In a press release issued on Monday, the association published a list of 36 private banks that had to be placed under moratorium by the RBI in public interest. Stating that it is the equivalent of the devil quoting scriptures, unions have accused the industry of being responsible for bad loans and for bribing bank officials.
Bad loan resolution: Banking on RBI???s new framework
The latest move by RBI to get in the new revised framework to tackle NPA resolution has met with similar opprobrium. The idea to do away with CDR, SDR, S4A, etc, is commendable, because with a plethora of measures of reconciliation which were not quite able to deliver the results, there was no point in having a series of such schemes.
Fraud, bad loans don???t dampen Mobius??? interest in Indian banks
For the 81-year-old emerging market investment guru, companies that are adopting internet, digital technology and robotics are another pick. Mobius, who recently retired from Franklin Templeton Investments after three decades of service, also advised caution. He said a correction is impending but its pace depends on factors that trigger the corrections.
PNB scam and NPA crisis: Are we looking at a long-term bear market?
Nobody is clear as to what the final damage across the banking system would be, since we don’t yet know which banks are exposed to the Letter of Undertakings (LoUs). There is some political fallout and there could be more, given the absconding jewellers’ connections with the high-and-mighty.
RBI???s NPA bitter pill comes with some side effects
There may be increase in bad loans due to slippages from Special Mentioned Account (SMA) category. Accounts that remained unpaid for 60-90 days are categories as SMA2.Critics in the banking industry point out that the new framework is very stringent on NPA recognition and is being introduced at a time when other pieces in the ecosystem are found wanting.
Malaysian parent company Maxis, run by businessman Ananda Krishnan, had earlier proposed a cash infusion to support the debt-laden company but has pulled the plug, said one of the people.The company has been in negotiations with lenders since September but has failed to hammer out a recast of its Rs 15,500 crore debt.
The wilful defaulters who have taken loans over Rs 25 lakh from the bank had a gross outstanding against them of Rs 14,593.16 crore as on January 31, 2018, according to PNB data. The bank first started giving out such data from June 2017, when the gross loan outstanding against them was at Rs 11,879.74 crore.
RBI???s new NPA rules may hurt but will drain the swamp
With that the hope of a revival in bank credit growth is blown away, which will also crimp economic growth, goes the argument. But that’s taking the short-term view. Yes, slippages will rise and so will provisioning. But in the long term, the central bank will get credit for pressing reset on the banking system.
Southern States SME Associations demanded the Central government to extend the notice period given to industrial units declared as non-performing assets (NPA) to settle the dues to 180 days from the existing 60 days.
Can absorb shock: Bank CEO tries to put up brave face
Punjab National Bank BSE -2.10 % chief Sunil Mehta put up a brave face before investors and analysts at a conference call late on Friday, saying the bank can absorb the financial fallout of what is being billed as the biggest fraud in Indian banking’s history.
State Bank of India (SBI) on Friday put on sale loans worth `1,935.62 crore to 24 different entities. It has sought bids for these from asset reconstruction companies (ARCs) on cash basis or a mix of cash and security receipts (SRs), according to a sale document. Bidding will be held on the bank’s e-auction platform.
IOB banks on resolution of NCLT cases to cut swelling NPAs
bank’s NPAs have consistently come down over the last three quarters. As on December 31 last year, IOB had a gross NPA of 21.95 per cent and net NPA of 13.08 per cent. “Our recovery rate has been higher than the slippage rate and the same trend will continue. In the third quarter (October-December), we had a slippage of Rs 14.91 billion but our recovery was Rs 32 billion”, said R Subramaniakumar, managing director & chief executive officer, IOB.
Reserve Bank of India (RBI) set strict timelines for lenders to take action against defaulters, threatening penalties if banks failed to act in a timely manner. Soured loans, which include non-performing, restructured or rolled-over loans, reached a record high of 9.5 trillion rupees ($148 billion) in the middle of last year before dipping slightly and prompting some relief among bankers that the worst was over. State-run lenders account for the bulk of these loans.
Bold reform: Letter to BS on NPA rules may mean short-term pain for banks
Steps such as banks harmonising treatment across their books of specific accounts, in case of consortium lending and making it necessary for them to report on a frequent basis, and start the resolution process right away will nevertheless bring greater clarity in dealing appropriately with default borrowers in a coordinated manner.
Bank of Baroda may float a $1-billion qualified institutional placement (QIP) soon while Indian Overseas Bank is looking to raise Rs 1,000 crore via QIP. Allahabad Bank is also looking to raise Rs 1,000 crore. Canara Bank said earlier this month that it will raise up to Rs 1,000 crore by issuing shares through QIP, rights issue, preferential allotment or follow on public offer.
Bond markets and NPA resolution ??? All you need to know
The impact of rising bond yields on the parameters of the insolvency resolution process (IRP) is likely to be significant. The restructuring or sale of corporate debt (mostly loans) by banks involves assessment of the amount of write-off on the book value of debt paper held by banks. This process can be complex. However, at the core, it involves the projection of future receipts from the paper and discounting of such future receipts at an appropriate discount rate.
Call to account: How I became a Non Performing Asset for my bank
The reason is that it looks bad on the bank’s report card to the sarkar if accounts get closed. So many banks keep hundreds and thousands, maybe millions, of loss-making accounts going, at ruinous costs to themselves. Defaulters are the main cause of banks’ NPAs. But banks themselves can often be their own NPAs: Non-performing Assets.
With the Reserve Bank of India (RBI) announcing a complete overhaul of the stressed assets resolution with a strict 180-day deadline, analysts are expecting a spike in the reported NPA levels for some of the large borrowers. ICRA in a report said that the total borrowing by 50 large borrowers have banking exposure of Rs 2,000 crore stands at Rs 2.46 lakh crore of debt, which will need resolutions by September 1, 2018.
Axis Bank chief is confident that new RBI NPA framework will not cut too deep
The third largest private sector lender had already factored in higher bad assets recognition and the resultant provisions due to migration to the IndAS, the newer accounting system due from April 1, and therefore, it will be able to support credit growth even after setting aside more money, Axis Bank chief Shikha Sharma said.
Despite banks blowing the whistle on bad loans, the Nirav Modi show goes on
Company Firestar Diamond and other firms huddle into emergency meetings to try and figure out what their exposure in either loans or bank guarantees to the diamond company is.On Tuesday, the Central Bureau of Investigation received two complaints from Punjab National Bank alleging fraudulent transactions worth about $1.8 billion. Calls and emails made to Nirav Modi and Firestar CFO Vipul Ambani were not returned till the time of going to press.
Many stressed loans have been referred to SDR, and are not yet classified as NPAs, but new promoters have also not been found yet. According to Care Ratings, in the medium term, banks will see a spike in their NPAs over the next couple of quarters.
PNB scam: Fraud nearly third of bank???s market cap, almost double the amount promised under recap plan
Uncovering of this fraud puts fresh doubts over the effectiveness of the bank recapitalisation plan launched by the government last year, to look into the concerns over the growing bad loans in the account books of the public lenders. Now, other than resolving the NPA issue, the government also needs to issue fresh impetus to improve governance standards across the banking industry.
New bad loan resolution framework to add Rs 2 lakh crore stress on banks
Two, the revised framework dictates the if one bank treats a particular account as an NPA, other lenders in the consortium must follow suit. The norm ensures uniformity, but it is likely that the overall NPAs would balloon significantly this fiscal.Lenders will now have to work out a resolution plan for defaults within 180 days, failing which the account would be referred to the bankruptcy courts.
The sell-off in banking stocks follows the RBI’s move to revamp non-performing asset (NPA) recognition norms and dismantle the earlier regime of multiple restructuring options, by putting in place a clear, but tougher, roadmap for recognition and resolution of NPAs. The RBI also directed banks to share information on all defaulting borrowers with an exposure of over Rs 5 crore with the central bank on every Friday.
On the current stock of NPAs, of the `8.8 trillion, we estimate Rs 3.5 trillion is already part of the IBC under List 1 & 2 of RBI. We estimate that banks have Rs 1.6 trillion under the watchlist/SMA 2 loans, which is likely to slip to NPLs at a faster pace, given the lack of forbearances available. We estimate another Rs 2.6 trillion currently under various forbearances.
NPA levels of banks set to bloat with RBI\'s mega resolution framework
In banking parlance, accounts that have remained unpaid for 60-90 days are termed Special Mentioned Account (SMA2). While the risk of slippage remains high, not all of them will, however, become NPAs.In the Reserve Bank of India’s (RBI’s) new rules, banks would have to harmonise the treatment of specific accounts across their books.
Banks may need Rs 2 lakh cr more for NPA provisions, loan book expansion
Twelve large banks — six in the public sector and six run privately — would together have around Rs 2 lakh crore in stressed assets that are not classified non-performing, an analysis done by India Ratings suggested. "Our estimate is that a sizeable proportion of these may not be restructured as per the plan and are likely to get impacted by these guidelines," said Prakash Agarwal, director & head of financial institutions at India Ratings.
PSU banks trade weak after RBI\'s new NPA resolution
In the RBI’s new rules, banks would have to harmonise the treatment of specific accounts across their books. If one bank has treated a particular account as an NPA, other lenders on the same account will have to treat it as an NPA in their books as well. According to Icra, the revised framework on resolution of stressed assets issued by RBI is likely to increase the reported NPA levels of the banks in coming quarters.
Revised RBI norms to clean up NPAs in one go: Financial Services Secretary
The revised framework has specified norms for "early identification" of stressed assets, timelines for implementation of resolution plans, and a penalty on banks for failing to adhere to the prescribed timelines.The latest notification issued by Reserve Bank of India (RBI) last night has also withdrawn the existing mechanism which included Corporate Debt Restructuring Scheme, Strategic Debt Restructuring Scheme (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A).
RBI\'s new rules on NPAs to weigh on bank stocks; PSBs to face bigger impact
A note by ICRA said the revised framework is likely to increase the reported NPAs of the banks in coming quarters. “This is likely to be an outcome of implementation of resolution plan for large borrowers that are currently in the Special Mention Accounts (SMA) categories. In the event, banks are unable to implement a resolution plan for the large borrowers with exposure of Rs 20 billion and above, these accounts will be required to be referred to the NCLT for resolution through the IBC.
Fast-forwarding NPA recognition and resolution: In the long-run, RBI???s new rules are healthy
In the past, once a loan account was referred to NCLT, banks and the company got 180 days to find a resolution, else the company is liquidated/auctioned—now, within 180 days of the default, if the resolution does not work satisfactorily, the bank has another 15 days to send the case to the insolvency tribunal for winding up/auction.
Revival route: Banks dealt a good hand on bad loans
Banks could also reorganise or restructure the debt, much in the manner of a corporate debt restructuring, such that payments are regularised. Late on Monday evening, the RBI asked banks, either singly or jointly, to initiate an RP as soon as a corporate default is spotted. In other words, banks have several options to revive the defaulting companies but these must be exercised within 180 days.
Lead by PSBs, NPAs soar 34.5% in Q3; pain to linger on, claims report
In the report based on the performances of 30 lenders, including 17 private sector banks and 13 state-run ones, the agency said the quantum of gross NPAs moved up to 9.45 per cent as of December from 8.34 per cent a year ago.While private sector banks' bad loans ratio was maintained broadly at 4.1 per cent, their state-run counterparts registered a spike in the proportion of dud assets at 12.4 per cent.
Corp Bank posts Rs 12.4-bn Q3 loss on higher NPAs; bad loan ratio at 15.92%
The bank's total income also decreased to Rs 48.41 billion in the third quarter of 2017-18, as against Rs 58.39 billion in the year-ago period as expenses were higher, showed the bank's balance sheet in a regulatory filing. Net NPA were 10.73 per cent of the net advances against 7.64 per cent by the same period year earlier.
Total provision more than doubled to Rs4,899 crore, from Rs2,302 crore in the year-earlier period. NPA provision was Rs4,373 crore as compared with Rs2,546 crore. The RBI had mandated the lender to classify Rs14,057 crore of assets as NPAs, the main reason for the rise in bad loans.
United Bank of India posts Q3 loss of Rs 638 crore
The lender’s asset quality worsened further in Q3. Gross non-performing assets (NPAs) in absolute terms rose 26.51% year-on-year (y-o-y) to `13,720.69 crore. And, on a quarter-on-quarter (q-o-q) basis, gross NPAs were up by 6.42% from Rs 12,892.67 crore in the September quarter this fiscal, according to a stock exchange filing.
RBI overhauls stressed asset framework, gives 180 days for NPA resolution
The framework did away with many existing guidelines on stressed accounts while simplifying them under a single code. This means the RBI’s existing norms on Scheme for Sustainable Structuring of Stressed Assets (S4A), ownership norms on stressed accounts, guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP), Strategic Debt Restructuring Scheme (SDR) and such myriad of schemes are now part of a simpler, easy to reference, scheme.
Final bidding round: ArcelorMittal, Numetal vie for debt-laden Essar Steel
They say the resolution professional (RP) and the National Company Law Tribunal (NCLT) will have to take a call on the eligibility of ArcelorMittal and Numetal because it involves interpreting the Insolvency and Bankruptcy Code (IBC) and relevant rules.
Banks review sale of loans under resolution to ARCs
Union Bank of India and Bank of Baroda (BoB) are looking to sell their exposure in Bhushan Steel Ltd to SSG Capital owned Assets Care & Reconstruction Enterprise Ltd in an all-cash deal, Economic Times reported on 7 February.
Their efforts have begun to show first signs of results. It is debatable whether demonetisation pushed back the resolution by four to five quarters as the banking system was seriously engaged with changing notes after November 2016 for two quarters and then the GST reform happened.
Corporate loans worth Rs2 trillion may turn bad in 12-18 months: report
In addition, another 1% of stressed assets could turn bad. These are mostly standard but restructured loans, and those loans whose restructuring under the central bank’s schemes may not work. Currently, the pool of corporate stressed loans stands at around Rs9.6 trillion, Kariwala said.
Separate route on anvil for individual insolvency cases
The ministry has suggested that DRTs designate special benches for resolution of individual insolvency cases. DRTs were established in 1993 under the department of financial services. Under the current mechanism, while corporate debtors approach the National Company Law Tribunal (NCLT) for bankruptcy and insolvency resolution, individual insolvency cases are referred to DRTs. There are around 1,988 cases pending in the NCLT, which was set up in June 2016 after the IBC was introduced.
Provisions for banks, which have declared results so far, have fallen between 6% and 21% between the quarter ended September and December 2017. Analysts say it looks like the worst is over for banks in terms of bad loans and a macroeconomic recovery could help banks clean up.
SBI reports Rs 2,416 crore loss as bad loans surge
State Bank of India (SBI), India’s biggest lender by assets, on Friday reported a net loss of Rs2,416 crore for the fiscal third quarter after setting aside funds to cover rising bad loans and losses on its bond portfolio.
Andhra Bank logs net loss of Rs 532 cr in Q3 on NPA woes
The bank had made a net profit of Rs 56.70 crore in corresponding October-December period of 2016-17. Sequentially, it widened the loss against Rs 385.11 crore loss in the second quarter ended September during this fiscal. Bank's asset quality worsened during the quarter with gross non-performing assets rising to 14.26 per cent of the gross advances at end-December 2017, from 11.88 per cent as on December 31, 2016.
Foremost among the steps initiated by the apex bank was its move to offer additional 180-day period for MSMEs adversely impacted by the GST implementation and demonetisation, to clear their bank loan dues. Representatives from industry bodies say this move has come as breather for ailing MSMEs hit by existing non-performing asset (NPA) norms under which a company is declared an NPA if loan repayment is delayed by 90 days.
Govt amends IBC for better realization of stressed assets
The regulations require the insolvency resolution professional—who takes charge of the assets—to hire two professional registered valuers to determine the fair value and liquidation value of the asset.The insolvency professional then has to provide these values to the committee of creditors on condition of confidentiality. The creditor panel takes the final call on approving resolution plans submitted by bidders.
Accretion of fresh NPAs has virtually stopped, says Bibek Debroy
Participating in a discussion on Budget 2018-19, Debroy said it was possible to scrap income tax and other direct taxes and replace them with indirect taxes but indirect taxes can never be progressive. Referring to issue of low income tax collection, he said it was mainly because farm income is not taxed in India.
RBI Monetary Policy: Relaxed NPA norms for MSME loans, no cap on priority lending
At present, banks and NBFCs classify loan accounts as NPAs based on the 90-day and 120-day delinquency norms, respectively. For the new norm to be effective, three conditions need to be satisfied: the MSMEs must be GST-registered; the aggregate exposure, including non-fund based facilities, should not exceed Rs 25 crore on January 31, 2018; the borrower account should be standard on August 31, 2017. It would apply to loans overdue as on September 1, 2017, and for payment from the borrower due between September 1, 2017 and January 31, 2018.
NPA: 40 corporate insolvency resolutions completed by December
The Code, which came into effect on December 1, 2016, seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.
Kotak Mahindra, Edelweiss units in race for Alok Industries
Alok Industries is among the 12 defaulters that the Reserve Bank of India ordered to be referred to bankruptcy court in June last year, having defaulted on more than Rs 29,000 crore of debt as its diversification exercise ran into trouble. The company was admitted to the insolvency process by the National Company Law Tribunal's Ahmedabad bench on July 19.
PSBs\' bad loans write-off reaches Rs 53,625 crore till Sept-end
Break-up wise, PSBs' write off was Rs 27,231 crore in 2012-13, rising steadily to Rs 34,409 crore in 2013-14; Rs 49,018 crore in 2014-15; Rs 57,585 crore in 2015-16 and hit a high of Rs 81,683 crore in 2016-17. As per RBI guidelines, NPAs including those against which full provisioning has been made, are removed from the balance sheet of the banks on completion of four years.
Bank of India invites bids for sale of a large NPA portfolio
Finance Minister Arun Jaitley, during a press conference, made a brief announcement on the recapitalisation of banks, detailed policy for which is still being worked on by the Finance Ministry. However, the announcement is being seen as a major step towards helping the public sector banks flush with money post demonetisation but reeling under non-performing assets.
bank set aside Rs 1,344 crore as a provision against potential bad loans — over twice more than what it did in the year-ago quarter. About Rs 650 crore of this was because of increased provisioning requirement for accounts that have been referred to the National Companies Law Tribunal (NCLT).
Ujjivan Financial profit drops 33% to Rs29.3 crore as bad loans soar
Gross non-performing assets (NPAs) soared to 4.24% in the reporting period from a low 0.25% a year ago, while net NPAs jumped to 4.99% from 0.05% in the same period last year, impacting the overall bottomline.
The IFCI board on Monday approved the preferential allotment to the Centre and convened an extraordinary general meeting of shareholders on March 7 to get their nod for the transaction, Rao added.For the third quarter ended December 31, 2017, IFCI reported a net loss of Rs. 176.87 crore. This is wider than the net loss of Rs. 45.17 crore recorded in the same quarter of the previous year.
After Rs 11,000 cr G-Sec auction called off, Centre must explain its deficit numbers
Bond yields have risen 90 basis points in the last three months and 32 basis points since January 17 when Viral Acharya, deputy governor, RBI said the central bank was not in a position to bail banks out every time they suffered a loss on their portfolio. RBI may well feel forbearance will kill market discipline, but with banks facing massive NPA-related losses as well as bond-market losses, it does need to consider forbearance.
Allahabad Bank aims to raise Rs 2.5-2.7 bn from staff share offer: MD & CEO
Last month, the RBI had also initiated prompt corrective action (PCA) against the state-run lender over its high bad loans.High net non-performing assets (NPA) and a negative Return On Assets (ROA) for two years in a row had prompted the action by the central bank.
Limited investment opportunities among PSU bank stocks
PSU banks' recapitalisation aside, investors are still worried about the NPA issues faced by these banks. "The stock market performance of PSU banks will be subdued for the next few quarters because the positive news (capital infusion) has been discounted. However, the negative news (NPA write offs) will come in the next 1-2 quarters," says Asutosh Kumar Mishra, Senior Research Analyst, Banking, Reliance Securities.
Market reacts strongly to capital gains tax proposal
The FM justified the LTCG by stating that about ?3.6 lakh crore of gains reside in the books and, with the market having amply rewarded investors, they ought not need to depend on a fiscal incentive. True enough. However, the denial of indexation to inflation when, an hour ago, he permitted the salaries and perks of MPs to be inflation-indexed, smacks of an unfair treatment of all those who are not ‘privileged’.
IDBI Bank posts loss for 5th straight quarter on higher bad loans, provisions
For the December quarter, the bank reported a loss of Rs1,524.31 crore, down from Rs2,255 crore from a year ago. A tax write-back of Rs1,234.82 crore, against Rs768.38 crore a year ago, helped limit the loss. Provisions and contingencies rose 30.37% to Rs4,179.12 crore from Rs3,205.56 crore a year ago. On a quarter-on-quarter basis, the increase was 28.33% from Rs3,256.60 crore.
Karur Vysya Bank Q3 net drops 38% as bad loans spike
The bank set aside Rs324.70 crore to cover bad loans and contingencies, nearly double the amount of Rs157.50 crore it had parked in the same period of previous fiscal, according to a regulatory filing.Its gross bad loans spiked to 5.94% of the gross loans at the end of December 2017, as against 2.66% in the year ago period.
Insolvency: Bidders may not be able to sell stressed assets for 5 years
According to a source close to the development, bidders have already been informed that if they bag assets being auctioned under the Insolvency and Bankruptcy Code, they will not be able to sell shares or any other assets of the acquired companies unless cleared by the lenders.
ICICI Profit drops 32 per cent, but NPA addition slows
Standalone net profit fell to Rs 1,650 crore, or Rs 2.55 per share, compared with Rs 2,442 crore, or Rs 3.80 per share, a year earlier. Profit was lower than a Bloomberg poll of 26 analysts, who had penciled in a net profit decline of 22 per cent to Rs 1,903 crore.
All state-run banks are on overdrive in the past year to recover dues from defaulters as the government and the regulator have been pushing them hard to set their house in order. The two forced banks to try defaulters under the bankruptcy code
Banks to be forced to vote at other forums like in IBC
A major highlight of the bankruptcy process is that lenders are not allowed to abstain from the meetings or voting process. If they do, they are deemed to have voted against the proposals. This has forced fence-sitters to be more active in the bankruptcy process.
Economic Survey: Resolving NPAs, implementing GST to lift GDP
Resolving the non-performing assets (NPAs), or bad loans, of state-run banks and implementing GST are among the major factors that will help India log GDP growth of 6.75 per cent in the current fiscal, says the Economic Survey for 2017-18 tabled in the Lok Sabha by Finance Minister Arun Jaitley on Monday.
Indian Banks??? Association may set up online platform to sell bad loans
Talking at an event on distressed assets on 20 January, Viral Acharya, deputy governor of the Reserve Bank of India (RBI), had urged banks and ARCs to collaborate for setting up an online trading platform for selling bad loans as it would help develop such a market.
Andhra Bank to sell SEL Manufacturing loan to ARCs
The bank’s principal balance exposure to the company stands little over Rs103 crore. This sale is part of the non-performing assets worth Rs3,251 crore offered for sale to ARCs, the tender showed. The bidding will take place on 2 February.
India’s stock of soured bank loans shrank slightly in the quarter to September last year, the first pullback since a drive to clean up record levels of bad debt began in 2015 and signalling that tighter rules and a new bankruptcy code may be starting to show results.
Bank recapitalization: Rs 1,00,000 crore boost for PSBs, here is Modi government???s mega revamp plan
This staggering amount comprises of Rs 80,000 crore which will be infused through recapitalisation bonds. Apart from this Rs 8,139 crore will be infused through gross budgetary support and Rs 10,312 crore of funds raised from the market. An announcement was made in this regard yesterday. The central government had come up with a reforms roadmap for these banks.
The Banks Board Bureau could serve as the board of a holding company for all PSBs. The remuneration structure of senior bankers at PSBs must move from public sector scales to board-determined, performance-linked, market-comparable ones that reflect the time horizon of the risks assumed.
FinMin asks PSU banks to be in hot pursuit of bad loans
Experts said a separate vertical for managing bad loans would accelerate resolution of the bad loans mess and help recovery, which could lead to write back of provisions in the next two years, boosting profits.
Humongous bank fund infusion tied to reform firewall against bad loans
Announcing the banking sector reforms, Finance Minister Arun Jaitley said, “Stringent norms for disbursal of high value loans have been framed.” Rajeev Kumar, secretary, Department of Financial Services, said the government will infuse Rs 88,139 crore capital into PSBs by March 31, but recapitalisation will be tied to performance and reforms
Large rise in NPA levels hurts Can Fin Home\'s Q3 results, net profit up 6%
The total interest income rose from Rs 3.7 billion in Q2 FY18 to Rs 3.8 billion in Q3 FY2018. The total income earned increased, by only three percent, to Rs 3.94 billion during Q3 FY18 from Rs 3.83 billion from the corresponding previous quarter.
Banks\' non-performing assets: Where have all the risk managers gone?
When bankers and analysts now talk about stressed loans of more than Rs 10 trillion, the 10 years from 2004 to 2014 become important. For, this is the period when these loans were sanctioned and disbursed. The period after the global credit crisis of 2008 is of particular importance.
NCLT to set up three more benches in Bhubaneswar, Jaipur and Kochi
The new benches will be in Bhubaneswar, Jaipur and Kochi, two persons familiar with development said. There is just about one appellate tribunal and the government is said to have initiated process to set up for appallate benches to share the workload.
Prime Minister Narendra Modi’s administration has pledged to inject $33 billion of fresh capital into struggling state-run banks — including SBI — and the Reserve Bank of India has asked commercial lenders to resolve bad loans at 40 of the biggest defaulters within a year. Policy makers are betting these moves will boost loan growth from a 30-year low.
Banks under PCA eye asset sales to ARCs to strengthen books
The gross non-performing assets (NPAs) ratio for the public sector banks was 12.6% at the end of September, 2017, data from ratings agency Icra showed, while the net NPAs stood at 7.24%.The capital adequacy ratio for the state-run lenders stood at 12.18% at the end of the September quarter, compared with 16.21% for the private sector banks, data from Icra showed.
The average NPA ratio of 18 PSBs was 8.89% at the end of FY17. This figure does not account for the NPA ratios of State Bank of India (SBI) and its associates, IDBI Bank and UCO Bank. Their ratios could not be ascertained as the value of their education loan portfolios was not readily available
Gross non-performing assets or NPAs (as a percentage of gross advances) declined to 5.28% from 5.9% in the September quarter and net NPAs were lower sequentially at 2.56% from 3.12%.Slippages, which had got out of hand in the previous quarter, declined by 50% sequentially. Fresh slippages fell to Rs4,430 crore in the December quarter from Rs8,940 crore in the three months ended September.
Gross NPA in Indian banks may rise to Rs 9.5 lakh crore by March, says ASSOCHAM-Crisil joint study
“High level of stressed assets in the banking system provides enormous opportunity size for asset reconstruction companies (ARCs) which are an important stakeholder in the NPA resolution process,” ASSOCHAM said in a statement quoting the study.It, however, said that owing to capital constraints, growth of ARCs is expected to come down significantly.
???Develop a U.S.-style online platform to sell bad loans???
Deputy Governor Viral Acharya has opined that such a platform could help create a thriving market for selling bad loans, which is plaguing the domestic banking system, and asked all the stakeholders to come together to develop such a mechanism.
The CBI called Mr Reddy for an inquiry and arrested him after questioning. As the MLC had not repaid the loan, it had turned into a non-performing asset. The bank had served several notices to his construction company, VNR Constructions, but they were returned as he had shifted from the location.
Expect government to support power sector in tackling NPAs, create demand: PV Ramesh, REC
In an interview with ET Now, PV Ramesh , CMD, REC , says expecting a big upsurge in the demand push in the Budget through government's instruments of stimulating growth like Make in India programme which is expected to generate much higher demand than witnessed in the last few years.
Allahabad Bank seeks bids for loans worth Rs 901 cr from ARCs
Prospective bidders are required to submit their expressions of interest by January 20 and complete their due-diligence by February 5. Bidding for the assets will be held on the bank’s e-auction platform on February 7. The bank added that since the sale is on ‘as is where is basis’, therefore, site visits are not envisaged.
Proper risk pricing key to curbing NPAs: RBI deputy governor
The deputy governor pointed out that credit analysis should reduce the information asymmetry issues between the borrowers and the potential lender. “The creditor should also enhance the data-mining processing capabilities to increase the efficiency of the utilisation of data,” he said.
Why high levels of NPAs must be added to subsidy cost
According to data in the latest RBI Bulletin, NPAs in the overall housing loan sector were around 1.1% in FY17—that is, even while property prices fell, home-buyers did not default. This could possibly be a function of the cash component in most home-buying—if, say, 30% of the house is paid for in cash, no one will default since, if the bank repossesses the house, they will lose this component completely.
Earlier this month, Union Bank of India and Bank of Baroda (BoB) put up about Rs16,270 crore worth of loans, including those of Bhushan Steel Ltd and Essar Steel Ltd, for sale to ARCs. Both steel companies are in the Reserve Bank of India’s first list of 12 cases undergoing insolvency proceedings. In December, BoB had also sold its foreign currency loan exposure in Essar Steel to foreign funds.
Andhra Bank, SBI put Rs 5,000 crore soured loans on the block
Andhra Bank has put on the block the 112 accounts with outstanding loans of Rs 3,251, while State Bank of India has done the same for 15 accounts amounting to Rs 1,833 crore. Visa Power and Visa Steel are among the two big-ticket accounts that are on block in the list of non-performing loans released by the state-run Andhra Bank.
SBI to put Rs 382 crore soured education loans on sale
The lender has invited bids from asset reconstruction companies (ARCs) for an education loan portfolio amounting to Rs 382 crore that was given to 20,891 students. The bank has set a reserve price, or a floor price, of Rs 114.6 crore for an all-cash offer. But the reserve price is higher at Rs 152.8 crore in case the ARC makes an offer which is a combination of cash and security receipts, which are similar to bonds payable after 5-7 years.
Affordable housing loans show good growth; NPAs rise too, says RBI
Housing finance companies (HFCs) and public sector banks (PSBs) experienced a slowdown in housing loan disbursements during 2016-17, while the overall NPA levels for the loan segment increased year-on-year. Low-income groups and economically weaker sections accounted for 96 per cent of the housing shortage.
Bad loans: SBI drags Jayaswal Neco Industries with over Rs 3,000 cr loan default to NCLT
The State Bank of India has dragged Jayaswal Neco Industries to the National Company Law Tribunal (NCLT), which has a loan default of over Rs 3,000 crore. The company was among the 28 companies identified by the Reserve Bank of India in its second list of big corporate defaulters.
The bank's gross non-performing assets (NPAs) rose to Rs 1498.70 crore as on 31 December 2017 from Rs 1345.28 crore as on 30 September 2017 and Rs 971.62 crore as on 31 December 2016. The ratio of gross NPAs to gross advances rose to 1.16% as on 31 December 2017 from 1.08% as on 30 September 2017 and 0.94% as on 31 December 2016.
Besides spelling out the contours of the reforms that banks need to deliver to avail the proposed Rs 1.35-lakh crore Recap Bonds, Jaitley is also widely expected to throw some light on the legislative amendments that will be carried out in the coming days to strengthen the Insolvency and Bankruptcy Code (IBC).
Much of the deterioration in asset quality came from the up to Rs 2-lakh loan slab, where the NPA ratio rose 60 basis points (bps) to 10.4% between FY16 and FY17. The rise in stress was more severe in the case of housing finance companies (HFCs), which saw the NPA ratio in the up to `2-lakh loan segment jump 250 bps to 8.6% at the end of FY17.
RBI data: Agriculture bad loans jump by 23 percent thanks to farmers??? loan waiver, demonetisation
The data further shows that the maximum default took place in 2017 while significant four years- 2012 to 2017 only showed defaults of Rs 24,000 crore. Farming sector has a bad loan which constitutes 8.3 per cent of the total banking sector NPAs of Rs 728,500 crore as of March 2017.
NCLT admits defaulter???s voluntary plea for insolvency resolution
Two other creditors, Axis Bank and Asset Reconstruction Co. (India) Ltd, had also moved the Kolkata bench of NCLT seeking the appointment of a resolution professional, but these were also dismissed because the company had filed its voluntary application first.
Videocon the largest defaulter in the RBI's second list that seeks to clean the banking system fraught with sticky assets. The matter was adjourned after the company claimed the bank did not serve adequate notice to the corporate debtor.
Insolvency proceedings: NCLT admits SBI???s plea against Bhushan Energy
BEL owes Rs 399 crore to SBI. The IRP, along with a committee of creditors (CoC), will come up with a resolution plan. If the committee is unable to find a solution within 180 days — this can be extended to 270 days — the company will be liquidated.
According to top regulatory officials, some of these firms are approaching senior NBFC executives, with a good reputation in the market, with a novel idea of setting up their own ‘asset reconstruction (ARC) start-ups’ and then bidding for the assets being sold under the insolvency process.
Will Insolvency and Bankruptcy Code fix the Bank NPA issue?
IBC, which stipulates the need to maximize value by making the assets available to the largest number of bidders, to suggesting that the ordinance was timely in preventing bids from those quarters which had failed to utilize the assets viably.
UCO Bank willing to take 40-45% haircut to keep book free of NPAs, says MD
The focus is on NPA resolutions either through NCLT or other means. Our gross NPA is Rs 24,000 crore and net is about 9.98 per cent. In the first list of 12 cases of RBI, we have nine cases in NCLT where the exposure is Rs 4,300 crore and in the second list we have 16 cases out of 29 where we have a Rs 4,700 crore hit
Jaitley blames reckless lending during UPA for NPAs
Union finance minister Arun Jaitley said on Thursday the government is bringing all possible resource to resolve the issue of the bad loans of public sector banks and mainatined that it was public investment that had enabled the country to get over 7 per cent growth when private invesment was dismal.
Telangana launches India???s 1st co-financing NBFC for MSMEs
The Centre will support with Rs 50 crore grant-in-aid even while department of industrial policy & promotion has given its in-principle approval. Majority of MSMEs are facing problems from banks owing to Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)
Bandhan Bank has 1.1 cr customer base, 28% CASA, low NPA and now IPO in a year
There are lots of opportunities for India to provide this banking services and it is not only the deposit and credit, the journey is another one. We are developing the habit in the bottom of the pyramid. Now can they build up the habit of deposit in small way. It is very good experience on financial inclusion for the country.
Insolvency proceedings to take toll on banks??? profits
The central bank's norms require that if insolvency proceedings are started against a borrower, banks will have to set aside as provisions half the loan amount from their quarterly profits. The provisions are necessary as banks are likely to recover only a small fraction of their money from these loans.
Banks gearing up to refer 24 of 28 large NPA accounts to NCLT
In August, the Reserve Bank had asked banks to either resolve the 28 more large stressed accounts or refer them to the National Company Law Tribunal (NCLT) by December 31. These accounts together account for 40 per cent of bad loans of around Rs 4 lakh crore.
Banks to refer 25 firms on RBI???s second list to NCLT
Lenders have decided to refer 25 of 28 companies on the Reserve Bank of India’s second list of large corporate defaulters to the National Company Law Tribunal (NCLT) for initiation of insolvency proceedings.
SBI leads push to regularise ???standard??? JSPL account
In an unprecedented move, the State Bank of India (SBI) is leading a campaign to regularise the contentious Jindal Steel & Power account arguing against the Reserve Bank of India's diktat, said two people familiar with the matter.
Reckless lending by banks over the years has created a huge mess in the form of non-performing assets (NPAs). A comprehensive structural reform alone offers a permanent solution to this legacy problem. With bad loans amounting to over Rs 9.50 lakh crore, India has now earned the dubious distinction of ranking fifth in the world among the nations with high NPAs, as per the latest research report by rating agency CARE.
Insolvency code amended: How Arun Jaitley???s swift decision may break the vicious cycle of NPAs
A recent CARE report has thrown the spotlight on India’s bad loans situation, which is the fifth worst in the world. The report said that even Spain, which lately applied to European Stability Mechanism for a €100 billion rescue package, has lower bad loans than India. But what made India’s situation worse was the vicious circle of bad loans-loan defaults-more loans.
Indian Overseas Bank to sell Rs600 crore worth exposure in Bhushan Steel
The National Company Law Tribunal (NCLT) admitted the bankruptcy plea against the steel company filed by State Bank of India on 26 July. The insolvency resolution process for Bhushan Steel is expected to be completed by 22 January.
Bill replacing IBC ordinance to allow promoters of insolvent companies more time to repay dues
Entities that submitted a resolution plan but were subsequently rendered ineligible by the NPA clause of the ordinance will get an opportunity to make themselves eligible to participate, said people with knowledge of the matter.
NCLT is a resolution and not a recovery mechanism: Bahram N Vakil
There is a sense of urgency in the 12 largest accounts that form 25% of our NPAs. The bids (for the companies) are due by month-end. The main thing the ordinance conveys is, if you are a defaulter or have violated laws, you can't be part of the resolution process.
The total bad loans amounted to Rs 2.86 lakh crores in 2016-17. The RBI can’t escape its responsibility for these bad loans as its representative sits on the boards of PSU banks. Merely red-flagging possible defaults after onsite inspection has little meaning. The central banker must be more proactive.
Watch: SEBI board meet tomorrow, tighter NPA disclosure norms on agenda
The outcome may mandate listed cos to disclose loan default within one working day as, the regulator believes, markets must get fair warning of prospective NPAs. Sources tell ET Now that prompt disclosures may be made effective from April 1, 2018. The board is also expected to tighten regulations governing credit rating agencies.
Only 4 major nations have higher bad loans than India
According to a research report by ratings agency CARE, India's NPA ratio — which excludes restructured assets that are around 2% higher than NPA — is one of the highest in the group of 'high-NPA' nations. The only countries with a higher NPA than India are Portugal, Italy, Ireland and Greece. Even among the troubled PIIGS, Spain has a lesser ratio of bad loans compared to India.
To discourage P-notes, Sebi likely to ease direct registration for FPIs
Sebi may allow listing of security receipts issued by an asset reconstruction company (ARC) on the exchange platform.Security receipt, in market parlance, means a receipt or other security issued by a securitisation company or reconstruction company.This will enhance capital flows into the securitisation industry and particularly be helpful to deal with bank non-performing assets (NPAs).
Non-performing assets: Worsening recovery of bad loans
While the loan recovery rate has been falling, the number of cases being referred to the National Company Law Tribunal (NCLT) benches for insolvency resolution has been correspondingly rising since the enactment of the Insolvency and Bankruptcy Code (IBC) last year.
IBC: Potential game changer for asset reconstruction companies
The jury is still out on whether asset reconstruction companies (ARCs) have been able to turn around assets, but there is still huge interest in even setting up new ARCs. In a panel discussion at the summit, participants said the IBC could be a potential game changer for ARCs.
On the one side the efforts of reducing the existing NPAs go on through various methods with no positive impact so far,on the other side many of the existing NPAs are slipping into NPAs has created a great concern among the Government as well as the RBI.
Market Now: PSU bank stocks tumble on reports of bad loans
Among the major public sector banks, State Bank of India had the highest amount of NPAs at over Rs 1.86 lakh crore followed by Punjab National Bank, Bank of India, Bank of Baroda ), Canara Bank and Union Bank of India, PTI reported.
Execution is key to NPA resolution under the bankruptcy code
In a fireside chat, Shyam Maheshwari, chief executive officer of SSG Capital Management Ltd; and Haseeb Malik, senior managing director, Varde Partners Inc., discuss the risks and rewards associated with investing in stressed assets and what they are making of the opportunity.
Surplus liquidity due to huge deposit accumulation during the demonetisation period, coupled with a lack of credit appetite for most part of the year, triggered deposit and lending rate cuts without the central bank having to do much by way of rate cuts. Retail term deposits of over one year duration declined by about 50 basis points.
Keeping the light at the end of bad loans tunnel burning
In addition to consumption, the firing-up of the second economic engine — private investments — would require enhanced credit flow and finance in the system. The immediate restoration of the health of the banking sector, which has been facing some asset quality concerns, therefore becomes a top priority.
NPAs: RBI blames investment banks for faulty loan appraisals
The Reserve Bank of India (RBI) has blamed conflicts of interest among merchant bankers as one of the prime reasons for faulty project appraisals that has led to the piling up of huge non-performing assets (NPAs) in the system which has crossed 10% or over Rs10 trillion as of the September quarter.
RBI warns of elevated NPA risks; private banks dud loan spike 41 pct
Overall, the stressed assets, including restructured loans and dud loans increased marginally to 12.2 per cent during the same period from 12.1 per cent. The state-run banks’ GNPA shot by 100 bps to 13.5 per cent while the same for their private sector peers jumped to 3.80 per cent.
RBI: Loans to SMA-2 borrowers up 56.5% in March-September
The share of large borrowers both in total bank loans as well as gross non-performing assets (NPAs) declined between March and September 2017, the central bank said in its Financial Stability Report (FSR).
RBI places restrictions on Bank of India after bad loan spike
Once PCA is triggered the bank faces restrictions on expenses such as opening branches, recruiting staff and giving increments to employees. Further, the bank can disburse loans only to those companies whose borrowing is above investment grades.
RBI imposes restrictions on BoI; fresh curbs for UBI
The banking regulator has also imposed fresh restrictions on Kolkata-based State-run lender United Bank of India. In an exchange notification, the lender said the additional restrictions were imposed due to high net NPA, low leverage ratio and requirement to raise capital.
CII proposal seeking reduction of govt stake in PSBs to 33% irks unions
CH Venkatachalam, AIBEA General Secretary, told BusinessLine that some of the members of CII and other industry bodies are responsible for the bad loans in the banking sector. Terming this recommendation as preposterous, he said: “They (private corporates) take loans. They don’t repay, and make the banks to waive off (loans). Then they are telling the government to privatise the banks.”
Gross NPAs of banks rose 9.5% to Rs 8.5 lakh cr in H1FY18
Reserve Bank of India (RBI) has informed that the growth in provisions for NPAs of Public Sector Banks (PSBs) in the first half of the current financial year (as on September 30, 2017 over March 31, 2017) was 9.5 per cent," he said in a written reply to the house.
Now, stressed companies claiming dues from one another; Essar Steel group companies lay claim to Rs 6,012 cr from parent
FE sought a comment from Essar Steel on the claims of the 21 companies but received no response till the time of going to press. These claims account for approximately a fourth of the total claims filed by all operational creditors of Essar Steel of an estimated Rs 22,914 crore.
Railway Minister Piyush Goyal, stepping in for Finance Minister Arun Jaitley, who was busy at another event, said, “We are asking banks to show the deviation between their balance-sheet, the audited balance-sheet and the AQR numbers, which has put pressure on the banks to show the correct picture and not indulge in ever-greening.”
Delinquencies in the loan against property (LAP) market are set to rise 70 basis points (bps) to 3.3 per cent this fiscal, even as underlying risks stemming from moderating growth, intensifying competition and falling yields come to the fore, Crisil said in a report today.
Goyal said between 2008 and 2014, lending of banks increased to Rs 52 lakh crore from Rs 18 lakh crore. "The credit growth in these years didn't match the GDP growth. It clearly shows the lending that was done was mostly to companies that didn't have the right intention. Phone calls were made to bank heads by politicians to lend to certain companies," he said.
The Reserve Bank of India deadline to resolve these 28 accounts ended on Wednesday. The regulator, in August, had asked bankers to refer these cases to the National Company Law Tribunal (NCLT) if they failed to find a resolution by December 31. These accounts together have an exposure of Rs 1.4 lakh crore.
Referring to the bad debt, at the Federation of Indian Chambers of Commerce and Industry (Ficci) annual general meeting, a day before the final phase of polling in Gujarat election, as he championed his government’s pro-poor policies.
IndusInd Bank fined Rs 3cr for hiding NPAs in 2015-16
Based on the its inspection report and other relevant documents, the RBI then had issued a show-cause notice to the bank in August this year as to why penalty should not be imposed on it for non-compliance with directions issued by the central bank.
Bad loans: Banks not deciding for fear of action, admits CVC K V Chowdary
The sluggish bank credit growth has been a political bone of contention between the ruling BJP and opposition Congress. While the Congress has used it to debunk the government’s claims of a healthy economy, the BJP claims it is a legacy inherited from the previous UPA regime.
Process automation and analytics could bring down NPA woes
The power of technology, especially the open source ones, analytics tools like Hadoop, faster and easy to deploy artificial intelligence for operational excellence, use of IoT and intuitive automation are driving the operating models of banks.
Jindal to Centre: Allow legitimate promoters to bid for stressed assets
Sajjan Jindal, Chairman, JSW Steel, tweeted on Tuesday: “Existing promoters (of NPA companies) are allowed to control the management in non-NCLT cases with deep debt restructuring involving large haircuts if they are not wilful & non-cooperative borrowers. If so, why to differentiate in #NCLT cases to debar legitimate promoters in bidding process?”
Insolvency and Bankruptcy Code- Background And The Road Ahead...
In lpha & Omega Diagnostics (India) Ltd. v Asset Reconstruction Company of India Ltd. & Ors., NCLT (Mumbai) observed that the term “its” under Section 14(1)(c) of the Code refers to the property of the corporate debtor. ...
RBI likely to extend NCLT deadline for second NPA list
The resolution for these cases is a complex task and reports from rating agencies on these cases have just started coming now. These reports will form the basis to decide between resolution or the NCLT option.
IBC auctions: Stressed unlisted firms may get tax incentives
Fair market value is the company’s adjusted book value. The government is also deliberating on allowing carry forward of losses if over 51 per cent shares of a stressed company change hands. The tax on transfer of shares in unlisted companies was becoming an issue in insolvency cases.
Jaypee homebuyers??? portal is only a data repository; options selected in the website can be changed later
Among the parties that had expressed interest earlier included Vedanta Group, Essel Highways, IDFC, Lodha Group, Puravankara, SARE Homes, L&T Infra, Cube Highways from Singapore, Kotak Infra, SARE Group, Deutsche Bank, Asset Reconstruction Company (India) Limited, Suraksha Realty, Tata Realty, National Infrastructure Investment Fund (NIIF) and JSW among others.
Govt asks panel to review amendment to Insolvency and Bankruptcy Code
Suman Jolly, managing director of Punjab-based Recorders and Medicare Systems Pvt. Ltd, had challenged the IBC ordinance on the ground that it would have retroactive effect, and that it does not distinguish between ordinary and wilful defaulters. The court will hear the matter on 25 January.
Unitech: The National Company Law Tribunal (NCLT) on Friday suspended the Unitech board for alleged mismanagement of funds and barred its directors from selling either personal or company assets, while allowing the Centre to name 10 nominee directors and paving the way for a government takeover of the floundering property developer.
Market Live: Sensex off early highs, Nifty around 10,300; metals lose shine
On December 8, the National Company Law Tribunal (NCLT) suspended all the eight directors of Unitech over allegations of mismanagement and siphoning of funds, while authorising the government to appoint its 10 nominees on the board.
Bankers speed up insolvency process as resolution deadline looms
Accounts that are not restructured until December 13 will have to be referred to the National Company Law Tribunal (NCLT) and CNBC-TV18, learns a majority of the 28 cases may end up in the NCLT despite the bankers attempts to recast debt within the deadline.
On the first anniversary of the first case of loan default being filed at the National Company Law Tribunal, or NCLT, the Insolvency and Bankruptcy Code (IBC), which is supposed to tackle India’s Rs10 trillion of bad loans, is in the news for more than one reason.
Banks are likely to take a haircut on defaulted farm loans, thus also helping trim the state government's burden towards the waiver scheme. As part of the state government's farm loan waiver plan, banks are likely to take a hit ranging from 15% to 45%, or even more, on the bad loans. This would give a final push to the waiver plan introduced this year after widespread protests by farmers.
The Supreme Court last week ruled if there is a dispute between the buyer at the auction of a mortgaged property and the secured creditor, it should be resolved by the debt recovery tribunal (DRT) and not by a high court. In this case, Agarwal Tracom Ltd vs Punjab National Bank, India Iron & Steel Corporation took a loan from the bank which it did not return.
Promoters will look to settle out of court, Post IBC tweak
On November 22, President Ram Nath Kovind gave his assent to a new section in the IBC, which makes wilful defaulters with loans classified as NPAs for one year or more ineligible to bid for their companies. Operational creditors with unpaid dues of even a few lakh rupees have taken the lead in filing IBC cases for recovery.
Trai ease of doing business good, but regulator must be more circumspect in fixing reserve prices
Given how long it can take to get various approvals, telecom regulator Trai has done well to come up with various ease of doing business recommendations. It recommends that if the department of telecommunications (DoT) has any objections to a merger, it should file these within a month—of course, given the delays at other bodies like the NCLT and the CCI, it is not clear how much this alone will help.
The plan includes floating re-capitalisation bonds of Rs 1.35 lakh crore and raising Rs 58,000 crore from the market by diluting government’s stake. The government equity, as per the current policy, can come down to 52 per cent in state-owned banks.
Given how long it can take to get various approvals, telecom regulator Trai has done well to come up with various ease of doing business recommendations. It recommends that if the department of telecommunications (DoT) has any objections to a merger, it should file these within a month—of course, given the delays at other bodies like the NCLT and the CCI, it is not clear how much this alone will help.
RCom claims all 31 lenders oppose China bank\'s insolvency plea
"At a committee of creditors meeting on November 29, a majority of them, both foreign and domestic, aggregating to 31, decided to oppose CDB's insolvency petition against RCom before the National Company Law Tribunal (NCLT)," RelianceCommunications claimed in a statement.
As NPA solution nears, bank stocks find favour with brokerages
In order to recover the NPA-laden banking system, the central government in October this year announced a mega plan of Rs 2.11 lakh crore to recapitalise the stressed PSU (public sector undertaking) banks. The government bifurcated the entire Rs 2.11 lakh crore amount in two parts: First, through budgetary allocation and second, by issuing recapitalisation bonds.
IBC Ordinance: How Modi govt walked into a trap, how it may walk out
The Centre and Reserve Bank of India pushed so hard to salvage lost loans from corporate borrowers — many of whom are to be squarely blamed for the recklessness and profligacy that have turned companies into basket cases.
When reminded that most of the NPAs were legacies of the previous Congress-led UPA government, he asked what is preventing the current government to declare this liability of Rs 45,000 crore as NPA? He further said that it makes no sense to give these companies an offset contract worth Rs 30,000 crore in the Rafale deal.
SBI is confident haircuts will be moderate: B Sriram
Emboldened by the interest expressed by private players in stressed assets, the country’s largest lender State Bank of India is hopeful that it will not have to take huge haircuts on most assets getting resolved under the Insolvency & Bankruptcy Code (IBC).
Rahul hits out at Modi over Gujarat debt, BJP calls him NPA of Congress
In 1995, the total debt of Gujarat was Rs 9,183 crore. In 2017, it is Rs 2,41,000 crore. That means every Gujarati is under a debt of Rs 37,000. Why should Gujarat people be punished for your mismanagement and publicity? Rahul Gandhi asked in a tweet.
Insolvency Code: Reliance Naval, Reliance maritime taken to NCLT by IFCI
IFCI has filed two insolvency petitions, the first against Reliance Naval and Engineering and the other against its subsidiary Reliance Marine and Offshore with the Ahmedabad bench of the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC).
RCom claims domestic lenders oppose insolvency plea by Chinese bank
According to the Insolvency and Bankruptcy Code (IBC), even if the Chinese banks are filing the suit, the domestic lenders will also become party to it with the IBC mandating the formation of the committee of creditors (CoC). RCom owes a consortium of Indian banks led by State Bank of India about Rs 45,000 crore.
Trai moots easier norms for telecom business, speedier M&A nods by DoT
The Telecom Regulatory Authority of India (Trai) on Thursday recommended to the department of telecommunications (DoT) that it should clear a merger proposal within 30 days of it being cleared by the National Company Law Tribunal (NCLT).
The bank has a massive exposure of Rs 1,66,893 crore to the power sector, of which Rs 10,472 crore is in the watch list. The iron and steel sector exposure stands at Rs 1,02,215 crore, of this Rs 1,881 crore is in the watch list. About Rs 2,548 crore of its telecom loans are also in the watch list.
Why was no action taken against loan defaulters during UPA govt, asks Jaitley
The asset quality review (AQR) in 2015 revealed high levels of non-performing loans, the Finance Minister said, adding that subsequently, loans of about Rs 4,54,466 crore, which were actually fit to be NPAs, and were under the carpet, were recognised after intensive scrutiny under the review.
From steel rails for Railways, logistics, ARCs, to land, here is what made news in infrastructure sector
Good move to give Infra Status to logistics sector. Was long overdue and clearly justified for hard investments in warehousing, logistics parks, cold-chains, inland container depots, dry ports, railway freight terminals et al. Reduces interest costs & enables borrowing from IIFCL Infra status for logistics will help exports: Logistics cost of Indian exports is high.
IDBI Bank default cases settled with 90 pct haircut; Malvika Steel to Usha Ispat, see how surprisingly low settlement was
IDBI Bank’s board and the trust’s board approved exchange of eight turnaround cases (worth Rs 1,522 crore) with three fresh loans (of Rs 1,335 crore) in June 2006. Auditors noted that in the eight cases that were transferred to IDBI Bank, the bank recovered Rs 1,659 crore.
Kolkata NCLT: Lenders to meet as IBC ordinance disqualifies promoters??? bid
Gujarat NRE Coke’s loans have remained non-performing for over a year, making its promoters ineligible under the revised IBC guidelines. The company owes lenders around Rs 4,600 crore and reported a net loss of Rs 676 crore on the back of Rs 541 crore in revenues in FY17.
DNA Money Edit: Recognising NPAs will make banks stronger
Arun Jaitley went on to blame the previous government that relaxed the loan classification norms that helped defaulters remain non-NPA account holders. As a result of asset quality reviews (AQRs) recently, loans of about Rs 4.54 lakh crore that were actually fit to be bad debts but were earlier swept under the carpet were recognised as NPAs.
Between the frying pan and fire: NPA mess leaves Modi with few choices
If a promoter ends up buying back his company in the resolution proceeding’s auction for its assets, at a steep discount to the debt the company owed, the government would be accused of letting the promoter loot the bank at the taxpayer’s expense.
Steps to tackle NPAs are not loan waiver to capitalists: Jaitley
In a blog, the finance minister also defended the recent amendments to the insolvency and bankruptcy code through an ordinance aimed at keeping wilful defaulters away from the management of businesses and ensuring a time-bound recovery.
There is no merit in the contention in certain quarters that the ordinance is “anti-promoter” and designed to keep away all promoters from participating in the resolution process, official sources said.
India needs insolvency ordinance to deal with Rs 9.5 lakh crore bad loan monster
The ordinance to amend the IBC has got President’s nod last week. Wilful defaulters, people associated with non-performing assets, or those who are habitually non-compliant cannot bid for stressed assets.
The amount set aside for bad loans and stressed assets — for ageing non-performing assets (NPAs) and National Company Law Tribunal cases would take provision coverage ratio to 58-60 per cent by the end of FY18, from 44.3 per cent at the end of March 2017, according to rating agency ICRA.
The Ordinance is obsessed with large borrowers, can adversely affect the fortunes of struggling small and mid-sized companies looking for a second chance, and can make defaulting companies vulnerable to predators, according to Mr Umarji.
Promoters of at least four small companies managed to pass their resolution plans before New Delhi tweaked the bankruptcy code, limiting the ability of erstwhile defaulting owners from buying back their assets at the conclusion of time-bound recovery proceedings. Synergies-Dooray, Chhaparia Industries, Sree Metaliks, and the West Bengal Essential Commodities Supply Corporation have all presented successful resolution plans approved by respective chapters of the National Company Law Tribunal (NCLT).
Top 5 steel companies in bankruptcy process face Rs 2.09 lakh crore claims
Five steel companies referred to the bankruptcy courts in the first batch are seeing more than Rs 2.09 lakh crore of claims, with many coming from their group firms that have been suppliers to the defaulters, data compiled by ET show. Claims from nine companies referred to Insolvency & Bankruptcy Code (IBC) that have so far made the information public have crossed Rs 3.25 lakh crore, data show.
The government wants to send a tough message to promoters. Last week’s amendment of the Insolvency and Bankruptcy Code makes it very difficult for promoters of a company that is a loan defaulter to submit a resolution plan. They now stare at the prospect of losing management control over their company. This is as close as India will come to allowing hostile takeovers, if hostile is defined as a situation where control is wrested away from unwilling promoters.
Oasis Textiles update on NCLT order of liquidation
Oasis Textiles announced that the application filed by the Umesh Harjivandas Ved before the Hon'ble National Company Law Tribunal, (NCLT) Ahmedabad Bench, for ordering the liquidation of the corporate debtor Oasis Textiles, was admitted and an order of liquidation and appointing the Umesh Harjivandas Ved as liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016, was passed on 22 November 2017.
With increasing instances of erstwhile promoters queueing up to pick up stressed assets at rock bottom prices, the amendment will deter chronic defaulters from regaining control of the company in the guise of a resolution plan.
Indian banks??? bad debt is not all that bad for global debt investors
India’s highest-profile default this year and the government’s plan to inject capital into state-controlled lenders have thrust the nation’s bad debt into the spotlight. Some global debt funds increasingly like what they see. The nation’s so-called dirty dozen — 12 large debtors that have been ordered to go through the bankruptcy courts — are one focus for funds including Bain Capital Credit and alternative investment firm Varde Partners. The government’s decision last month to inject Rs2.11 trillion ($32.5 billion; Dh119.7 billion) of capital into state-controlled lenders over two years, as well as the country’s new insolvency code that took effect in 2016, will help open the market for soured loans, according to Hong Kong-based loan and bond trading firm SC Lowy.
Essar Steel and Bhushan Steel are attracting the same set of bidders, according to a top executive of a leading consultancy firm. The two debt-laden steel companies are going through the insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code (IBC). The interest from all the top steel companies stems from the fact that both the plants have robust revenue earnings. While Essar Steel earns a revenue of Rs 70 to Rs 75 crore daily, Bhushan Steel earns about Rs 65 crore to Rs 70 crore a day.
Insolvency professionals are asking bidders to declare that they do not violate any of the provisions that have been inserted. So far, they only had to check if the resolution process was in order or not but now they have to also verify if bidders are eligible on all counts.
The RBI has decided to allow asset reconstruction companies to have higher holding than the 26 per cent cap set earlier with regard to limits on shareholding of the post-converted equity of a borrower company under reconstruction.
The Reserve Bank of India (RBI) on Thursday exempted from the limit of shareholding at 26% of post converted equity of the borrower company asset reconstruction companies (ARCs) that are compliant with the net owned fund (NOF) requirement of Rs 100 crore and have at least half their board of directors comprised of independent directors.
ARCs allowed to hold more than 26% in sick companies
Banks could hold more than 51 per cent when they converted their debt into equity, the ARCs could hold only up to 26 per cent. So if the banks sold their debt to ARC without conversion, the ARC was not allowed to convert more than 26 per cent of the debt into equity.
RBI allows strong ARCs to hold more than 26% in sick units
In a note to ARCs sent late Thursday, the central bank said ARCs that maintain Rs 100 crore net owned fund consistently and follow good corporate governance would be exempted from the 26% shareholding limit prescribed in 2014.
RBI allows strong ARCs hold more than 26% in sick units
In a note to ARCs sent late Thursday, the central bank said ARCs that maintain Rs 100 crore net owned fund consistently and follow good corporate governance would be exempted from the 26% shareholding limit prescribed in 2014.
Bad debt: Banks look for credible buyers; no fall in value of assets, says SBI chairman Rajnish Kumar
Resolution has to be very credible because the idea is that if we can save the asset from liquidation and we should save it. Secondly, when we are talking about resolution, the credibility of those who are bidding would also be examined,” State Bank of India chairman Rajnish Kumar said.
The ordinance aims at putting in place safeguards by prohibiting wilful defaulters, those associated with non-performing assets (NPAs), and the habitually non-compliant, from regaining control of the defaulting company or stressed assets through the back door in the garb of being a ‘resolution applicant’.
Bad loan recovery in Q2 falls as sales to ARCs dip
Recovery of bad loans slackened in the second quarter, both sequentially and year over year, amid lacklustre sale to asset reconstruction companies (ARCs), pushing some lenders to take recourse to bankruptcy proceedings to improve resolution.
\'Dirty Dozen\' Debtors Lure Big Funds To Their Bad Loans
A high-profile default and the government's plan to inject capital into state-controlled lenders have thrust the nation's bad debt into the spotlight. Some global debt funds increasingly like what they see.
Cabinet approves ordinance to introduce changes to IBC
The changes proposed are expected to help rationalise the process of selecting buyers for stressed assets. The proposal consists of the following provisions with a view to improving the quality of Insolvency Resolution, sources say.
India???s $207 billion NPA mess: Uday Kotak, Richest Asian Banker, says it???s an once-in-lifetime opportunity
Over the next year, the assets and debts of about 50 of India’s biggest defaulters may be sold off by court-appointed professionals, in a process in which banks are expected to take deep haircuts on their loans.
Govt may seek cabinet nod to amend insolvency and bankruptcy code
IBC does not specify the buyers that can bid for stressed assets of companies that are undergoing bankruptcy proceedings. This has triggered concern that promoters could reacquire their companies at a discount once the lenders decide to sacrifice a part of the money they are owed.
Let???s hope no NPA iceberg hits any Titanic in Indian banking
Former Reserve Bank of India (RBI) deputy governor Subir Gokarn compared banks’ bad loans or the non-performing assets (NPAs) with cancer—if not treated early, the patient would die. RBI’s current deputy governor Viral Acharya has said a bank not keeping adequate capital to absorb losses arising out of bad loans resembles a person who has slipped off the terrace of a skyscraper to fall and die.
Moody???s India rating upgrade: Concerns over NPAs, private funds persist
With Moody’s Investors Services issuing a clear warning alongside Friday’s ratings upgrade that India’s rating could be downgraded if its fiscal metrics and the outlook for general government fiscal consolidation deteriorates materially,
Among the parameters which the banks will have to improve are: cost to income ratio, ratio of staff in branches to total staff, net profit per employee, reduction in bad loans and stressed loans, evidence of steps to better scrutinise fresh loans, increasing the percentage of current account and savings account money in the total funds and better return on assets.
Bad loans in banks could be the weak spot in India's economy and could risk triggering a future downgrade. Besides the standard risks to the economy arising out of fiscal slippage and from global volatility, Moody's has cited health of the banking system as vulnerability for the economy.
Edelweiss urges NCLT to reject Rs 2k-cr claims of lenders in Binani case
Edelweiss Asset Reconstruction Company (ARC) on Friday urged the Kolkata bench of the National Company Law Tribunal (NCLT) to reject around Rs 2,000-crore claims raised by IDBI Bank, Bank of Baroda (BoB) and State Bank of India (SBI) in the insolvency case against Binani Cement.
The Government has not asked the Reserve Bank to pay any special dividend and is only seeking Rs 13,000 crore of surplus lying with the central bank, Economic Affairs Secretary Subhash Chandra Garg has said.
In August, the RBI had paid a dividend of Rs 30,659 crore for the fiscal ended June 2017. It was less than half the Rs 65,876 crore it had paid in 2015-16. The Government had budgeted for a Rs 58,000 crore dividend from the RBI in its Budget for this fiscal year.
Indian Bank to seek bids for sale of NPAs worth ?1,100 cr.
Indian Bank has decided to invite bids for sale of NPAs (non-performing assets) worth close to Rs 1,100 crore. Covering over 8,250 accounts, these NPAs will be sold “as is where is and as is what is basis,’’ the bank said. And, the sale is “without any recourse to the bank,” it added.
It was a mixed bag for bad loan recoveries by banks in the September quarter of FY18 over the previous year, data compiled by FE showed. While, banks like State Bank of India (SBI), Canara Bank, Union Bank of India and ICICI Bank have reported higher recoveries, others like Punjab National Bank (PNB), Axis Bank and Central Bank of India have shown dip in recoveries in Q2.
Gross bad loans at Indian banks moderate in September
ross bad loans at Indian banks were moderate in the September quarter, with lenders writing off a lot of advances after providing completely for their loss. The write-offs touched a record high, says Credit Suisse in a report.
Uco Bank bad loans: Looking to recover Rs 4000 cr, says MD & CEO RK Takkar
Public sector lender Uco Bank is looking to recover more than Rs 4,000 crore from bad assets in this financial year by means of cash recovery and upgradation to clean up its balance sheet. The bank hopes a lower non-performing asset coupled with a higher credit growth, backed by the government’s proposed mega recapitalisation, would bring down its high level of gross NPA ratio.
CBI to investigate fraud of Rs 82 crore through bad loans
Justice S S Sundar ordered the probe on a batch of two petitions filed by vice-president of Lakshmi Vilas Bank (Madurai), M Rengarajan stating 31 people who had availed loan from the bank had defaulted on the payment and police had not initiated any action on his complaints.
Thirty-eight listed banks that reported September quarter earnings posted a 1.32% rise in aggregate gross bad loans to Rs8.40 trillion from a quarter earlier, data compiled by Mint shows. The increase is 18.98% when compared with the same quarter a year ago. Of this, Rs7.34 trillion belongs to public sector banks.
Higher NPA provisioning: Bank of Baroda Q2 net drops 36%
Public sector Bank of Baroda has posted a 36 per cent decline in net profit to Rs 355 crore for the second quarter ended September 2017 from Rs 552 crore in the corresponding quarter of the previous year.
Finmin asks NPA-hit PSBs for Rs 2,11,000 cr recap roadmap in a month
As part of Rs 2.11 lakh crore recapitalisation exercise, the Finance Ministry has asked state-owned banks to submit their board-approved roadmaps for raising funds and strengthening core activities in about a month.
To resolve bad loans, both capital & human resources are scarce: Siby Antony, Chairman, Edelweiss ARC
The bankruptcy code has brought a new energy to the stressed assets market in the country. In an interview with a group of ET journalists, Siby Antony, chairman, Edelweiss BSE 0.94 % ARC, elaborates on various issues regarding bad loans and bankruptcies.
The kerfuffle over the twin balance sheet problem afflicting India’s financial system is not going away in a hurry. Over-leveraged corporates and banks encumbered with those bad assets have acted as a drag on the earnings for both segments of the economic vector. Companies have gone under, unable to deal with the burden of constant servicing of those loans through interest payments, while a vast swathe has been sent into intensive care for resuscitation.
BoB chief hopeful that NPA numbers will improve; bank reports 36% drop in profits
Bank of Baroda BSE 1.98 % reported a 36 percent plunge in net profit in the September quarter as its provisions for loan losses surged and income from treasury fell, but the overall bad loans position eased and forecast better days ahead if the National Company Law Tribunals deliver on recovery from defaulters.
Bank NPAs crisis: Lenders welcome recapitalisation, now Centre must take next step, implement reforms
In tackling heath epidemics, it is important to administer the right dose of curative medicine. But to avert recurrence of the epidemic, it is imperative to develop preventive vaccines. It is no secret that India’s banking system is in poor health.
India's largest mutual fund manager ICICI Prudential is betting on banks to drive a much-awaited recovery in corporate earnings in 2018, as additions to their record pile of sour loans slow after surging in the past two years.
Last weekend, Axis Bank announced the largest ever private equity investment in an Indian entity led by Bain Capital, Life Insurance Corporation (LIC) and others which have agreed to invest Rs 11,626 crore in the bank. In an interview with TOI, the bank's MD & CEO Shikha Sharma explains how the money will be used to meet capital requirements arising out of new accounting standards and to fund growth, which is around the corner. However, she warns that the bank is not done with bad loan provisioning.
Robust public sector banking will support growth: Arun Jaitley
A robust public sector banking system will have an increased ability to support economic growth, finance minister Arun Jaitley said on Sunday as the government moves to recapitalise state-run lenders burdened with bad loans.
Bad loans: SBI expects most cases from RBI second list to go to NCLT
State-run State Bank of India (SBI) on Friday said it expects most of the cases from the RBI's second list of large non-performing assets (NPAs) to be referred to the National Company Law Tribunal (NCLT) for resolution under the Insolvency and Bankruptcy Code (IBC).
SBI Q2 net drops 38% on provisioning, bad loans ebb
The Rajnish Kumar-led State Bank of India (SBI) on Friday reported a 38% drop in net profit for the second quarter ending September at Rs 1,581 crore due to higher provisions for bad loans. In the corresponding quarter of the previous year, the bank had reported a net profit of Rs 2,538 crore.
Bank of Maharashtra cuts loss by 93% but NPAs go up to 18.54%
Bank of Maharashtra reported a 93% reduction in net loss to Rs 23.24 crore during Q2FY18. BoM’s operating profit went up by 62% during the quarter to Rs 692 crore from Rs 427 crore a year ago. Total income went up marginally to Rs 3,303.62 crore during Q2FY18. The bank has had to make additional provisioning of Rs 832.89 crore for 10 accounts covered under the Insolvency and Bankruptcy Code. This will be spread across three quarters with Rs 277.63 crore provided for in Q2FY17 and remaining Rs 555.26 crore to be spread over remaining two quarters.
As slippages drop, SBI logs Rs1,582-cr profit in Q2
Robust growth in other income coupled with contained operating expenses helped State Bank of India report a net profit of Rs 1,582 crore in the second quarter against a net loss of Rs 557 crore in the year-ago quarter.
The move on the part of the government to inject capital of ???2.11 lakh crore into public sector banks (PSBs) is commendable and a decisive step. In making this move, there was an implied acceptance that the recovery process set up through the Insolvency and Bankruptcy Code (IBC) reform had not been working at the desired pace.
Bad loans of private banks also spurt, keep pace with PSU counterparts
Private banks have reported a massive rise in bad loans in the last five years, in a sign that they are not far behind their public sector counterparts when it comes to stressed assets in the banking system. Gross non-performing assets of private banks soared to Rs 100,481 crore at the end of September 2017 against Rs 22,020 crore in September 2013, a rise of 356 per cent.
PSB conclave to focus on governance, NPA resolution, credit revival
With a Rs 2.11-lakh crore capital infusion plan in hand, top executives of public sector banks (PSBs) will brainstorm with officials and experts at Gurugram over the weekend about governance issues, experience with insolvency cases, recoveries and credit demand revival.
Oriental Bank of Commerce reports loss in Q2 as NPA provisions rise
In the previous quarter, the Gurugram-based bank had reported a net loss of Rs 486.20 crore. The bank's net interest income, or the difference between interest earned and interest expended, stood at Rs 1251.73 crore in the second quarter, down 4.9% from the corresponding period last year, it said in a notification to the stock exchanges.
Q2 numbers hint worst could be over for banks on NPA front
The second quarter earnings of banks so far indicate that the worst on the NPA front may just be over, as data show that incremental additions of such loans have slowed significantly. After growing by 105 per cent in Q2FY17, growth in gross NPAs slowed down to 26.3 per cent in Q2FY18, an analysis done by Care Ratings shows.
Are there more cases like Synergies Dooray in offing?
The practice of selling soured loans back to promoters or their related entities by banks, as in the case of Synergies Dooray Ltd, has left minority creditors with little choice but to accept loan recast terms that are favourable to the promoters unless the courts intervene.
Axis Bank board set to meet on Friday to consider plan to raise equity capital
The board of India’s third-biggest private-sector lender, Axis Bank BSE 1.50 %, will meet on Friday to consider a proposal to raise equity capital from the market at a time when the spotlight is on worsening asset quality.
PSU lender Indian Overseas Bank has reported a significant increase in net loss at Rs 1,222 crore for the quarter ended September 30, 2017, compared with a net loss of Rs 765 crore in the year-ago quarter.
Indian Bank Q2 net up 11.5% at Rs 452 cr as bad loans shrink
Public sector lender Indian Bank on Monday registered a rise of 11.45 per cent in net profit at Rs 451.54 crore for the September quarter as bad loans declined, although provisioning to cover for such assets was raised. The bank had made a net profit of Rs 405.14 crore in July-September 2016-17.
Board of Calcom Vision allots 24.31 lakh equity shares under BIFR approved Rehabilitation Scheme
In terms of the Rehabilitation Scheme ('Scheme') approved by Hon'ble Board for Industrial and Financial Reconstruction (BIFR) vide order dated 8 July 2014, 218804 Zero Coupon Compulsorily Convertible Bonds of Rs. 1000/- each were allotted by the Company on 13 August, 2014, convertible into equity shares of the Company of face value Rs. 10/- each at a premium of Rs. 20/-per equity share in accordance with Scheme.
Since 2011, the author estimates that close to Rs4 trillion of shareholder value was eroded when the stock price of non-performing assets (NPA) and stressed companies fell by 95% to 99% from their pre-default days. This massive erosion of shareholder value is a direct outcome of a system-wide corporate governance failure.
Banks will not allow wilful defaulters to participate in bidding of failed companies
Banks will not entertain wilful defaulters or those promoters who have not received a clean chit from the forensic auditor to participate in the bidding process of acquiring distressed companies. But at the same times, banks think promoters are within their rights to participate in bidding process of their own company.
PSU lender Indian Overseas Bank (IOB), which has been facing huge bad loans, managed to cut its losses and reduce slippages in the first quarter of this fiscal. R Subramaniakumar, Managing Director & Chief Executive Officer of IOB, highlights the bank’s progress towards the turnaround.
Public sector banks may get Rs 70,000 crore via recap bonds this fiscal
Following last month’s announcement by finance minister Arun Jaitley to pump in Rs 2.11 lakh crore to the banking sector, about Rs 70,000 crore could be infused in NPA-hit public-sector banks in the next four months through recapitalisation bonds. The plan is part of strengthening the public-sector banks that are hit by raising bad loans.
DBS profit sinks as bank tries to put bad loans behind it
DBS Group Holdings Ltd chief executive officer Piyush Gupta was determined to put the pain of soured energy-industry loans behind him—even if it meant profit missing the lowest analyst estimate by a wide margin.
RBI insolvency move to resolve NPAs not correct: Y.V. Reddy
The Reserve Bank of India's (RBI) move to direct banks to take the major debt defaulters through the route of insolvency in order to tackle non-performing assets (NPAs) was principally "not correct", former RBI Governor Y.V. Reddy said on Friday.
Y.V. Reddy disapproves of RBI\'s insolvency stick to tame NPAs
The Reserve Bank of India's (RBI) move to direct banks to take major debt defaulters through insolvency route to tackle non-performing assets (NPAs) was "not correct" in principle, former RBI Governor Y.V. Reddy said on Friday.
Banks recall loans to Topworth, may Start Bankruptcy Proceedings
A consortium of 11 public sector banks led by the State bank of IndiaBSE 0.38 % (SBI) have decided to recall loans worth Rs 2,003 crore to Mumbai-based steel and power company Topworth Group, setting the stage for the lenders to approach the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC), documents in the possession of ET revealed.
Ujjivan Financial Services on Thursday reported a consolidated net loss of Rs 11.95 crore for the quarter ended September, as against a profit of Rs 73 crore in the year-ago period and a loss of Rs 74.94 crore a quarter ago. The company’s total income rose 5.89% year-on-year (y-o-y) to Rs 378.03 crore, even as net interest income (NII) fell 12.5% to Rs 164.57 crore. The net interest margin (NIM) at 10.55% in Q2-FY18, an increase from 9.23% in Q1-FY18.
Despite heavy bad loans 5 PSU banks among top 40 Indian brands
Tata Group has topped the table in the Best Indian Brands 2017 for the fifth time. This is not the news. Asia’s richest man Mukesh Ambani-led Reliance Industries has tumped Airtel on the second spot. Even this is not the news. The news is: Seven public sector enterprises (PSUs) have made it to the list of top 40 Indian brands in 2017, and five of them are public sector banks — which have gained, or retained their brand name despite reeling under record bad loans.
In the last two years, public sector banks have come in for scathing criticism after RBI’s Asset Quality Review revealed large-scale ever-greening of loans and excessive exposures to debt-heavy members of India Inc. Now it transpires that private sector banks have been guilty of similar practices, albeit to a lesser degree. Over the last few quarters, as the AQR-related surprises have abated, PSBs have been able to report lower net NPA accretions. But private banks have shocked the markets with manifold jumps in their bad loans.
Union Bank sees Rs 1,531 crore loss in Q2 on bad loans
Union Bank of India reported a surprise second-quarter loss on Friday due to surging provisions for bad loans. Net loss for the second quarter of FY18 stood at Rs 1,531 crore as against a profit of Rs 177 crore in the corresponding period in the previous year. The loss during the second quarter factors in Rs 1,566 crore of additional provision for 11 accounts referred to the National Company Law Tribunal (NCLT) at the behest of the RBI.
Resolution of large cases will help IDBI Bank come out of red
Resolution of the large cases that have gone to the bankruptcy court will be the key enabler for the government owned IDBI BankBSE 3.68 % to come out of red, said M K Jain, CEO of IDBI in an exclusive interview with ET.
NBFCs better than banks at minimizing NPAs? Unbelievable, but true!
Non-banking financial companies (NBFCs) have taken strong roots in the Indian financial sector. NBFCs target niche segments of the population and mostly help small businesses or salaried employees with their momentary needs. After banks and insurance companies, NBFCs hold the number three position in the Indian financial system—while banks could manage to grow credit at 5.1% in the final quarter of the last fiscal year, NBFCs could register a credit growth of 250% more than banks, i.e. 13%.
Bank of Maharashtra seeks bids for sale of NPAs worth Rs 400 crore
Bidders have to complete due diligence on these loans by November 22, and the last date for submission of bids is November 28, a bank official said. The accounts include a loan to Hanung Toys and Textiles with an outstanding balance of ?36 crore, and a ?13.9 crore outstanding balance on a loan given to Sterling Biotech. The bank’s gross non-performing asset ratio jumped to 18.59 per cent as on June 30 from 12.64 per cent a year ago, and 16.93 per cent a quarter ago.
Vijaya Bank saw improvement in asset quality for the quarter ended September 30, 2017. The gross NPA ratio came down to 7.06 per cent during the quarter from 7.07 per cent. Net NPA was down at 4.86 per cent from 5.10 per cent. The provision coverage ratio was at 59.29 per cent. The bank celebrated 87th Foundation Day on October 27.
Banks have put old bad loans on the block as they chase the big cases under the new insolvency code. So far, in the first six months of the current fiscal year ending March 2018, banks have put bad loans worth Rs 30,000 crore for sale to asset reconstruction companies (ARCs), more than 70 per cent of which did not find takers in the last year.
IDBI Bank betting on bad loan recovery, asset sales for turnaround
India's state-run IDBI Bank Ltd is betting on slowing the pace of additional bad loans, improving operating profit and selling non-core assets to help turn around its fortunes after reporting its fourth-straight quarterly loss on Tuesday.
IDBI Bank sees loss for 4th qtr in a row over bad loans
IDBI Bank has reported a net loss of Rs 198 crore in the second quarter of FY18 as against a net profit of Rs 56 crore in the corresponding quarter in the previous year. The bank reported its fourth successive quarter of losses due to higher provisioning on bad loans, which are now nearly 25% of total loans.
How to tackle errant borrowers? Here is what banks must do now
The Insolvency and Bankruptcy Code (IBC) can be a potent weapon, like the Sudarshana Chakra, to destroy the demons of NPAs. Its efficacy will depend upon the willpower and honest intent of the user to find a just and equitable solution. It is necessary to discern and destroy the ill-motives of anyone to defeat the real purpose of the law.
Government owned IDBI BankBSE 1.67 % on Tuesday said that one fourth of its loan book has turned sour and provisions on them has led to a Rs 197 crores loss for second quarter ending September 2017. In the corresponding quarter last year the bank had reported net profit of Rs 55 crores however in June 2017 quarter the losses were much higher at Rs 853 crores.
Public sector IDBI Bank has posted a loss of Rs 197.8 crore for the second quarter ended September as against a net profit of Rs 55.52 crore for the July-September period of last fiscal due to a significant jump in bad loans.
Shocked by private banks??? divergences in Q2 Gross NPAs: Nilesh Shah of Kotak AMC
After India’s large private banks such as Axis bank and Yes Bank reported large divergences in gross NPAs to the tune of Rs 5,633 crore and Rs 6,355 crore respectively in the September quarter, Nilesh Shah of Kotak AMC says that results were shocking to analysts and the markets.
Financial regulators in the European Union are grappling on several fronts with problems in their banking system. They’ve made some progress, but there’s a pattern: The proposals fall short. Plans for EU-wide deposit insurance have been watered down. The system for resolving failing banks is underfunded. And now controversy has arisen over new rules for dealing with bad loans—rules that, despite the complaints, still aren’t as bold as they ought to be.
PSU banks in focus; PNB, Oriental Bank, Syndicate Bank up over 5%
Shares of public sector undertaking (PSU) banks are back into action after last week robust rally as most of the banks such as Union Bank of India, Oriental Bank of Commerce, Syndicate Bank and Punjab National Bank (PNB) were up more than 5% each.
???Insolvency and Bankruptcy Code helping in resolving disputes in time-bound manner???
The time taken and costs involved in resolving disputes have crippled the entrepreneurial community in India. Statistics show that the recovery is only 20 per cent in India and in global ranking, the country is in the 136th position with respect to the time taken for resolving disputes. China is in the 55th position, but the top four are Japan, Germany, the US and Korea, said Gopal Krishna Raju, Chartered Accountant and Council Member of the Institute of Chartered Accountants of India.
An asset reconstruction company (ARC) dedicated to the housing sector could get incomplete projects back on track and harried home-buyers their promised houses, said Deepak Parekh, Chairman of HDFC, India’s largest standalone housing finance company.
Bank recapitalisation \'appropriate\', \'bad loan\' problem not as bad as it looks: Former RBI governor Y V Reddy
Former Reserve Bank of India (RBI) governor Dr Y Venugopal Reddy has welcomed the recent mega bank recapitalisation move by the Central government as an 'appropriate' decision, while adding that the structural problems in the banking sector still remain.
HomeMarket No divergence reported in ICICI Bank NPAs as RBI audit still incomplete: Chanda Kochhar
After India’s large private banks such as Axis Bank and Yes Bank reported large divergences in gross NPAs, Chanda Kochhar of ICICI Bank said that the bank did not report any divergence on that front, as the RBI audit is not yet fully complete.
Private banks\' NPA provisions surge in second quarter
The expectation of a stable asset quality profile for private banks has been shattered in the second quarter ended September 2017 (Q2) as the Reserve Bank of India (RBI) asked some banks to treat certain accounts as bad loans and accordingly make provisions. Termed “divergence” in industry parlance, the difference in views over bad loans has hurt investor sentiment.
Time for state-run banks to be responsive & responsible: Rajiv kumar, Secretary, Financial Services
Through enactment of the bankruptcy code, we have a transparent procedure which timely allows resolution of NPAs. Sarfaesi Act and debt recovery laws were made more effective. So, having done with recognising the issue, taking steps to resolve and now providing capital support, there are no more logjams.
DRT appointments, functioning to be examined by Supreme Court; Arvind Datar appointed Amicus
The order was passed in a petition by one Rojer Mathew against South Indian Bank. Advocate Renjith B Marar, along with advocates Lakshmi N Kaimal and Vasudha Gupta appeared for the appellant, while Senior Advocate V Giri represented the respondent Bank.
NPA assessment: Yes Bank, RBI rating gap Rs 6,000 cr
The divergence in gross NPA between the RBI’s assessment and as reported by Yes Bank as on March 31, 2017 was Rs 6,355.20 crore, while the divergence in net NPAs was Rs 4,819.40 crore, the bank said in its second quarter earnings statement.
ARCs, NBFCs eye interim finance market as bank credit to distressed firms dries up
Interim finance is simply the debt raised by the resolution profession during the insolvency resolution period. It has been given super priority status, which means it needs to get paid back first before all other creditors. Lenders are also charging 16-24% rates of interest for such loans.
Axis Bank laggard, non-prudent in recognising NPAs: Moody???s
Because of the lower base, it could report a 36 per cent surge in profits as compared to the year ago period. The bank expanded its credit costs guidance, which denotes a jump in provisions it expects, by 0.35 per cent and also said that it will take at least two more quarters for things to normalise on asset quality front.
As part of increasing efficiency of government officers, a workshop will be held on November 13 which will be addressed by heads of various training institutions. This will be followed by a seminar on December 13 to assess the implementation of various welfare laws.
Yes Bank Q2 profit rises 25% despite surging bad loans
Rana Kapoor, managing director and chief executive officer of Yes Bank, said that the regulatory exercise was completed this month and the impact of the bad loan divergence—the difference between RBI’s and Yes Bank’s NPA assessment—was recognized in the September results.
The stock touched a low of Rs299 a share, a level last seen on 6 July, and fell as much as 9.86%. At 9.37pm, the stock was trading at Rs309.15 on the BSE, down 7% from its previous close. Since 16 October, Yes Bank has declined nearly 20% or erased over Rs14,000 crore market value of the investors. So far this year, it has gained 33%.
According to Moody’s, increase in corporate bad loans drove the overall rise in NPAs. Out of the Rs. 8,110 crore new corporate NPAs during the second quarter, Rs. 4,870 crore were recognised after an inspection by Reserve Bank of India.
Bad loans, stressed assets in Indian banks estimated at Rs10 trillion: Arvind Subramanian
The government announced on Tuesday a Rs 2.11 trillion recapitalisation plan for its state-owned banks over the next two years, in a bid by Prime Minister Narendra Modi to tackle a major drag on the economy that has frustrated his attempts to boost growth.
NPA mess cleared without adding to fiscal burden: Nilesh Shah, Kotak MF
The government and the RBI asked banks to provide for non-performing assets (NPA), but banks did not have enough capital to write off NPA, not that they did not know which company was a NPA. Now by providing capital, banks will have the ability to write off NPAs. The way this entire recap bond has been structured as per the global definition it becomes part of fiscal deficit of this year.
Without specifying the name of the company, HDFC Bank on Tuesday had said that it had participated in a consortium lending that underwent flexible structuring under the 5:25 regulatory framework as approved by the Joint Lender Forum (JLF) in February 2016. The lender was in discussions with the Reserve Bank of India on certain observations made on the scheme’s implementation. The conduct of this account with the bank has been standard throughout, the lender had said.
ARCs, NBFCs eye interim finance market as bank credit to distressed firms dries up
With the number of insolvency proceedings against distressed companies on the rise, and banks largely unwilling to lend to them, providing interim finance is increasingly emerging as an important step in the insolvency resolution process.
DRT Has No Power To Condone Delay In Filing Appeal: SC [Read Judgment]...
In the instant case, an appeal was preferred by the aggrieved against the order of recovery officer before the tribunal beyond the prescribed period of 30 days and the tribunal held that Section 5 of the Limitation Act not being applicable to proceedings under Section 30 of the Act, the delay beyond the prescribed period could not be condoned.
SARFAESI: Allahabad HC Refuses To Entertain Borrower???s Loan Default Due To Demonetisation, GST [Read Judgment]...
The issue before the division bench was whether the prayer for quashing a possession notice issued under Section 13(4) of the SARFAESI Act, 2002 (“SARFAESI Act”) could be entertained in the light of statutory and alternative remedy under the Act.
What prompts Ambit Flowers ARC to raise up to $1billion
Ambit Flowers ARC, an asset restructuring joint venture between Mumbai-based brokerage Ambit Capital and US private equity firm JC Flowers, plans to raise up to $1billion from global investors to invest in distressed assets under insolvency proceedings. The asset reconstruction company plans to raise $150-250 million in the first tranche, two persons familiar with the matter told ET.
India???s Bad Loans: Here is the list of 12 companies constituting 25% of total NPAs
Bad loans made their way back to news after private lender Axis Bank reported that their gross non-performing assets (NPAs) rose to 5.90% as compared to 4.17% in the same period a year ago last week. The case of India’s bad loans is, indeed, getting worse day by day. According to the RBI, just 12 companies are estimated to account for 25% of the gross NPAs, and were identified for immediate bankruptcy proceedings, while there are 488 others which have been given six months time to restructure their debt or be dragged to National Company Law Tribunal (NCLT).
After RBI identifies 12 large accounts for NCLT, bankers divided over selection criteria of investors
Lenders are divided on the criteria to select new investors for companies which have been admitted to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC), senior bankers said, adding that talks held by the Indian Banks’ Association (IBA) have been inconclusive so far. According to bankers, while private sector banks prefer a discretion to choose an investor, public sector banks are keen to follow a pre-determined checklist.
Waiting for resolution of the first bad loan case: Usha Ananthasubramanian, Allahabad Bank
Mid and smaller segments can be tackled by the banks themselves by the grassroots and top management of the bank but when it comes to larger consortium loans, it is a consortium which comes together and gives a loan.
Axis Bank???s eight NPA assets to be identified by other lenders too
The eight consortium accounts that were classified as non-performing assets by Axis Bank last week after a directive from the Reserve Bank of India will have to be classified as NPAs by the other lenders who are part of the consortium, bankers said. The banking sector’s exposure to these accounts would be close to Rs 40,000 crores, Axis Bank told analysts at its recently-held second quarter post-earning call.
The banking sector fears accretion of more than Rs 40,000 crore of bad loans to its books following recent classification of eight consortium accounts of Axis Bank as non-performing assets (NPA) by the RBI.
Lenders see one-time settlements boosting pace of NPA resolution
Banks are betting on one-time settlements (OTSs) to boost bad loan recoveries as cleaning up their balance sheets through modes such as sale of bad loans and restructuring are not yielding anticipated results.
Banks in India have traditionally placed tremendous faith on promoters and personal guarantees provided by them, on par with if not higher than the intrinsic creditworthiness of the proposal itself (i.e. borrower, project/business, industry, etc.).
Hope to see a turnaround in 2018-19: IOB MD&CEO R Subramaniakumar
Last two years have been tough for the Chennai-based Indian Overseas Bank (IOB), on account of growing NPAs, increased costs in the wake of an aggressive approach on the expansion front and a sudden migration to the new core banking solution (CBS) platform-- all of which have put a lot of pressure on the several branches of IOB. On top of this, the bank was also put under Reserve Bank of India's (RBI's) Prompt Corrective Action (PCA).
RBI has directed certain reclassifications in the private sector lender’s asset classification and provisioning as on March 2017, subsequent to the annual risk based supervision (RBS) exercise conducted for 2016-17. As a result, Axis Bank had to reclassify 9 standard accounts into NPAs. Of these, 8 accounts are part of consortium lending, according to the latest quarterly results announced by the bank.
ECB under pressure to soften crackdown on bad loans - sources
European Central Bank supervisors are having to rethink their proposals for dealing with the euro zone's huge pile of legacy bad loans after complaints from Italy that it would hinder the country's recovery, four senior central bank sources told Reuters.
United Bank of India sees NPAs silver lining, but first this critical thing has to happen
Saddled with the high-level of bad loans, United Bank of India is hoping to bring down its total amount of non-performing assets (NPAs) to a significant level once some of the large stressed asset cases, identified for bankruptcy proceedings by the Reserve Bank of India, are resolved.
Lending start-ups grow consumer credit business amid caution by banks
Online lending start-ups such as Faircent, Wishfin and Loantap as well as large e-commerce firms are helping expand consumer credit at a time when banks burdened by bad loans have become cautious about lending.
Thai banks third-quarter earnings hit by bad loans and provisions
Thai banks reported a mix of falling earnings and tepid growth this week, booking higher provisions and being unable to create new loans.
The country's largest bank, Bangkok Bank Pcl, said profits grew 1.2 percent, supported by increases in interest income to 16.8 billion baht ($507 million) and non-interest income, but set aside 135.8 billion baht in allowances for doubtful accounts, up from 116.7 billion the same time last year.
Gross NPAs of private lenders up 55% to Rs 35,772 cr in Sept quarter
With banks' earlier indications of their bad-loan situation being under control, the markets were expecting a stable asset quality profile for the September quarter. However, this has been hit by the Reserve Bank of India's recent diktat in this regard.
Greek banks plan record sale of bad loans as pressure mounts
Three of Greece's largest lenders plan to sell up to 5.5 billion euros ($6.5 billion) in bad loans by early next year, sources said, as the country's central bank chief called on the creaking banking sector to act faster to tackle its bad-debt problem.
Rising bad loans from MSMEs also a concern, says expert
When it comes to bad loans, it is not just large corporates that banks are worried about. Banking industry estimates suggest a steady rise in bad loans from lending to MSMEs (micro, small and medium enterprises), now re-classified as Mudra loans.
Axis Bank has reported a net profit of Rs 432 crore for the quarter ended September 2017 — an increase of 36% over Rs 319 crore in the second quarter of the previous fiscal. The increase in profit was because of a low base as the bank's profit in Q2FY17 was down 83% due to a jump in provisions. When compared to the preceding quarter (Q1FY18), net profit was down 67%, hit by a surge in bad loan provisioning following a nudge from the RBI.
Living with high NPAs is the new normal; what PSBs have to do to stay relevant
Banks have been very cautious in acknowledging that all NPAs have already been classified. But, in the process, the total stressed assets in banks had reportedly reached 12.6% by June 2017—the highest recorded in the last 15 years.
From Railways safety, Ganga cleaning to NPA resolution, here is what grabbed infra spotlight recently
The recent derailing incidents put the focus on ensuring track safety. Some that aren’t past even 25% of their lifespan are showing fractures. But after the Elphinstone Road tragedy in Mumbai, the focus must be widened to ensuring safety standards for all Railways infrastructure.
JM Financial sees 27% jump in Q2 net at Rs 145.84 crore
JM Financial Group managing director Vishal Kampani said. Our ARC (asset reconstruction company) business remains focused on resolution of the existing assets and we remain selective on acquiring new assets, Kampani added. Under the fund-based business, the lending book of JM Financial Products stood at Rs 6,102 crore at end of September.
Sebi\'s great leap backwards on loan default disclosure issue
Secrecy not only makes their life easy but allows special interests full sway. Secrecy also serves to hide the mistakes, whether innocent or not, whether the result of a failure to think matters through or not. Sunshine is the strongest antiseptic. Joseph Stiglitz, Nobel Laureate.
Bad loan recast failures portend more pain for banks as India???s economy is forecast to slow to a 4-year low
The jump in failures underscore the challenges banks face in rehabilitating their assets with growth in the economy forecast to slow to a four-year low. Lenders are stuck with 1.5 trillion rupees of live cases with the CDR forum, mainly from steel sector.
???Higher provisioning will make bank balance sheets more resilient???
Stressing on the need for higher provisioning, the Reserve Bank of India Deputy Governor NS Vishwanathan said the required provisioning for the NPA (non-performing asset) accounts referred for insolvency resolution is “nothing unusually large”.
Bad loan recast failures portend more pain for Indian lenders
The jump in failures underscore the challenges banks face in rehabilitating their assets with growth in the economy forecast. Lenders are stuck with Rs15,00,000 crore of cases with the CDR forum. Central bank had asked lenders more than two years ago to choose legal action over the mechanism to tackle the problem.
Bad-loan recast failures portend more pain for Indian lenders
Loans worth 1.7 trillion rupees ($26 billion) have been withdrawn in total since the 2001 inception of the Corporate Debt Restructuring Mechanism through to the end of August, according to the latest data from the agency that brokers agreements between borrowers and lenders.
RERA, DeMo, NPA crackdown drive consolidation in real estate sector
A raft of reforms and legislations in the real estate sector is driving consolidation with several smaller realty developers either monetizing their land parcels on outright basis or entering into joint development or development management agreements.
Axis Bank NPAs: Essar, Jindal Steel & Power, Lanco, Ballarpur on list
Jindal Stainless said in a statement Axis Bank has reclassified the account as an NPA on technical grounds, and not on financial grounds. “There is no default or delay in payment by JSL towards Axis Bank or any other bank.”
Tech disruption, bank NPAs and jobs are interlinked
The biggest asset of India is its demographic profile. It has a young population which, when entering the work stream, will provide an impetus to economic growth for several years. This is called the demographic dividend.
MF favours ECB\'s proposal to raise provisions on bad loans
The International Monetary Fund strongly supports the European Central Bank's recent proposal to increase provision requirements for new non-performing loans, IMF European Department chief Poul Thomsen said on Friday.
Loan Sales To ARCs Drop To Around Rs 5,000 Crore In July-September
Asset reconstruction companies bought non-performing assets worth about Rs 5,000 crore from banks in the July-September quarter, two people familiar with the matter told BloombergQuint. Of this, around Rs 2,000 crore came from just one transaction – Edelweiss Asset Reconstruction Co Ltd.’s purchase of Essar Steel Ltd. loans from Indian Overseas Bank.
After throwing up some signs of asset quality pressures in the June quarter, things are stabilising yet again for IndusInd Bank. The September quarter (Q2) results were largely in line with expectations, with net interest income (NII) at Rs 1,821 crore and net profit at Rs 880 crore. The bank had reported a 25 per cent year-on-year (y-o-y) growth on each of these two parameters. Net interest margin (NIM), the profitability indicator, was logged at four per cent for the fifth straight quarter.
Even legal sale of property can be set aside if price inadequate: Bombay High Court
Observing that a sale of a property could be set aside if the confirmation of the sale is at a ‘grossly inadequate’ price, the Bombay High Court recently dismissed a plea moved by Everest Fincap private limited. The HC has also imposed costs of Rs 1 lakh on the firm.
NPA-laden banks looking to avoid bankruptcy courts
Banks are planning to seek regulatory exemption from taking the second lot of defaulters to bankruptcy courts as such proceedings tend to erode value of assets, said three bankers familiar with the discussions.
Admitting asset reconstruction company Edelweiss’ appeal, the National Company Law Appellate Tribunal (NCLAT) on Wednesday said it will look into the resolution plan in the Synergies Dooray Automotive case, the first case of debt recast plan to be approved under the Insolvency and Bankruptcy Code (IBC).
No respite for banks as bad loans hit record Rs9.5 trillion
Indian banks’ sour loans hit a record Rs9.5 trillion ($145.56 billion) at the end of June, unpublished data shows, suggesting Asia’s third-largest economy is no nearer to bringing its bad debt problems under control.
Non-banking financial companies (NBFCs), key players in the financial spectrum, have witnessed a steady deterioration in asset quality in the past five years. Gross non-performing assets (GNPA) ratio for NBFCs increased to five per cent at end-March 2017 from 2.9 per cent at end-March 2012, the Reserve Bank of India (RBI) has said.
The working group constituted by the Insolvency and Bankruptcy Board of India has laid out draft regulations for repayment plan for individuals and firms declaring insolvency, providing a framework for resolution of personal insolvency.
A Non-Performing Asset refers to a classification for loans on the books of financial institutions that are in default or are in arrears on scheduled payments of principal or interest. In most cases, debt is classified as nonperforming when loan payments have not been made for a period of 90 days.
Barring auto, even retail loans see spike in bad loans: Report
Even as banks continue to focus on retail loans, as they keep away from the large corporates due to their poor credit quality, a study has found an uptick in non-performing assets across many sub-segments of small loans in the year to March 2017.
No respite for Indian banks as bad loans hit record $146 bn
Indian banks’ sour loans hit a record 9.5 trillion rupees ($145.56 billion) at the end of June, unpublished data shows, suggesting that Asia’s third-largest economy is no nearer to bringing its bad debt problems under control.
Welcoming the slew of measures taken by the government in the recent past to clean up bad loans, the International Monetary Fund on Wednesday said that though the steps are in the positive direction more needs to be done as the Indian banking sector as well as Indian corporate sector remain vulnerable. “A combination of weak banks and weak corporates, which are highly leveraged leaves India vulnerable,” said Ali Al-Eyd, Deputy Division Chief, Global Market Analysis Division at the IMF, adding that more measures are required for adequate capitalisation and further reducing bad debts is required.
EU Commission to present bad loans roadmap, may slow ECB plan- draft
ECB banking supervisor proposed last week that euro zone banks should set aside more cash from next year to cover newly classified bad loans and may also present additional measures to tackle the sector's huge stock of bad debt which amounts to nearly 1 trillion euros.
Slovenian banks reduce bad loans, net profit up slightly
Bank of Slovenia said that banks made joint net profit of 315 million euros in the first eight months of the year, against 311 million euros in the same period of 2016, mainly because of reduced provisions for bad loans amid favourable economic conditions.
Focus on NPA management, new SBI chief Rajnish Kumar creates an MD position
SBI's gross NPAs rose to 9.97 per cent from 7.40 per cent and net NPAs jumped to 5.97 per cent from 4.36 per cent. Retail NPAs grew 1.56 per cent to Rs 7,632 crore, while bad loans in the agri book grew 9.51 per cent to Rs 17,988 crore.
South Indian Bank Q2 net dives 96% on higher provisioning
South Indian Bank reported a 96-per cent drop in net profit at ???4.32 crore in the second quarter of the current fiscal against ???111 crore in the corresponding period of the previous fiscal, due to higher provisions.
Lenders move to take control of Essar Power Gujarat
Led by State Bank of IndiaBSE 0.12 %, lenders will invoke pledged shares to take control of Essar Power Gujarat, an arm of Ruias-promoted Essar Group. The decision to acquire 51% equity interest has been taken weeks before a slice of the Rs 4,500-crore outstanding loan gets the tag of non-performing asset, or NPA, in banks’ books.
SSG Capital Management, InCred in race to buy up to 15% stake in CSB
SSG Capital Management, a Singapore-based pan-Asian private equity investor, is in a race with former Deutsche Bank co-CEO Anshu Jain-backed In-Cred Finance to buy up to 15% stake in Kerala-based Catholic Syrian Bank after the latter's talks with Canadian billionaire Prem Watsa-controlled Fairfax was called off on valuation differences.
In 1990 as a fresh graduate, I quickly realised that successful businessmen spent much of their time in Delhi because the licence raj ensured companies did not have customers but hostages. In 1996 as a fresh MBA seeking advice on becoming an entrepreneur, a licence-raj era tycoon told me to forget my western concepts of Return on Equity but think about Return before Equity — the money left from over-invoiced projects funded with nationalised bank loans after you accounted for the bribes to get the loans, real capital expenditure and your official equity contribution.
Sale initiated under SARFAESI hit by moratorium under IBC? NCLT answers
The Miscellaneous Application has been filed under Section 65 of the IBC by JM Financial Asset Reconstruction Company (JM Financial), in its capacity as a financial (secured) creditor of Quantum Ltd. The application by JM Financial alleges collusion between Quantum and Indus Ltd., the financial creditor that triggered insolvency against Quantum in May, 2017. Moratorium under Section 14 of the IBC was subsequently declared by NCLT, Mumbai.
Bad loans and investment climate: not as bad as it seems
When we are bombarded with something every quarter, we end up believing it. In fact, sometimes it seems foolish to not believe it. There was an advertisement sometime earlier on TV, with the punchline, “PSPO nahin jaante (you don’t know what is PSPO)?” which typifies peer pressure.
SBI chief creates MD post to manage stressed assets
Rajnish Kumar, the new chairman of the State Bank of India (SBI), has kicked off his first day in office by reorganising the top deck of the bank. For the first time, the bank has set up a post of managing director for HANDLING stressed assets, according to a senior SBI official. Resolution of the stressed assets will be a major challenge for Kumar. At the end of the first quarter for which the bank announced the merged entity’s results the gross non-performing assets were at Rs 1.88 lakh crore.
The ever-growing bad loans of public sector banks (PSBs) have kept them perennially in need of funds from their principal owner. The government has committed to infusing Rs70,000 crore of taxpayer money under Mission Indradhanush. Reserve Bank of India (RBI) deputy governor Viral Acharya has conceded that the programme will be grossly inadequate to address the problem—and that what is needed is something like the sudarshan chakra. The deputy chairman of the erstwhile Planning Commission, Montek Singh Ahluwalia, has suggested in this newspaper recognition, resolution, recapitalization and reform (by reducing government equity to 33%) should be the four “Rs” of the sudarshan chakra.
Being the first woman to head State Bank of India in 207 years has been the least remarkable achievement of her four-year tenure. The girl from St Xavier's, Bokaro, who went on to head the country's largest bank, has steered SBI during its most challenging period. Arundhati Bhattacharya has not hesitated to speak her mind to power — whether it's on the damage caused by farm loan waivers or on risks associated with state projects. As she moves on from the bank, Bhattacharya, 61, shares her life's lessons with TOI.
Over 4 downgrades a day keep Indian corporates, banks debt profile in fragile region
With more than four downgrades a day, the debt profile of Indian companies and banks remains fragile. Data from Bloomberg shows there were 807 downgrades in the six months to September compared with 787 upgrades. With more companies stressed, several banks are being downgraded. Central Bank of India’s poor financial performance —with losses widening to Rs 2,439.10 crore in FY17 against a net loss of Rs 1,418.2 crore in the previous year and gross NPA ratio burgeoning to 18.23% in Q1FY18 — cost the lender dearly as the rating for its upper tier 2 bonds fell by a notch. Both Icra and CARE have lowered the lender’s rating due to a significant deterioration in capital adequacy parameters.
Barring auto, even retail loans see spike in bad loans: Report
Even as banks continue to focus on retail loans, as they keep away from the large corporates due to their poor credit quality, a study has found an uptick in non-performing assets across many sub-segments of small loans in the year to March 2017. Education loans and commercial vehicle loans reported one of the biggest spikes in the proportion of NPAs, while the auto segment saw a dip in bad loans, says a report by credit information company Crif High Mark.
OBC falls over 4% as RBI initiates corrective action over bad loans
Shares of Oriental Bank of Commerce fell as the Reserve Bank of India has started corrective action over bad loans. Mid-sized Indian state-run lender Oriental Bank of Commerce Ltd fell as much as 4.3 per cent in early trade.
Companies with debt of Rs 32k cr fail at CDR cell in April-August
Companies with debt of around Rs 32,000 crore have failed at the corporate debt restructuring cell (CDR) in five months of FY18, taking the total failures since inception of the cell in 2001 to Rs 1.69 lakh crore.
Oriental Bank stops ???risky??? loans, faces RBI curbs
Oriental Bank of Commerce has stopped taking "risky exposure" to certain sectors and will restrict its fresh advances to companies with BBB or higher ratings, while it pushes for retail loans, its MD Mukesh Kumar Jain said on Sunday, a day after it informed stock exchanges that the RBI had initiated "prompt corrective action" against it over high levels of non-performing assets (NPAs).
Indian Prime Minister Narendra Modi's government is set to cut red tape for small and medium-sized companies on Friday, as it rushes to address growing criticism of its stewardship of Asia's third-largest economy.
The Reserve Bank of India (RBI) has kept its policy rate unchanged at 6% and the stance of the October monetary policy continues to remain neutral, but the rise in the Indian central bank’s inflation projection for the second half of fiscal year 2018, marginally though (from 4%-4.5% to 4.2%-4.6%), makes any cut in the December policy uncertain.
An aspect of financial services often overlooked is that they serve as second-order infrastructure, essential for commerce, industry, and daily living. A disruption in the financial sector slows everything by cutting productivity. Other reasons for decline, such as structural issues in power supply, telecom/broadband, and in farming, are accepted as part of the landscape.
Banks not a growth story, closer to end of NPA recognition cycle in FY18: Nomura
The banking stocks are under pressure ahead of Reserve Bank of India's policy outcome later in the day. According to Nomura, the banks are not a growth story, but it still sees value after underperformance. Among them, it sees value in corporate banks and has a buy rating on five stocks.
Trouble with Insolvency and bankruptcy Code? What could really disturb its journey
The Insolvency and Bankruptcy Code 2016 (IBC) completed nine months, or almost 270 days, in September. Incidentally, 270 is the maximum number of days provided under IBC for completion of insolvency resolution process. It makes a fitting occasion to take a downright look at the IBC journey so far.
After Tata Power, Adani Power offered to sell their power plants for free to the Gujarat state electricity board, Bajaj Energy’s project is set to join the list of non-performing asset for the lenders. Bankers said the company has stopped operations after the new Uttar Pradesh government cancelled the power purchase agreement citing high power cost thus effectively shutting down the 450 mw plant.
???Eco growth, NPA resolution not directly related???
Economic growth is not directly related to bad loan resolution, and the latter is a legacy of the past, according to Ashok Lavasa, finance secretary, Government of India. He also said that the fall in economic (GDP) growth has bottomed out and that the economy will get back on the growth path from now.
ECB to force banks to raise bad debt provisions - draft document
The European Central Bank plans to ask euro area banks to set aside more cash to cover bad loans, making it prohibitively expensive for lenders to keep sitting on them, a draft proposal seen by Reuters showed on Tuesday.
Insolvency and Bankruptcy code a game-changer; but here is what needs to be taken care of
The Insolvency and Bankruptcy Code (IBC) has been dubbed a game-changer in corporate circles, and the intent of the legislation—to see whether corporate debtors can be put back on their feet within a stipulated time frame to stave off liquidation—is laudable.
So, how down and out is Indian economy at the moment? Look at the data to know
Yashwant Sinha, ex-finance minister and an old BJP stalwart, fired a salvo against the managerial capability of the current finance minister in an article in The Indian Express, I Need to Speak Up Now. In a strongly worded yet disjointed and factually wanting piece, Sinha claimed that India's economy is on a downward spiral and that a hard landing appeared inevitable.
NITI Aayog Chief Rajiv Kumar???s Take On Growth, Bad Loans, Agriculture And More
The Indian economy has shown greater resilience to the shocks of demonetisation and Goods and Services Tax and the growth has bottomed out, according to NITI Aayog Vice-Chairman Rajiv Kumar. The economist, who replaced Arvind Panagariya, says the only way to improve businesses and agriculture is to make them globally competitive. In an interview with BloombergQuint’s Contributing Editor Praveen Chakravarty, Kumar talked about bad loans, and the importance of coordination between the central bank and the finance ministry and much more.
The stress in the power industry that is evident both in the distribution and generation sides of the business has left the State Bank of India, the country’s largest bank, with a 30 per cent share of the stressed assets of private power producers. Punjab National Bank (PNB) has the second largest chunk of the total debt exposure to these projects, which totals Rs 1.44 lakh crore.
Here???s how bad India???s bad loan problem is. Hint: It???s far worse than China
In India, liquor baron Vijay Mallya became a wilful defaulter of Rs 9,000 crore and Sahara's Subrata Roy failed to pay Rs 36,000 back to banks, but the country's bad loan story does not end with these high-profile cases; it is far worse -- worse than China.
Fairly confident 80% of the book may never see NPAs: PV Ramesh, REC
Talking to ET Now, PV Ramesh, CMD, REC, says REC raises resources at the cheapest possible rate among the peers today because of its rating and because of tactical management. REC knows when to raise funds, where to raise funds.
Lack of awareness of insolvency code hindrance to resolution: Ashish Chhawchharia
The job of an insolvency resolution professional (IRP) is not all about exercising power just because he or she is empowered, said Ashish Chhawchharia , partner restructuring services, Grant Thornton Advisory , which is now engaged in supporting ongoing insolvency proceedings at many firms including two of the large dirty dozen cases -Alok Industries and Monnet Ispat BSE 5.68 %.
Stressed assets: Who is looking at India as an investment option? Grant Thornton???s Ashish Chhawchhoria explains
Global stressed assets and special situation funds are scouting for investment opportunities in India as the National Company Law Tribunal works towards resolving the massive bad debt crisis in the country, Ashish Chhawchharia, partner (recovery & reorganisation services), Grant Thornton, told FE’s Shamik Paul.
In view of the SEBI report citing alleged financial irregularities at Chemmanur International Jewellers, strict action should be taken in this regard, demanded ARC chairperson V S Achuthanandan. The government should urgently intervene and take measures to shut down the establishment, VS said.
Amid criticism that the country’s economy is running on only one engine ‘public investment’, Prime Minister Narendra Modi meeting chiefs of public sector banks to take stock of lending to private sector to spur growth on Wednesday.
Hyderabad High Court fines Rs 25,000 to export firm
The Hyderabad High Court has slapped Rs 25,000 on each of the petitions moved by Swetha Exports Ltd for repeatedly approaching either the Debt Recovery Tribunal (DRT) or the High Court with an intention to prevent the Bank of India from selling their mortgaged properties for non-repayment of loan.
The increasing level of NPAs in the banking sector, more particularly of the PSBs, is a cause of concern for the Centre and it has come up with the IBC 2016 and created the new “ecosystem for resolving the issue of ballooning NPAs”, Dhingra said.
With the banks busy chipping away at their mountain of bad loans and operating on precarious levels of capital, who will fund the credit needs of Indian businesses? Reserve Bank of India’s recently released annual report for 2016-17 shows that many new sources of finance are springing up.
Euro zone banks must stop waiting for state help with bad loans: ECB
Euro zone banks have not done enough to wind down their excessively large pile of soured loans and need to take action now instead of waiting for government help, European Central Bank supervisor Pentti Hakkarainen said on Friday.
Congress cannot be blamed for NPA mess, says Yashwant Sinha
Stepping up his attack on the government's management of the economy, senior BJP leader Yashwant Sinha on Thursday said the Finance Ministry failed to address the problem of non-performing assets (NPAs) and the opposition Congress cannot be blamed for the "mess" in the economy.