James Christopher Flowers, who made fortunes out of several financial crises, whether in Japan or UK , with $14 billion investments in debt-ridden companies he would then turn around, is now betting on India . His company JC Flowers and Co has formed a joint venture with a local investment bank Ambit to float an asset reconstruction company, Ambit Flowers Asset Reconstruction. Flowers, one of the youngest partners of Goldman Sachs before he left it in 1998, was portrayed by Hollywood star Michael O'Keefe in a movie “Too Big to Fail.'' Flowers tells Baiju Kalesh that the new central bank governor will continue to clean up bad loans of banks and that is where he sees an opportunity. Edited excerpts: People did not seem very positive when I was here the last time and that was sort of the business environment . The business mood was quite negative and it has improved much since then. One of the things that we're pursuing here is an asset reconstruction company (ARC) and so , I see things through that lens and it has become a lot easier to do business here.We actually have one more investment already in India. We own part of a company called SICOM, an NBFC (non-banking financial company) promoted by Maharashtra, where we are a major shareholder. So, we have had an experience in India as an investor before 2008.But part of what brings us to India today is this and let me also say we looked at many investment opportunities in India in the last decade or so. Specifically, now this ARC opportunity is a specific thing that we find attractive at this time. So that's one reason why we are here.When you have a lot of accumulated non performing loans that represent an opportunity. Whoever you are that represents an opportunity. At the moment, we have that situation here in India where a lot of nonperforming loans have accumulated and, by the way, this goes in cycles. So some time there won't be many and then there will be many opportunities when there is an accumulation. The details of how that gets resolved are important, whether there is an opportunity for somebody like us to invest, depends on the details of how the system works... that the system is authorising new asset reconstruction companies. One thing that's very important is the change in the bankruptcy rules. Then the attitude from the Reserve Bank of India towards banks to clean up their bad assets. So, you have things lining up, where, you have, as I said, an accumulated stock of bad assets, where I think we have a potential for a much more active market. If that market develops then you know there are going to be good investment opportunities.Well there are a bunch of several issues there, and one is, whether banks will sell non-performing loans at prices that make sense for buyers. One possibility is that it is slow to develop, and the other is that it develops relatively quickly. So, the factors determining it will be how much pressure banks feel to clean up their bad assets versus not having to clean up their bad assets.You know in terms of what price. There will be several people who want to buy the asset there and the main point being we have competitors and the person who pays the most money wins. So, it is the competitive market dynamics which establishes whether for example a 30% discount is the right price because that could be the best price you may be getting in an active market.That should be the answer of how these kinds of discounts are determined.Yeah, I mean of course we do think it's the right time to enter, and you know, because of all the forces we have already talked about, we are at the beginning of what we hope will be a rapidly increasing market, a high level of activity and in terms of the kind of role that we can play. I think you've made a good point. I'd like to elaborate...you know part of the job of somebody like ourselves, is going to be to revitalise companies that have good future potential that have ended up over leveraged and to help with strategy, management, capital, etc.So, you can take a company that's stuck and get it moving forward. That is a big part of what goes on with such bad debt workout situations. So, I think we do have a positive role to play.We've learned from both our successes and also problems because you can't be in this business for as long as we've been without having problems as well as successes, and especially in 2008. It was a very difficult time in our industry and so, it wasn't too big to fail. One important lesson is alignment of shareholders and stakeholders. Second one is the control over a company.We found that in difficult times, especially, control can be important. In this asset reconstruction initiative we would expect to have control of the debt that we buy and I would say that's another lesson we've learned. So those are two important lessons.I've seen a couple times, maybe twice.It's a strange experience to see myself portrayed in a movie with this strange experience.Yes, I did. Mike came to see me before the movie was made and we talked and he wanted to see what I was like and stayed with him. So, like I said, it was an unusual experience for me.There are a lot of mistakes anywhere. So, we try not to make mistakes. I hope we won't make too many mistakes. But I mean, again, the issues of alignment and transparency, I mean one of the issues, I think, in India. For example more than let's say Sweden are issues of transparency, and you know we're not Indians we're foreigners. You know this is a big, huge, enormous, complicated country. I think, the way to do that is to partner and the people that we're doing business with and have the correct alignment together. You know our partners in this venture are Ambit, we've known them for a long time, we feel very comfortable with them and we think it is absolutely essential, to have local skilled, high quality, trustworthy partner which we think, we have.I think it will continue and I hope it will continue for the good. Of course, it's good for our venture if it continues but it's also good for India. We have been in many economies over the years and have seen both approaches. We have seen the “don't do anything“, you know, sort of cover it up or let it continue for a long time. Japan did that for a while. China is doing that right now. To some extent, that's happening in Europe . We've seen that approach and we've seen the take the pain, clean it up and move on approach. That's what America did after 2008. That's what Japan has done at this point. So, we've seen both the approaches. The problem with covering it up or letting it seem like less pain is like not jumping in the cold water, but it reduces the effectiveness of the banking system. It makes it harder to grow. It is not capital for growth. And by the way, if bad debts are not taken care of, then it affects the credit markets generally. So in other words, if you owe money, but you can't collect it, if good borrowers and bad borrowers look the same, then your economy doesn't work right.