MUMBAI: State Bank of India chairman Rajnish Kumar has said that there are many new buyers interested in taking over defaulted companies and the value of these businesses will not dip if promoters are prevented from bidding for them.

The SBI chairman’s statement comes after the government amended the Insolvency and Bankruptcy Code to bar even ordinary defaulters from bidding for assets under the insolvency process. The new amendment states that those who have their accounts classified as non-performing assets for one year or more and are unable to settle their overdue amounts submission of the resolution plan, cannot bid.

“This presumption that there would not be many bidders is wrong. If you look at the expression of interest on many of the companies under National Company’s Law Tribunal, there is a good interest. And that good interest is being driven by two things - outlook for that industry and quality of the asset. So you have to distinguish between the quality of the promoter and the quality of the assets which they have created,” said Kumar.

According to Kumar, once the company has gone into insolvency, there is no promoter. “They've lost that business the day it went into bankruptcy. The question is about who would be allowed to bid and who will not,” he said.

Kumar said that the bank’s main objective is to prevent the company from going into liquidation. To this effect the focus is on getting a resolution plan that is credible. “When we are talking about resolution, the credibility of those who are bidding would also be examined. Law makes it much more clear and explicit and that helps,” said Kumar. He added that while the decision of the committee of creditors will be critical there are multiple parties involved in the resolution process including the insolvency and the courts.

