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Rate cut unlikely to have big impact on macro recovery: KKR

Nayar says there are no signs of increased consumption spending as yet. He expects the rupee to be under pressure over the next few months

Sanjay Nayar, CEO, KKR India feels a rate cut alone will not help speed up the pace of economic recovery. In an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, he says investments by the private sector could take time.  New money into the economy will have to come from public spending till then.

Nayar says there are no signs of increased consumption spending as yet. He expects the rupee to be under pressure over the next few months.

He says there is capital willing to invest in stressed assets, and that some clauses of SARFESI could be refined in the coming days.

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Below is verbatim transcript of the interview:

Q: Before getting to the macros – you are all set to take an investment in an international asset reconstruction company. What is the interest in that company? ARCs as of now have not done a great job in terms of even making a small difference to the NPLs, turning them around; something is making you confident now?

A: On the stake – this is something that they have announced, we haven’t as yet. We are still in the process of seeing all the diligences and getting approvals, but as a sector it was created with a right intent and for all the reasons which we do not need to discuss today, they haven’t taken off. I think some of them have done a good job.

The reason we would consider putting equity into an asset reconstruction company is to get ready for the next phase which is to see stressed assets being offloaded by the banks.

There are still many issues in terms of what makes it very effective to resolve assets but our intent would be to see if we can bring in significant amount of foreign capital which we do in many countries given the background of our firm and similar firms like ours bring in a lot of foreign capital to buy these assets at fair value and resolve them.

The key is the resolution of the assets so that the banks can get some money back and so can the investors.

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