AGENCY FOR SPECIALIZED MONITORING
Year 2019 was the year of reckoning for the India Banking Sector. Indian
Banks were reeling under a Distress Debt of around USD 200 Billion and were
in dire need of debt restructuring and infusion of fresh capital.
Aggressive lending to the Infrastructure Sector in order to prop up the Indian Economy after the years of Great Financial Crisis (2008-2010), and due to various other factors including fraud and diversion of funds, had ultimately resulted in piling up of huge amount of Bad Debts within the Banking Sector.
The Govt. of India, in order to keep a latch on fraudulent activities and to prevent diversion of funds, has introduced the ASM (Agency for Specialised Monitoring) Mechanism. Under the ASM, banks will now appoint specialized monitoring agencies to closely track the activities of the debtor (borrowers) including purchase/invoices, actual production vis-à-vis projections, high value transactions/ payments as regards beneficiaries and purpose, cash inflow/ outflow.
ASM will be applicable for all debtors where exposure is above INR 250 Crore.
The Scope of work shall include:
- Concurrent Review and Monitoring Procedures (for Working Capital)
- Concurrent Review and Monitoring Procedures (for Term Loan); preferably deployed in when there is delay in implementation-ASMs for large accounts should be engaged in order to ensure proper monitoring of project implementation as per schedule and utilization of funds.
- Concurrent cash monitoring which includes the following:
- Cash Inflow Monitoring
- Cash Outflow Monitoring
- Fund Flow Analysis
- Non-Cash Parameters
SSPC with its techno-financial capabilities, is rightly placed to offer a 360 degree overview to the lenders, with regard to their exposure to large borrowers. We can monitor the progress of the implementation/operation of projects on real time basis. Simultaneously, we can monitor the operating and non-operating financial transactions of the debtor, including cash flow monitoring.