The major beneficiaries of loan recasting will be sub-Rs 500 crore corporate exposures and retail exposures, which were earlier expected to see the highest increase in NPAs in percentage terms.
With credit growth remaining high despite deterioration in the economic environment, the Reserve Bank of India (RBI) on Wednesday asked banks to initiate measures to keep the fresh accretion of bad debt to the minimum and also improve the recovery process.
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.
While the overall loan disbursements stood strong at 15 per cent YoY in Q2, pockets such as vehicle finance, loans to NBFCs, and business banking showed some weakness. A continued fall in these numbers may make it tough for AU SFB to defend its valuations under the current circumstances.
Y H Malegam, 80, will head the panel that will look into non-performing bank assets and their relation to the Rs 114-bn PNB scam.
The one-time restructuring of loans will help every firm and prevent cost-cutting measures such as lay-offs.
Standalone total income increased to Rs 74,457.86 crore in the first quarter of 2020-21, from Rs 70,653.23 crore in the same period a year ago.
In a move that will help improve the financial health of banks, the Reserve Bank of India on Wednesday issued fresh norms for the treatment of provisions for restructured accounts, standard assets, and non-performing assets (NPAs).
Mark-to-market risks to the Indian banking sector are limited and manageable, says RBI
Borrowers can move civil courts to stall recovery proceedings as they have few other choices.
Weighed down by mounting outstandings and non-performing assets (NPAs), credit card companies are taking strong measures that include slashing new card issuances and credit limits for existing customers.
'Quality of management, corporate governance, allocation of capital, full disclosures should form the basis to decide investing in a particular stock.'
'If the government says that the Balakot airstrike was effective and terrorists were killed then they should have shown some proofs'
Many are now cheaper after stock splits. But look at key parameters
Gross NPAs of commercial banks in FY08 escalated by Rs 61.36 billion, according to the Reserve Bank of India.
Many of the Kannada films released last year have had a poor response at the box office. This, coupled with the fact that the global financial crisis has left its impact on the Kannada film industry as well, has seen distributors lose interest. As a result, many films -- including those financed by the IDBI -- are still awaiting release.
The Reserve Bank of India has started a review of the non-performing asset or bad loan classification norms to ease the flow of credit to corporate groups.The move follows a reference from the government and is aimed at relaxing the norms temporarily to enable companies to access funds during the economic downturn that is putting pressure on cash flows and repayment capabilities.The review has been sought by the finance ministry following appeals from various industries.
Refusing to disclose details, Citi India Chief Executive Officer Sanjay Nayar told reporters that non-performing assets in the consumer finance segment were much larger than expected, but added that business remained 'satisfactory'. "It is classic over-indebtedness, consumers were over-leveraged, while the underlying capacity remained unchanged," he said on the sidelines of a press conference.
After removing three PSBs - BoI, Mahabank and OBC from the framework, RBI, on Tuesday, took out three commercial banks - Allahabad, Corporation and Dhanlaxmi from the said list.
They say liquidity remains a major cause of concern, and the coming quarters could witness a significant rise in non-performing assets. According to them, a robust risk management system, adequate capital infusion and regulatory reforms is crucial if India's economic growth is to remain intact in the medium and long term. Banks are facing immense liquidity pressure, as resources gradually disappear from the system. Banks have also been unwilling to lend each other.
However, the RBI declined to share details of action being taken on these fraud cases saying "it is not readily available".
While the level of non-performing assets for banks is on the rise, despite the Reserve Bank of India's push for debt restructuring, cases referred to the corporate debt restructuring cell increased to 34 at the end of March 2009, as against 10 at the end of 2007-08. CDR, which was set up in 2002-03, is a mechanism for faster disposal of restructuring cases involving multiple lenders, though foreign banks are yet to join the platform.
Bank loan defaults rose to Rs 74,685 crore (Rs 746.85 billion) at the end of March 2010, with non-performing assets of public sector banks reaching Rs 57,301 crore (Rs 573.01 billion), Parliament was informed on Tuesday.
ICICI Bank, the biggest credit card issuer, has made it conditional for some of the credit card applicants, who do not meet the bank's eligibility criteria, to open FDs under a scheme called Fixed Deposit Instant Credit Card.
Leading private sector lender HDFC Bank on Monday reported a 33.8 per cent increase in its June quarter net profit at Rs 811.71 crore (Rs 8.11 billion).
It is a national economic problem and one that requires a political solution hand in hand with a clear government commitment to stand behind core national assets, says Vinayak Chatterjee.
Advocate Abbad Ponda, his lawyer, said a person with low immunity is easily susceptible to catching coronavirus.
Lenders can now initiate recovery proceedings since the SC has lifted the standstill on asset classification, which protected stressed accounts from slipping into NPAs.
Banks are willing to help cardholders to settle dues.
The apex bank's intervention could also happen in the next 3-6 months exerting more pressure on banks to hike rates in the near future, it said. The survey also said that non-performing assets of banks in the system are likely to increase in the medium term.
The central bank has not set a deadline for banks to conclude the stress-test exercise, but senior bankers opine that some were already looking at this, and will now fast-track it by September-end, when they will have a better picture of their books after the moratorium on the servicing of loans and a 180-day view on the performance of borrowers' accounts.
What's worrying for the public sector banks is the rise in delinquency in the housing portfolio, which does not include real estate. But a bank chief said that with low exposure to the real estate sector, the state-run banks have fewer worries. The other area of concern is credit cards but the operations of public sector banks in this segment are small compared with the likes of ICICI Bank, HDFC Bank and Citibank, the largest players in the business.
The performance of the Mumbai-based public sector bank may continue to lag behind its peers longer than expected due to the deterioration in its credit cycle, the agency said. Even though IDBI's non-performing asset ratios improved significantly after bad loans worth Rs 9,000 crore (Rs 90 billion) were transferred to a trust in FY04, the current economic slowdown could impact the bank's corporate loan portfolio.
The ED had summoned Patel, 70, twice for questioning in the case but the Congress Rajya Sabha MP from Gujarat later cited prevailing COVID-19 guidelines that advises senior citizens to stay indoors in order to remain safe from the pandemic.
RBI has identified about 50 cases for NPA resolution after it was empowered by the government to ask banks to initiate insolvency proceedings.
While the Congress party has said that the deal was transparent as payment of Rs 2 crore was received by Vadra from Kapoor through cheque and was reflected in income tax returns, the ED is probing if the painting was owned by her or the AICC.
The quality of the bank's loan book, which has perhaps grown far too fast, is a cause for concern. When the bank announced its annual results the number talked about was a reasonable Rs 8,000 crore. Now it appears that the standard loans restructured amount to nearly Rs 13,000 crore and taken together with pending applications is closer to Rs 21,600 crore or about 4 per cent of the loan book.
Gandhi said that the Centre should not discriminate amongst states and no politics should be played with farmers suffering across the country.
While the government has infused huge capital into PSBs, the same has largely been used to mitigate losses and has failed to contribute meaningfully to credit growth.
The government has given a go-ahead to State Bank of India and other financial institutions to take over capital-starved Yes Bank, and an announcement is likely to be made soon, highly places sources said on Thursday. The board of SBI, the country's largest lender, is meeting in Mumbai on Thursday, but it could not be immediately ascertained whether the takeover of Yes Bank is on the agenda. Yes Bank, which is grappling with bad loans, is looking to raise fresh capital but the plans are facing uncertainties.
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