Business failures rise when growth declines. When Indian growth slowed in the last decade, defaults increased. This is the normal working of the market economy, points out Ajay Shah.
Most lenders to the airline have already classified the account as an NPA.
Punjab National Bank on Monday allayed concerns about its exposure to Adani companies and noted that its loans to the group are diversified into 8-9 companies, which are generating sufficient cash. Atul Kumar Goel, the bank's MD & CEO, in a post-earnings call said total exposure to Adani group, so far, stands at Rs 7,000 crore, of which Rs 2,500 crore is in the airport sector. He further said there is "no worry as the exposure is not very big" and that the bank is keeping an eye on the development that is taking place.
Only NIIF has stayed the course as a viable infrastructure financing institution.
India's aggregate NPA as a percentage of GDP is far lower than that in Italy, Greece.
The framework also envisages amendments to the Prevention of Corruption Act to exempt commercial decisions by PSBs from scrutiny by investigating agencies. Both the amendments are likely in the monsoon session of Parliament.
Resolution to the bad loans problem has to be incremental, and the RBI has to ensure NPAs are not swept under the carpet, HDFC chairman Deepak Parekh tells Joydeep Ghosh.
Experts said the new framework has ensured that the focus has moved to creditor protection from debtor protection.
'As these segments are growing at 25 per cent for the last three years, credit quality has been extremely good.'
Axis Bank's results for the fourth quarter of the 2022-23 financial year (Q4FY23) were skewed due to large one-off charges related to its acquisition of Citi's retail business. Axis reported a loss of Rs 5,730 crore on account of exceptional items of Rs 12,350 crore (net of tax) towards Citi's acquisition, policy harmonisation etc. Excluding this one-off, the adjusted net profit or profit after tax (PAT) would be Rs 6,630 crore, up 61 per cent year-on-year (YoY).
Total income rose to Rs 20,163.25 crore during the quarter as compared to Rs 16,832.22 crore in the same period a year ago.
The Reserve Bank India's (RBI's) decision to ban the onboarding of new accounts on the "bob World" mobile digital platform led to a selloff in the Bank of Baroda (BoB) stock. The stock of the public sector bank dropped by around 3 per cent. The central bank cited "material supervisory concerns"; news reports claimed mobile numbers were randomly linked to accounts to purportedly inflate registrations on bob World.
Canara Bank topped the list recovering Rs 638.41 crore (Rs 6.38 billion) from non-performing assets of the total Rs 4,420 crore (Rs 44.2 billion) recovered by 19 nationalised banks by taking advantage of securitisation laws in the last fiscal.
Commercial banks in the country continued with their improving asset quality trend in the October-December 2021 quarter with slippages remaining under control coupled with healthy recoveries and upgradation of asset classification. The 28-listed banks reported improvement in bottom line with net profits rising 64.1 per cent year-on-year (YoY) and 21.5 per cent sequentially. This is mostly on account of a fall in provisions and contingencies.
Indeed, there were frauds, and the politician-banker-industrialist nexus played a role in the rise of NPAs, but governance issues in Indian banking are far more nuanced and complex, reveals Tamal Bandyopadhyay.
Banks may approach the government to further strengthen the Securitisation Act, which apparently got diluted with the waiver of a provision requiring defaulters to deposit 75 per cent of the loan
Axis Bank Managing Director & Chief Executive Officer Shikha Sharma on the new mechanism for non-performing loans, the bank's loan portfolio, industry outlook and the bank's future plans.
RBL Bank's interim chief executive officer (CEO) and managing director (MD) Rajeev Ahuja on Sunday tried to allay concerns around the health of the bank. He said events during the weekend are not linked to RBL's asset quality. The bank said Vishwavir Ahuja, its managing director (MD) and chief executive officer (CEO), had on Saturday proceeded on leave with immediate effect on medical grounds.
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".
The coming years could be exciting for Bandhan Bank, IDBI Bank, IDFC First Bank, Federal Bank, and CSB Bank.
Asset quality of banks, which saw some improvement in the second half of 2020, is likely to worsen during the first six months of 2021, according to a survey. The findings are part of the 12th round of bankers' survey carried out by FICCI-IBA between July and December 2020. The survey was conducted on 20 banks, including public sector, private sector and foreign banks, representing about 59 per cent of the banking industry, as classified by asset size.
Every defaulter is not a wilful defaulter who has the capability of paying back and is yet not servicing the bank loan, observes Tamal Bandyopadhyay.
If companies get into trouble, the loan becomes a non-performing asset and "we very much want these assets to be back on track," Raghuram Rajan said.
'The demand for housing is always increasing, and so is housing shortage.'
RBI governor D Subbarao, in the second quarterly review of the monetary policy in October, had said there is need to increase provisioning against bad assets to not less than 70 per cent by September 2010.
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.
The cumulative loss of 20 state-run lenders stood at Rs 14,000 crore during Q4
Scheduled commercial banks have written off loans amounting to over Rs 10.09 lakh crore in the last five financial years and the process of recovery of dues from the borrowers continues, Union Finance Minister Nirmala Sitharaman informed the Lok Sabha on Monday.
The airline was considering selling two properties worth Rs 120 crore for partial loan repayment.
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.
The drop in net interest margin will separate the men from the boys, explains Tamal Bandyopadhyay.
On November 12, 2021, the Reserve Bank of India (RBI) decided to ring in uniformity in asset classification and income recognition across all lending institutions. Shadow banks, or non-banking financial companies (NBFCs), like commercial banks, are to test non-performing assets (NPAs) on a daily basis and upgrade them to "standard assets" only when interest and principal arrears are settled by borrowers. This is going to create all manner of headaches for shadow banks and their clientele. Says Y S Chakravarti, managing director and chief executive officer (CEO), Shriram City Union Finance: "NPA levels will go up, especially of small borrowers.
Banks have written off bad loans worth Rs 10,09,511 crore during the last five financial years, finance minister Nirmala Sitharaman informed Parliament on Tuesday. The non-performing assets (NPAs), including those in respect of which full provisioning has been made on completion of four years, are removed from the balance sheet of the bank concerned by way of write-off, she said in a reply to Rajya Sabha. "Banks write off NPAs as part of their regular exercise to clean up their balance sheet, avail tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their boards.
Lenders can now initiate recovery proceedings since the SC has lifted the standstill on asset classification, which protected stressed accounts from slipping into NPAs.
The Reserve Bank of india is likely to tell state-run United Bank of India (UBI), which has seen erosion of capital due to bad loans and higher provisioning to implement prompt corrective action.
Seek easing of asset classification guidelines for better credit flow.
Bankers need to take a call on whether they will allow technology firms to run banks or banks themselves will turn into tech firms, says Tamal Bandyopadhyay.
Moody's Ratings on Thursday raised India's GDP growth forecast for FY24 to around 8 per cent from 6.6 per cent on the back of strong domestic consumption and capital expenditure. The estimate comes a day after RBI Governor Shaktikanta Das said the economic growth in the current financial year could be close to 8 per cent in view of the third quarter GDP data released by the government. The latest estimate of Moody's is about 140 basis points higher than the earlier projection of 6.6 per cent made in November 2023.
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.
Not all public sector banks are back in the black, but their collective net profit for the year is Rs 32,346 crore against a Rs 9,013 crore loss in the previous year, points out Tamal Bandyopadhyay.
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