.......Most of the other recommendations also fail to address the seriousness of the issue at stake. For example, the Mahapatra Group makes recommendations about conversion of debt into preference or equity shares, cautioning that banks should only exceptionally convert their debt into preference shares. Preference shares are a non-voting as well as subordinated instrument. Conversion into, as an option, needs to take a futuristic look at the turnaround of the entity, and may be an excellent kicker. However, these are strategies which need to be exercised with great degree of caution. Making any list of rules for the action on the part of banks is like missing the intricacy of the point altogether. In short, it may be likely that the RBI may accept the recommendations of the Mahapatra Group and banks may happily use restructuring as the device to keep their NPA levels cosmetically low.
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