Union Finance Minister Nirmala Sitharaman, along with her team of bureaucrats, delved into the fine print of the 2024-25 Budget documents in a press conference, detailing the government's road map on bringing down the debt-to-GDP ratio and bold tax measures.
In the June quarter of FY24, 51 per cent of consumers who took small-ticket personal loans already had more than four credit products at the time of accessing yet another new loan, compared with just 17 per cent in the June quarter of FY20, points out Tamal Bandyopadhyay.
We must stop stigmatising business failures. Particularly when startups are mushrooming all around, the financial system, backed by the RBI and the government, can explore ways of extending support to restart the journey of a failed entrepreneur by finance as well as counselling, recommends Tamal Bandyopadhyay.
'They have since only tried to improve systems. Also, with regulatory guidance from time to time, we are in a position to assess a situation and react in time.'
The focus of the meeting will be on enabling businesses and households to avail of the revival framework on the basis of viability, necessary steps like finalising bank policies and identifying borrowers, and discussing issues that require addressing for smooth and speedy implementation.
If a holiday, banks will have to report the details on the next working day.
The difference between what the banks play in the US and India is not that of soccer and football but rugby and football. SVB also has a unique character. But when risks are mispriced, the fallout could be very similar, points out Tamal Bandyopadhyay.
Apart from easing the NPA pressure on domestic banks, the RBI's move can allow companies to raise cheap, long-term loans easily now.
The amount of loans that carry a high risk of slippage into the NPA category over the next few quarters is about Rs 2.8 trillion.
The NDA government will be following the footsteps of its predecessor, the UPA, which had introduced the concept of "loan mela" to boost credit by directing banks to lend to people through public meetings.
'The approach today is, instead of giving loans to 100 MSMEs, let us give one loan to a big-ticket corporate.' 'And so many of these big fish deceived the banks and the banks are in the doldrums now with high NPAs.'
Not all NPAs are treated as wilful defaulters.
The Indian financial system's asset quality improved despite the pandemic, but it could be due to special dispensations by the regulator, and banks would likely see increased stress on their books once the schemes expire. According to the annual trend and progress report of the Reserve Bank of India (RBI) released on Tuesday, the data available for this financial year so far indicate that banks' bad debts have moderated while provision coverage ratios (PCRs), capital buffers as well as profitability indicators have improved relative to pre-pandemic levels.
The net NPA ratio declined to 3.7 per cent in September 2019 from just below 4 per cent in March 2019, reflecting increased provisioning.
Move to increase 90-day window to 120 days to give more time to borrowers to service loans.
Rating agency ICRA on Wednesday revised down its credit growth outlook for banks to 2-3 per cent for the current fiscal, and said the coronavirus pandemic-driven stress may leave 3.1-3.7 per cent of assets into bad loan list by March.
They say that a stimulus package may not be necessary because, unlike last year's total lockdown, public transport, including the railways and airlines, is running and the restrictions on movement are localised and, in some cases, are partial rather than total.
RBI said the improvement in asset quality was driven by state-run lenders which saw a drop both in both GNPA and in the net NPA ratios.
Banks, through the Indian Banks' Association, have urged RBI and credit information companies to maintain a database of wilful defaulters.
'We do not know when we will get to the business-as-usual mode.' 'Many borrowers may not be able to pay up.' 'The incidence of cheque bouncing has doubled or even trebled, some lenders say,' says Tamal Bandyopadhyay.
'Fear psychosis has gripped the entire world.' 'Nobody is going to enter shops freely in the next 5, 6 months.' 'Secondly, the priority has changed.' 'Now that they have seen the bottom of the economy, people will prefer to save for tomorrow.'
Banks given 180-day time for NPA resolution, matter to be referred to Insolvency Board within 15 days.
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