Why can't we have a sunset clause for the ARCs, which is a global norm? questions Tamal Bandyopadhyay.
Banks are set to sell dud-loans worth Rs 90,000 crore of 22 firms in the first tranche to the National Asset Reconstruction Company (NARCL). It's reason for cheer given that such sales to asset reconstruction companies (ARCs) have been poor in recent times. In fiscal 2020, their assets under management (AUM) contracted by 4 per cent; and in fiscal 2021, it fell by another 100 basis points to Rs 1.07 trillion. So, why are we where we are?
India's economy is estimated to contract by 9.6 per cent in the fiscal year 2020-21, reflecting a sharp drop in household spending and private investment, and the growth is expected to recover to 5.4 per cent in 2021, the World Bank said on Tuesday. In its Global Economic Prospects report, the World Bank said that the informal sector, which accounts for four-fifths of employment, has been subject to severe income losses during the COVID-19 pandemic.
In India, the company serves customers such as stock exchanges, brokers, non-banking financial companies, financial services and insurance, IT and IT-enabled services.
The RBI working group's proposal to allow corporate houses to set up banks is a 'good-looking' step in a 'bad direction' and may lead to crony capitalism and eventual financial instability, former chief economist of World Bank Kaushik Basu said on Thursday. Basu further said that there is a good reason why all successful economies have a clear dividing line between industries and corporations on the one hand, and banks and lending organisations on the other.
The infra-major going belly up cracked open some major flaws in the system - the most evident being weak corporate governance and how layers of corporate structures could be formed adding to the opaqueness of the group.
In 2009, the UPA government, had announced a slew of measures to boost liquidity in NBFCs. These included a scheme for providing liquidity support to NBFCs having assets size of over Rs 100 crore through a SPV.
In an indication of easing financial stress among borrowers, the number of unsuccessful auto-debit requests through the National Automated Clearing House (NACH) platform declined in July, reversing a three-month trend that started with the second wave of the Covid-19 pandemic. According to the NACH data, of the 86.4-million transactions initiated in July, 33.23 per cent, or 28.7 million transactions, failed, while 57.7 million were successful. Compared to June, this is a significant improvement in bounce rates.
Physical KYC takes anywhere between two to five working days to get done, V-KYC, only a few minutes.
The problem for the NBFC sector is the funding inertia by banks and not lack of funds.
Is the worst over for Indian banks? The past two years saw them ride on treasury trades as deposits soared and credit growth dipped sharply. Gross and net non-performing assets (NPAs) moved south, and the provision coverage ratio (PCR), capital buffers, and profitability indicators are back at pre-pandemic levels. So, what's the plot ahead?
The purchase or construction of houses by large numbers of people can add meaningfully to India's economic growth, points out Neelkanth Mishra.
Isn't it time to review the 'fit and proper' criteria for banking licence, particularly with reference to individuals applying for it, asks Tamal Bandyopadhyay?
Vehicle sales have been hampered by weak consumer sentiment and still-weak availability of financing following tighter liquidity at non-banking lenders since the middle of 2018.
India may adopt norms similar to the US Federal Reserve model, which regulates conglomerate-led banks in the country.
RBI's oversight cadre move creates HR trouble, officers threaten agitation.
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.
Indians face COVID-19 with record debt, stalled income.
Foreign banks set the template in consumer banking in its infancy, but have almost vacated this booming space.
Owing to the risk perception attached with the segment by banks, the residential realty segment has been increasingly relying on non-banking financial companies and housing finance companies to raise debt financing, reports Abhijit Lele.
Reserve Bank Governor Shaktikanta Das on Wednesday said the country is at the doorstep of economic revival on the back of accommodative monetary and fiscal policies being pursued by the central bank and the government.
the three investors that have submitted their final bids are not commercial banks. Among the three, one is a non-banking financial company. Another distinctive feature of the revival is that PMC may lose its cooperative bank characteristic after its reconstruction.
One of the factors behind the rise in securitisation deals was State Bank of India's (SBI) decision to buy portfolio worth Rs 45,000 crore from NBFCs
Many developers are facing financial challenges after the IL&FS defaults, after which non-banking finance companies - the major financiers to real estate firms - slowed disbursals.
In a business friendly move, the Reserve Bank of India on Friday said that Real Time Gross Settlement System (RTGS), used for large value transactions, will be made available round-the-clock from December. In December 2019, the National Electronic Funds Transfer (NEFT) system was made available on a 24x7x365 basis. Currently, RTGS is available for customers from 7.00 am to 6.00 pm on all working days of a week, except second and fourth Saturdays of every month.
This is not her first stint in North Block or in leading a major economic ministry. She started Prime Minister Narendra Modi's first term as minister of state for finance, was made the commerce minister, and then became the defence minister.
Besides low interest rates, a reduction in active Covid cases and strong high-frequency macro data have lifted the sentiment of both corporate India and the stock markets.
It may be a 'no-go' for banking licences to large industrial houses.
In India, economic activity slowed substantially in 2019, with the deceleration most pronounced in the manufacturing and agriculture sectors, whereas government-related services sub-sectors received significant support from public spending, the Bank said.
Under the co-lending model, banks have to take their share of the individual loans on a back-to-back basis on their books while NBFCs are required to retain a minimum of 20 per cent share of the individual loans on their books.
'The people let off by the NBFCs have little bargaining power and willingly settle for a 20% to 25% cut in their existing salaries when hunting for new jobs.'
Bombay Oxygen Investments Ltd shares have been witnessing a particularly sharp rally for many days now and have more than doubled from about Rs 10,000 level seen in March-end and the market watchers feel the only reason for this kind of stupendous rally is the name of the company.
After swinging nearly 330 points, BSE Sensex finished 172.69 points or 0.43 per cent higher at 40,412.57. Similarly, the 50-scrip NSE Nifty appreciated 53.35 points or 0.45 per cent to close at 11,910.15.
Penalty must act as a deterrent. If it is too low, it could encourage the regulated entities to lap up penalty instead of complying with the norms, suggests Tamal Bandyopadhyay.
With economic growth slowing to a six-year low, IMF Chief Economist Gita Gopinath says the government should undertake structural reforms such as bank clean-up and labour reforms to address the slowdown in domestic demand. She rooted for government policies focusing on managing a slowdown in domestic demand, and on boosting productivity growth and supporting employment creation in the medium term.
If you are running a sweetmeat shop, will you manage a dairy for milk supply or buy milk from the market? Banks are running a dairy (which has its cost for processing milk), while NBFCs are buying milk from the market, observes Tamal Bandyopadhyay.
'They can shift to dynamic asset allocation funds to automatically rebalance their equity exposure.'
Banks are in the process of getting a board-approved restructuring framework in line with the RBI's framework and eligibility defined by the central bank.
Second-tier NBFC stocks are trading at 24.4x their trailing earnings, which is nearly twice their 15-year average of 13.9x
The Reserve Bank of India's (RBI's) move to ban Mastercard from issuing new cards for not complying with the local data storage guidelines may hit five private banks, a non-bank lender, and a major card-issuing company. The impact is expected to be felt for a few months as these players transition to other card networks. According to Nomura Research, RBL Bank, YES Bank, and Bajaj Finserv are the ones most impacted by the ban as all their credit card schemes are allied to Mastercard. Among others, IndusInd Bank, Axis Bank and ICICI Bank have 35-40 per cent of their credit card schemes tied to Mastercard, the report said.
