Get InvITs under purview of bankruptcy law: SBI MD
Infrastructure investment trusts (InvITs) are enjoying immunity from insolvency proceedings and should be brought under the Insolvency and Bankruptcy Code, a top official from SBI said on Friday. Ashwini Kumar Tewari, the managing director of the bank, said lenders need the assurance of being able to recover their dues from InvITs in case of a default and added that they are in touch with the Reserve Bank and the government on the same.
«We need to bring these trusts, which are bankruptcy remote, within the purview of the IBC because that will go a long way in giving us the assurance that this is like any other asset,» Tewari said, addressing an NBFC event organized by industry lobby Assocham here.
He elaborated that at present, the primary responsibility of an InvIT or a special purpose vehicle under it is towards the trust holders and there are «gaps» which need to be filled.
«This space needs clarification; this space needs assurance to the lenders that in case there is a (legal) testing of default etc, it will be the same as any other lending that they do within this space (infrastructure),» he said.
Tewari mentioned that banks also lack the power to change management at entities, which is a key feature under the IBC provisions and has already been invoked in the past.
He also made it clear that SBI is «very bullish» on the InvITs space because it takes away the long-term risk from the bank after a project is completed, and also because it provides steady flow of cash to pension funds and other investors.
