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GE toys with options to recast bad assets

Mumbai, Oct. 4: GE Commercial Finance, part of the General Electric Company with consolidated revenues of over $131 billion, is looking at a variety of models for reconstructing impaired assets in India. Other than joint ventures, the setting up of an asset management company may also be considered.

“It may mean setting up an AMC or joint ventures,” Harjit S Bhatia, president, GE Commercial Finance (Asia Pacific) told The Telegraph.

Asset reconstruction is an area GE will focus on in India in the days ahead.

“GE is committed to India. We will make our presence felt not only in the individual’s side, but evolve various products,” he added.

According to Bhatia, the company, through its global restructuring services, adopts a vastly different approach as compared with vulture funds. GE not only leverages its large industrial base, but utilises various processes that includes international best practises to successfully turn around bad assets.

It has set up platforms in Thailand, Korea and Taiwan where it works closely with asset reconstruction companies (ARCs).

In India, GE is present in diverse areas such as medical systems, power systems, lighting. GE Capital Services India, a wholly owned subsidiary of GE Capital, provides financial solutions through a wide range of products and services to meet the needs of corporate and retail customers.

It is one of the largest financial services companies in India today and has an asset base of around Rs 6,000 crore.

GE Countrywide is one of India’s leading consumer finance companies and it offers various products including car finance, consumer durables finance and personal loans. GE also has a joint venture with State Bank of India (SBI) for credit cards.

GE Capital Transportation Financial Services, which commenced operations with the acquisition of SRF Finance, provides financial solutions for the transport sector.

Pursuant to the promulgation of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance (SARFAESI), investors can buy bad assets of banks and financial institutions, which can subsequently be nursed back to health.

Foreign funds have two options to invest in distressed assets. These include the setting up of an AMC that can buy such assets from an asset reconstruction company (ARC) and the other route is to set up an ARC and buy non-performing loans from banks or financial institutions.

So far two ARCs, Asset Reconstruction Company of India Ltd (ARCIL), headed by ICICI Bank and State Bank of India (SBI), and IFCI-promoted Asset Care Enterprises Ltd, have been granted licence by the Reserve Bank of India (RBI).

While close to a dozen applications are now pending before the central bank, several Indian and foreign finance companies are looking at the emerging scenario where distressed assets can be nursed back to health.

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