Bad Loan Firms Call For Rule Change To Open Up Sector To New Players

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The proposed modifications will broaden the range of organisations that trade Security Receipts, financial products backed by non-performing loans.

According to a sector association, Indian companies that buy bad loans from banks have made the decision to speak with regulators about expanding the market to include new participants including affluent people and corporations.

The proposed modifications will broaden the range of organisations that trade Security Receipts, financial products backed by non-performing loans. Currently, only banks and non-financial businesses can do this business.

According to Hari Hara Mishra, CEO of the Association of Asset Reconstruction Companies in India, the modification will increase liquidity and competitiveness, he told Bloomberg in an interview last week.

In the upcoming days, the group plans to present the change to the Reserve Bank of India and elected leaders. If such recommendations are accepted, it might improve liquidity and draw in foreign investors, according to Mishra. The committee "decided to approach the authorities with sweeping changes in India's distressed-asset market."

A working committee established by the Indian Banks' Association recently convened to explore recommendations opening the door for those businesses in India known as asset reconstruction companies.