SBI’s massive restructuring of standard loans are finally coming home to roost with a vengeance.
A strange picture of India’s financial system is being drawn, where privatisation is being pushed even as critical analysis and reporting on private sector entities is slowly being discouraged.
While stakeholders within the system have complained that the rules may hurt clean bidders too, the insolvency and bankruptcy board appears in no mood to review the ordinance.
While the government needed to kick-start growth and private investment, it is absolutely essential that promoters of defaulting corporate groups don’t end up laughing all the way to the bank.
While it will almost certainly impact the fiscal deficit, this needs to be accompanied by an aggressive recovery of loans so that moral hazard doesn’t set in.
Over the last five years, wilful defaults have risen by over Rs 84,000 crore, according to data put out by credit rating agencies.
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 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?
Days after media reports indicated that the telecom operator was having trouble with its loan servicing obligations, bank facilities worth Rs 17,356 crore and debt facilities worth Rs 3,630 crore have now been assigned the lowest available rating for corporate debt.
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 three year-long CBI investigation into Jatin Mehta’s Winsome Diamonds has finally come to an end. While there are a number of questions still remaining, will the guilty be punished?
The discourse around non-performing assets (NPAs) remains largely focused on private corporations, while NPA concentration in public sector undertakings flies under the radar of scrutiny.
The dual reporting structure comes at a time the bank should be strengthening and not diluting the independence of its risk management team.
While the speed with which the government has brought about the new legislation deserves to be applauded, the absence of many significant provisions takes the sheen off an otherwise much-needed piece of reform.