Reserve Bank of India Governor Raghuram Rajan had said recently that there was "no need" to set up a separate bad bank to deal with stressed assets of public sector lenders.
Fitch Ratings on Wednesday said India's high fiscal deficit would pose a challenge in lowering the debt to GDP ratio, which is expected to rise above 90 per cent in the next five years. It said India entered the pandemic with little fiscal headroom from a rating perspective. Its general government debt/GDP ratio stood at 72 per cent in 2019, against a median of 42 per cent for 'BBB' rated peers.
Bankers say there is palpable fear among erring promoters that the banking system just cannot be taken for granted, and any delay in loan repayment could mean promoters losing business
Banks feel happy shifting their toxic assets from loan books to investment books while the ARCs enjoy the management fees with a smile, observes Tamal Bandyopadhyay.
Lenders say settlements will cross over 100 accounts in the March quarter.
New government should consider reforming taxation rules.
Seeking to spur foreign investments, Finance Minister P Chidambaram has said the Union Cabinet will decide on raising FDI caps in different sectors in the third week of this month.
The meeting is expected to chart a road map for cleaning up their balance sheets and boost credit flows, reports Somesh Jha.
A roadmap for the consolidation of public sector banks will be outlined during the year.
Governor Rajan stressed on the benefits over a medium-term.
It won't be easy for the banking sector to better its performance every quarter, predicts Tamal Bandyopadhyay.
RBI has identified about 50 cases for NPA resolution after it was empowered by the government to ask banks to initiate insolvency proceedings.
All banks are eligible for privatisation. A committee of secretaries will decide which banks will be privatised, says Financial Services Secretary Debasish Panda.
Rishabh Pant on track for IPL comeback
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.
Mulls ways to improve the bank's earnings, cut bad loans and step up credit recovery efforts
'One of the ways to do that is to ensure that NBFCs have got liquidity.' 'If we don't do that, this mood of gloom will continue.' NBFCs need to be provided with liquidity if they have to start lending.
Banks might not have realised the exact implication of risky projects under PPP projects, which were getting implemented under high leverage
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.
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.
Rush to offload bad loans indicates a revival in asset-sale market
Rogue lending under political influence was rife in the Congress-led regime and is not happening in the Modi regime, certainly not on that scale. But if PSBs cannot lend as indiscriminately as they did last time in the name of 'credit expansion', how well will these banks do, asks Debashis Basu.
The investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 per cent to 15 per cent on par with domestic institutions.
Daniel Wu, chairman of the Asian Bankers Association (ABA), says there is merit in merging some of the less efficient public sector banks in the country.
The court also allowed Indian Banks' Association, another respondent, to file a response.
'The approach towards Mallya is not right because his unit could have been turned around earlier with additional funds from his side and the bank's side.'
It will take over large non-performing assets of banks and help in revive companies ridden with bad debts.
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Amidst debate over control of Jet Airways post UAE's Etihad buying stake, the RBI on Thursday notified FDI guidelines defining control of a company, saying that a firm will be said to be controlled by non-residents if they have powers to appoint majority of the directors.
With the Jaypee acquisition, the Suraksha group, which made lenders an offer of Rs 7,736 crore, will be able to expand its footprint in north India after making inroads in Mumbai's real estate market over the past year. Sudhir Valia, the promoter, was a co-founder and executive director of India's biggest pharmaceutical firm, Sun Pharmaceuticals, and is a close relative of Dilip Shanghvi.
Loan defaults and restructuring to limit profits.
The improved outlook on the Government of India announced by rating agency Moody's might need to be viewed with some scepticism. There is no doubt the performance of the Indian economy has sharply improved from the deep trough it hit last year. But the ability of the second largest global ratings agency to assess an upside and downside before events make everyone wise about India has been dismal for a long time, as the chart shows.
In a proposal to FinMin, the Banks Board Bureau suggests asset sales to PSUs within a deadline to recover bad loans.
Consensus continues to be cautious with analysts pointing towards tougher days ahead
Bankruptcy proceedings are going at a slower pace than what the bankers had envisaged and many cases have gone beyond the 270-day timeline set under the IBC mainly because of litigation.
The order, a "negative" overall, will be a short term positive for corporate focused state-run and private lenders because of the possibility of delaying incremental stressed asset recognition.
Mergers to create at most six state banks
Raghuram Rajan, said, the scourge of loan losses "had a tendency to increase, get too big to ignore, too late to manage, and push the system into crisis".
'We need to further catalyse economic growth and the government needs to increase revenue,' says G K Agarwal, BJP's national spokesperson on economic affairs.
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