The new set of rules are aimed at creating a “harmonised and simplified generic framework” for resolution of stressed assets in view of new bankruptcy regulations.
SBI’s massive restructuring of standard loans are finally coming home to roost with a vengeance.
PSBs had a collective write off of Rs 816.83 billion for the financial year 2016-17.
According to banking sector experts, write-offs help bring down their tax burden.
A new ordinance will stop a majority of promoters from bidding for their own stressed assets, but may result in lower revenue for lenders.
Although the state-run power sector lender doesn’t follow RBI guidelines on loan restructuring norms yet, the CAG has in the past pointed to gaps in its due diligence process.
Growth in bad loans raises questions about due diligence measures followed by renewable energy, power PSUs over last five years.
The total stressed loans of the banks – including non-performing and restructured or rolled over loans – rose 4.5% in the six months to end-June.
The results are the first since SBI merged with five of its subsidiary banks and also took over a niche lender for women from April 1.
If the finance ministry is serious about restoring the health of the banking sector, it cannot afford to discriminate between those that won coal blocks and spectrum during the NDA rule and the other defaulting companies.
The central bank said that making the list public would “hurt the business climate in the country and endanger the jobs of thousands working in these entities”.
The new Insolvency and Bankruptcy Code aims to resolve India’s $150 billion bad debt overhang by speeding up proceedings and recouping more of the losses.
State Bank of India, the biggest lender to the airlines, has pegged its losses at Rs 900 crore, however, the actual losses may be even higher than these estimates.
The additional loss of Rs 5,792 crores in the quarter ended March 2017 surprised the capital market. Were the regulator, the parent bank and SBI’s chairperson aware of the state of asset quality in its subsidiaries?
While the loans are costlier than those offered by banks, which charge around 12% on average, they are processed more quickly and require little paperwork.
The move comes on the same day the President promulgated an ordinance aimed at tackling the bad loan crisis in India’s public sector banks.
The Centre is wrong in assuming that Rajan’s exit will make things easy. The institutional integrity of India’s central bank is at stake.
Despite the distress signals, Arun Jaitley has chosen to strictly adhere to a conservative fiscal stance in his successive budgets, prioritising deficit reduction over everything else.