State-owned Punjab & Sind Bank is targeting salary accounts to boost the share of low-cost deposits. Swarup Saha, managing director and chief executive officer of the New Delhi-based lender, tells Manojit Saha that the bank may see gross non-performing assets (NPAs) fall below 8 per cent if there is resolution of the stressed assets.
Finance Minister Nirmala Sitharaman's Rs 30,600 crore government guarantee for the bad bank has changed the body language of bankers for the better, observes Tamal Bandyopadhyay.
The account turned bad before Chaudhari took over as SBI chairman and the asset was sold to AARC following an open bidding process, months after Chaudhari retired, explains Tamal Bandyopadhyay.
UV Asset Reconstruction Company Ltd has made the highest bid of Rs 16,000 crore to buy Anil Ambani group's Reliance Communications and Reliance Telecom, which are in the National Company Law Tribunal (NCLT). Last year it was the highest bidder for taking over Aircel's assets for an upfront payment of Rs 150 crore. Surajeet Das Gupta and Dev Chatterjee dig deeper to find out more about this little known company.
Asset Reconstruction Companies, set up to assist banks and financial institutions in reducing their non-performing assets pegged at over Rs 90,000 crore (Rs 900 billion), are all set to start operations shortly.
Shares of Yes Bank may face selling pressure as the Reserve Bank-mandated three-year lock-in period for individual investors and exchange-traded funds is ending on Monday, according to analysts. The analysts expect distress on the bank counter on Monday as they expect investors, primarily the nine banks led by State Bank, which picked up almost 49 per cent of its stocks in March 2020 for Rs 10 per share -- at a premium of Rs 8 on the face value as part of the RBI bailout, making an exit. Exchange-traded funds are also likely to press the exit button.
It won't be easy for the banking sector to better its performance every quarter, predicts Tamal Bandyopadhyay.
Nothing has ever been done to make bank officers accountable, except for the rare actions when there is a public controversy, argues Debashis Basu.
Transiting from "survival mode", which took most of the management time in FY21, the bank has been able to take a long-term view in terms of growth and preparing technology in the past 12 months.
In a bid to make primary markets more efficient, the Securities and Exchange Board of India on Saturday said listing time gap would be reduced further from 6 days after the IPO currently, while listing will be allowed for security receipts issued by asset reconstruction company.
The Union Budget 2016-17 has cheered the NBFC sector
The ministry of corporate affairs (MCA) has launched a probe into the books of Edelweiss Asset Reconstruction Company (EARC) following allegations by a whistleblower of fund diversion and irregularities. The whistleblower, Paras Kuhad, a former additional solicitor general of India, had written to the Prime Minister's Office and the Reserve Bank of India (RBI). Kuhad has alleged that Edelweiss Group and Caisse de depot et placement du Qubec (CDPQ), a Canadian institutional investor, which hold stakes in the ARC, diverted funds and did not adhere to norms while making investments in EARC's instruments. Sources have indicated that a probe has been initiated, but the MCA did not comment on the issue.
Why can't we have a sunset clause for the ARCs, which is a global norm? questions Tamal Bandyopadhyay.
The government liberalised FDI policy in sectors, including multi-brand retail, single-brand retail, commodity exchanges, power exchanges, broadcasting, non-banking financial institutions and asset reconstruction companies.
The change may give "secure creditors" the first right to auction an asset in order to recover the dues.
The Union Cabinet has cleared a proposal to provide Rs 30,600 crore government guarantee for security receipts issued by the National Asset Reconstruction Company (NARCL) as part of resolution of bad loans, Finance Minister Nirmala Sitharaman said on Thursday. The proposed bad bank or NARCL will pay up to 15 per cent of the agreed value for the loans in cash and the remaining 85 per cent would be government-guaranteed security receipts. The government guarantee would be invoked if there is loss against the threshold value.
Foreign investment ceiling in Asset Reconstruction Companies (ARCs) has been increased to 74 per cent from 49 per cent, a move aimed at bringing more foreign expertise in the segment.
Raghuram Rajan said on Friday it is not clear India needs a so-called "bad bank.
Apart from being the most successful cases under the IBC, Bhushan Steel and Essar Steel are among the best steel assets in the country. They also ended up helping their lenders get back a significant chunk of the money while allowing Tata Steel to consolidate its position and giving the world's two largest steel makers - ArcelorMittal and Nippon Steel - a strong foothold in India. A significant contrast was the pace at which these two cases were resolved under the bankruptcy code. In the annals of the Insolvency and Bankruptcy Code (IBC), Essar Steel may go down in history as the most noticeable resolution with the world's largest steelmaker, ArcelorMittal, and the incumbent, Ruia family, locked in an intense battle spanning more than two years and ultimately resulting in full recovery of the principal amount for the financial creditors.
Markets watchdog Sebi on Tuesday decided to tighten norms for utilisation of IPO proceeds by companies, introduce special situation funds to invest only in stressed assets and amend various regulations, including those on mutual funds and settlement proceedings. The board of Sebi, which met on Tuesday, also gave its nod for amending Foreign Portfolio Investor (FPI) regulations and introducing a provision for appointment or re-appointment of any person, including as a managing director or a whole time director or a manager, who was earlier rejected by the shareholders at a general meeting. Once the amended norms are in place, such appointments or re-appointments can only be done with the prior approval of the shareholders.
PE funds say they have enough money to buy two or three of the indebted companies and the issue is not cash but the management bandwidth to turn them around.
Arcil acquires non-performing loans from banks and financial institutions along with the underlying securities mortgaged or hypothecated by borrowers to the lenders.
The Budget kept away from mood dampeners such as an increase in taxes (capital gain taxes) and even the much-feared introduction of Covid cess and wealth taxes, says Nimesh Kampani, chairman, JM Financial.
FinMin officials say an announcement could be made in the Budget.
The long wait for realisation makes lenders averse to security receipt transactions. Instead, they have been insisting more on cash, even though valuations of bad assets are generally lower in case of cash deals than those involving SRs. While in deals involving SRs stressed assets are valued at 30 per cent on an average, in cash deals they are valued at 20 per cent, depending on the quality of the assets.
The amount of banks' non-performing assets (NPAs) or bad loans brought into the market for sale has more than doubled in the past four years.
This month, advertisements for managing directors and the senior management team for the National Bank for Financing Infrastructure and Development or NaBFID, should be out, signalling the start of a financial institution (FI) like no other the country has ever had. For this and other reasons government managers associated with the NaBFID project are convinced it should remain a 100 per cent government-owned entity. This is somewhat different from what former economic affairs secretary Tarun Bajaj said when the NaBFID Bill was being tabled in Parliament earlier this year: "To begin with, it will be 100 per cent government owned.
The stressed asset business will be a mix of an ARC and a distressed asset fund. Ambit has already started insurance brokerage and equity research and sales businesses this year. It closed a $100-million private equity fund called Ambit Pragma Ventures recently. It is also keen on starting proprietary trading.
Banks, through the Indian Banks' Association, have urged RBI and credit information companies to maintain a database of wilful defaulters.
'The concern that the bad bank may create a moral hazard for the system is extremely valid.'
Canara Bank has put on hold its plan to sell non-performing assets with realisation value of around Rs 250 crore (Rs 2.5 billion) after lukewarm response from asset reconstruction companies (ARCs).
The government may exempt investments in asset reconstruction companies from income tax in the forthcoming Budget to boost the bad assets recovery business.
Defaults due to rising rates resulted in the move.
As part of its expansion drive in the high-potential Indian financial services market, Barclays Bank plans to pick up a 10 per cent stake in asset reconstruction company, ARCIL, from domestic banking major ICICI Bank.\n\n
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