Need to correct compliance burdens for businesses, reduce litigation: KV Kamath

K V Kamath, Chairperson, National Bank for Financing Infrastructure and Development (NaBFID) asserted that there is a need to 'correct compliance burdens' for businesses.

He highlighted that the level of compliances and compliance burden both needs to be addressed. He further added that the government itself has identified issues on the compliances front when it spoke about simplification of various procedures for businesses.

"The issue of litigation should be addressed with greater speed as a step towards enhancing investments. It is on the policymakers' agenda too," he said.

Commenting on the slowdown in foreign direct investment (FDI) in the country, the veteran banker said that people are not in a position to invest and they are re-assessing their own future.

He said that the FDI flows have been impacted by the overall global sentiment where volatilities are leading to a deferment of decisions, and also the funding winter in the private equity and venture capital space.

“Can you imagine any European company really going to put money in now? For that matter, USA, you do not know whether you are in recession or in a growth phase. And, Japan is no different. So, large pools of capital, which would have come this way or investment on their behalf are not happening,” Kamath said at the CFO Summit 2023 by FICCI in Mumbai.

Kamath believes that if the Indian economy grows at seven per cent per annum along with the digital opportunity, then the FDI will flow into the country.

'Won't run out of capacity'

Referring to the public sector, compared to corporate, Kamath highlighted that ROEs are between 20-25 per cent, where as going beyond 15 per cent was impossible.

"We are running in less than 14 per cent investment to capex ratio, in 2000-2003 we didn't have the capacity at all and the incremental pie then was the infrastructure. There is no need of additional capital today," he said.

He further stated that the demand is not sluggish today, because nothing structural is wrong, it is just that in the last few years they have build capacity and won't run out of capacity.

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