Punjab Cabinet launched One Time Settlement (OTS) Policy

The Captain Amarinder Singh led Punjab Cabinet approved a One Time Settlement (OTS) Policy to give entrepreneurs of promoted and loanee companies the last chance to settle their dues with PDSIC and PFC, with the condition that no such OTS opportunity would be given to defaulters hereafter.

Facts :

• The Punjab Government has given it's nod to a new policy which is aimed at the revival and rejuvenation of defunct industries.
• Under this initiative, the debt ridden companies as well as the entrepreneurs would be provided an opportunity for the one time settlement (OTS) of the balance amount.
• The approval has been accorded to the entrepreneurs and the debt ridden companies for the one time settlement of their balance debt amount with the PSIDC and PFC. It would be the last chance for the companies not making the payments.
• The One Time Settlement policy -2018 has been okayed and accepted after holding comprehensive deliberations with the promoters of revival and rehabilitation of the industrial sector and also as per the suggestions of the Chamber of Commerce and Industries Association.
• As per this policy the entrepreneurs and the companies under debt would get a chance to receive the payment of Rs. 80-100 crore and Rs. 7-10 crore under the settlement of their balance debt with the Punjab State Industrial Development Corporation Limited (PSIDC) and Punjab Financial Corporation (PFC) respectively.
• Under the OTS policy-2017, PSIDC did not receive any application for loan cases. However, a sum of Rs. 3.99 crore was recovered by way of OTS for equity from two companies. PFC received offers for OTS from 25 loanees concerns having tentative OTS amount of Rs. 2.72 crore, against which it has so far recovered Rs. 1.57 crore, with the remaining being recovered in quarterly instalments.
• Notably, the PSIDC provided Loan to the 861 industrial units out of which 739 had settled the debt with the corporations where as the cases pertaining to only 122 units are pending and all of them have already become non-performing assets.
• Besides, PSIDC had made equity investment in 322 units, of which 245 collaborators have already settled their dues by way of buy back of their equity/settled their accounts under OTS, and only 77 promoted units are yet to buy way of equity investments.
• Similarly, PFC extended term loans to 18000 loanee concerns, of which 16900 have settled their accounts and about 1142 units are at present outstanding and the entire portfolio has been declared NPA. Currently, the default position to the bond holders of PFC is Rs. 151.95 crore, which includes Rs. 101.31 crore as principal and Rs. 50.64 crore in interest. The bondholders of PSIDC owe Rs. 542.52 crore to it, inclusive of Rs. 392.48 crore and Rs. 150.04 on account of principal and interest respectively.

Analysis :

• The Punjab Government is fully committed to the revival of the industrial sector in the state.
• The new policy would bolster the debt ridden companies as well as the entrepreneurs, it would yield employment avenues for the youth too.
• The new policy would lead to the release of the hold up industrial assets and also reduce the unnecessary litigation with these corporations.
• The policy would also result in the generation of revenue for the development centric initiatives for boosting up the industrial infrastructure.

By: Harman Sandhu