"We have been thinking how to create a regulatory structure (as) we do not have a good bankruptcy system. We are thinking about a structure so that people should voluntary withdraw from unattractive businesses," said Mr Mahapatra while addressing the ASSOCHAM National Seminar on 'Managing Stressed Assets' in New Delhi.
He said in the Indian context the bankruptcy has a stigma attached. "Nobody wants to be called a bankrupt person... Indian philosophy is that we do not like failures".
He said the work on providing an enable framework for "voluntary withdrawal" by entrepreneurs has just begun and is only at the stage of conceptualization. While there is a talk of providing legal provision in the Companies Act, but the RBI would like to work on examining the regulatory framework for the "voluntary withdrawal" by the entrepreneurs.
Referring to the problem of the heavy NPAs, Mr Mahapatra said the concentration of the bad assets is mostly in the public sector banks while the new private sector banks have shown much better performance. He said the Reserve Bank of India has now provided a system of incentives and disincentives for following rules of the game for Corporate Debt Restructuring (CDRs).
