Interview with Harish Chander,VP, Edelweiss ARC
You do have one of the largest ARC businesses in India. What is the outlook in terms of your strategy? What is the growth potential for this segment?
Currently the recognised NPAs are about Rs 6 lakh crore, and ARC sale is one of the tools available with the banking system which they can provide settlement or restructuring.
Therefore sales to ARCs will continue though the texture will change. Just to take you back to 2002. when the ARC system started, at that point, sales to ARCs was only 0% which was increased to 5% in 2006 and to 15% in 2014. After April 2017, sales will mostly happen on 50% cash basis and after 2018, it would be on 100% cash basis. We have significant commitment in this and we will be a large player to do this.
Most of the manufacturing sectors are there. Infrastructure has not started coming as yet for the simple reason that the way infrastructure financing is done, there is a cushion available and therefore the bandwidth with the banking system to restructure it is available. Viable projects are being restructured. If projects have become unviable, those are coming up for sale and we have picked up some in the infrastructure sector, in ports, in power sector, in roads. We are open to trying in all these areas.
Your ARC book at around Rs 29000 crore at the moment. Which sectors do you have maximum exposure in and where do you see your AUM book by the end of FY17?
In all sectors, we have almost similar kind of exposure which is manufacturing, steel, cement. Commodities are in trouble there is a problem with the commodity cycle. Therefore, almost all the manufacturing companies which are dependent on commodities are already there and I think the trend will be similar and infrastructure sector accounts would be coming.