- LENDERS TAKE 57% HAIRCUT IN 94 CASES WORTH Rs 1.75 LAKH CRORE: Banks have taken a huge 57% haircut in 94 large accounts worth Rs 1.5 lakh crore which were resolved in Financial Year 2019, recovering just Rs 75,000 crore, which amounts to 43% of total value of the admitted claims, as per a report. The average resolution time for these 94 cases resolved was 324 days as against the stipulated timeline of 270 days. As of March 2019 there were 1,143 cases pending at various bankruptcy tribunals, and 32% of them are pending beyond 270 days. The report further says that had these 94 cases were liquidated, the recovery would have been just 22%.
- ROUND 2 OF PSB MERGERS, BIG BANKS MAY GET A CALL: The government is soon likely to invite select big banks for discussion on a second round of merger in Public Sector Banks, according to a Finance Ministry Official. The lenders to be called for discussion may include Punjab National Bank and Union Bank of India. The merger activity may start anytime during the second or third quarter of the current fiscal year. But in our opinion the time is not ripe for further mergers as most of the banks are in a recovery mode and first they need to strengthen and consolidate their balance sheets. Moreover the government should see how the earlier merger of Dena Bank and Vijaya Bank with Bank of Baroda shapes up.
- RBI MOVES TO TIGHTEN CURRENT ACCOUNT OPERTAING NORMS TO CHECKFUND DIVERSION:In a move to tackle fund diversion, Reserve bank of India has proposed sterner rules on opening and running of current accounts of corporate borrowers. As per the proposed rule, current accounts can only be opened with the lead bank in a lending consortium while other banks having collection accounts will have to transfer funds at the end of the day to the current account with the consortium leader. RBI has said the rule would apply to corporate accounts which have borrowed and availed a credit limit of Rs 50 crore or more from the banking system.
- LENDERS TO ANIL AMBANI’S RCom FACE STEEP HAIRCUT: Lenders to Anil Ambani’s Reliance Communication (RCom), Reliance Telecom and Reliance Infratel are finalising plans to recover their loans of Rs 45,000 crore. Banks have decided to shortlist a Resolution Professional from a field of 15 players. But the bankers feel it will be a tough task given that the value has been significantly eroded with the impaired assets, leaving little on the table for the potential buyer. So even if the lenders find a buyer, they will have to take huge haircut.
- NBFCs AIM TO TAP OVERSEAS LOAN MARKET TO RAISE FUNDS: Non-Banking Finance Companies which includes some prominent players like Piramal Capital Housing, Bajaj Finance, Hero Fincorp, L&T Finance, Tata Financial Services are now going beyond bonds to seek loans from overseas banks in the form of External Commercial Borrowing (ECB). While they are willing to be exposed to currency risks, they want to diversify their funding pattern. Each company aims to raise about $ 200-400 million in the next few weeks. Maturities of such loans are likely to be in the range of 3 to 5 years.
- RBI GETS SUPREME COURT ULTIMATUM ON RTI ACT DISCLOSURES: The Supreme Court has ordered the Reserve Bank of India to disclose its annual inspection reports of banks along with the list of defaulters and information related to them under the Right to Information Act. The Supreme Court further said that the RBI is duty bound under the law to disclose information sought under RTI Act.
- CBDT AND GSTN SIGN A PACT TO NAB TAX EVADERS TO REDUCE BLACK MONEY GENERATION: The Central Board of Direct Taxes (CBDT) and Goods & Services Tax Network (GSTN) have signed an agreement to facilitate exchange of data between the two. The I-T Department will share key financial information including the status of I-T Return filings, turnover of business, gross total income and turnover ratio with GSTN. This is done to nab the evaders and thus reduce generation of black money.
This post first appeared on IMPACT OF DEMONITIZATION OF CURRENCY IN INDIA IN 2016, please read the originial post: here
