Centre appoints nine EDs in public sector banks (BL 10.10.17)
The Centre has elevated as many as nine General Managers to Executive Directors in various Public Sector Banks (PSBs). The Appointments Committee of the Cabinet (ACC) has given its nod for these appointments and the Department of Financial Services (DFS) has issued the relevant orders, official sources said. While Bajrang Singh Shekhawat, General Manager at Central Bank of India has been appointed as Executive Director of Central Bank of India, Govind N Dongre, General Manager at Vijaya Bank has been appointed as Executive Director at Punjab & Sind Bank. Ajay Kumar Srivastava, General Manager at Allahabad Bank has been appointed as an Executive Director at Indian Overseas Bank. Matam Venkata Rao, General Manager at Allahabad Bank has been elevated as an Executive Director at Canara Bank. Kulbhushan Jain is now an Executive Director at Andhra Bank. Prior to this elevation, he was a General Manager at Bank of India. Rajesh Kumar Yadhuvanshi, General Manager at Punjab National Bank is now an Executive Director at Dena Bank. Chaitanya Gayatri Chinthapalli, who was General Manager at Bank of India, has been elevated as an Executive Director at the same bank. S.Krishnan, who was General Manager at Indian Bank, is now an Executive Director at Syndicate Bank. Lingam Venkata Prabhakar, General Manager at Allahabad Bank, is now an Executive Director at Punjab National Bank.
Probationary officer aspirants on reserve list seek justice, move court (BL 10.10.17)
A group of 40 candidates on the reserve list of the Institute of Banking Personnel Selection (IBPS) for the post of probationary officer for 2016-17 has approached the Bombay High Court seeking justice in the recruitment process. This is after IBPS, an autonomous body mandated with recruitment, selection and placement process, refused them employment despite having a ‘huge number of non-joining vacancies’ in the participating public sector banks. One of the petitioners, who did not want to be identified, said that 10% of the total candidates considered in the first round of allotment is kept in the reserve list for the post of probationer officers or management trainees. The non-joining vacancies are filled from the reserve list. The provisional allotment from the reserve list of candidates is declared on March 31 every year. The petitioners, who hail from across the country, said more than 1,000 non-joining vacancies were left unfilled even after recruiting from the reserve list, which is more than the number of candidates who were denied jobs. This was revealed in RTI responses given by the participating public sector banks. Despite having a huge number of non-joining vacancies, many of these banks went on record saying they didn’t intend to recruit in 2016-17. However, they actively participated in the recruitment process for the year 2017-18. The candidates allotted from the reserve list are usually given appointment orders in the next financial year. The public sector banks which refused to recruit from reserve list, despite having enough number of non-joining vacancies, include Punjab National Bank, Syndicate Bank, Corporation Bank, IDBI Bank and United Bank of India. The five banks have a cumulative non-joining vacancies of 1,072, the petitioners said, citing RTIs filings. Syndicate Bank has 355 vacancies; IDBI Bank, 361; Punjab National Bank, 130; United Bank, 89; and Corporation Bank has 71. “We were hopeful of getting allotment and waited for a year,” said the petitioner quoted above. “Despite having huge number of vacancies, most banks decided not to recruit from the reserve list. For a few of us, it was the last chance to appear for the test,” the petitioner said.
Take the ‘STEPS’ to stay on top, SBI chief tells staff (BL, BS, ET 10.10.17)
SBI’s new chief Rajnish Kumar has exhorted his team of 2,68,705 associates to take the ‘STEPS’ so that the bank continues to retain the crown position in the banking sector and delivers ‘new age banking for new India’. STEPS stands for Strong ethics, Transparent & high standards of corporate governance, Empathy & compassion for colleagues, customers & communities around, Politeness in dealing with customers, peers, seniors & junior colleagues and Sincerity. “Let us keep in mind the values of STEPS….Let us ensure that the STEPS spirit passionately persists with us till the end,” Kumar said in a communication to employees. Kumar took charge as Chairman of the country’s largest bank on October 7 for a three-year term. Even as he highlighted that the ‘nation banks on the over two-century-old bank’, Kumar flagged the issue of the banking industry passing through tough times. This is happening globally and India too has not escaped the tremors. The SBI chief said: “Despite our grit, fortitude, hard work and resilience, we also could not stay insulated from the unfavourable macro conditions. More so, in a highly inter-connected world and economic environment….But challenges inspire us. We are wired that way…The recent merger proves this. “...I have no doubt that our bank will overcome the current challenges soon. Still, we should not forget that the crown position in the industry bequeaths greater responsibilities on us to push ourselves extra.” The challenges that SBI is currently up against include resolving bad loans (that touched almost 10% of total advances in the June-2017 quarter), reviving credit growth (which saw a tepid 1.46% year-on-year growth in the June quarter), and retaining market share (in the face of tough competition from private sector banks).
SBI’s Aadhaar centres in Karnataka (BL 10.10.17)
SBI plans to open Aadhaar Enrolment Centres across Karnataka. The bank opened its first such centre at Sira Branch in Tumkur District. Seven more such centres have started functioning at various places at Bidar, Raichur, Belgaum, Dharwad and Chitradurga districts. The centres will undertake enrolment activity and corrections/modifications at a nominal charge of ₹25.
SBI to fund Maharashtra govt’s affordable housing schemes (BL 10.10.17)
SBI will soon ink an MoU with the Maharashtra government-owned PSU Shivshahi Purnarvasan Prakalp (SPPL) for financing affordable housing under the State’s slum rehabilitation schemes. The SBI will make available funds for the construction of affordable housing tenements under the slum rehabilitation schemes, including the Dharavi Redevelopment Project, of the Maharashtra government. According to sources in SBI and SPPL, the MoU is expected to promote private sector participation in construction of affordable housing under the slum rehabilitation schemes in Mumbai. The SBI will promote its home loan business with special offers under the SBI Hamara Loan scheme. Before sanctioning loans, SBI will take precautions such as scrutinising the proposals of the selected builders and developers along with the documents of slum rehabilitation schemes. Credit appraisals will also be done on the builders and developers. According to Vaijinath MG, Chief General Manager, SBI has deployed 7,500 specialised ‘feet on street’ to market its home loans. The bank has floated its Hamara Ghar scheme that offers loans at a fixed rate of 8.35% for the first two years of home loans up to ₹30 lakh. The Maharashtra government has recently announced that it will set up an Affordable Housing Corporation to construct 20 lakh tenements for ₹2,000 Cr by 2022 under the Pradhan Mantri Awas Yojna. The corporation will be incorporated with the shareholding of the Maharashtra Housing and Area Development Authority, Slum Rehabilitation Authority, and Shivshahi Punarvasan Prakalp (SPPL) among others.
Allahabad Bank waives off processing fee on home, car loans (BL 10.10.17)
Allahabad Bank has waived off the processing fee on its home and car loans as part of its festive offering – 'AllBank Utsav'. The waiver of processing fee will be valid from October 1, 2017 to March 31, 2018, said a press statement issued by the bank. The bank has also slashed the MCLR for one-year tenor to 8.45% making home, car and other retail loans cheaper. Women customers covered under 'AllBank Shakti' would additionally get lower margin on home and car loans, besides concessional interest rates on home loans, the release said.
Mudra scheme: Bengal banks disburse Rs. 7,178-cr loans so far this fiscal (BL 10.10.17)
Banks in West Bengal have disbursed close to Rs 7,178-Cr worth loans to small and tiny enterprises so far during the current fiscal under the Pradhan Mantri Mudra Yojana (PMMY). The State had disbursed Mudra loans worth Rs 15,480.03 Cr in 2016-17, a 100% growth over Rs. 7,740 Cr in 2015-16. According to NK Kapoor, GM, Corporate Account and MSME, United Bank of India, the number of beneficiaries under the various Mudra schemes in State was close to 46 lakh in 2016-17. United Bank of India is the convenor of State Level Bankers’ Committee (SLBC). There are three schemes under PMMY — Shishu (loans up to Rs. 50,000), Kishor (Rs. 50,000 – Rs. 5 lakh) and Tarun (Rs. 5-10 lakh). Of the total disbursement of Rs. 15,480 Cr, the maximum disbursement has taken place under the Shishu scheme — at close to Rs. 10,912 Cr in 2016-17. “We expect a good growth in the disbursement of these loans during the next two quarters, which are typically the peak period for loan offtake,” Kapoor said. The level of non-performing assets (NPAs) for Mudra loans was as high as 15-16%, he added. In FY17, banks across the country disbursed close to Rs. 1.75 lakh Cr worth Mudra loans, nearly 32% higher than Rs. 1.33 lakh Cr disbursed in FY16. So far during the current fiscal, banks across the country have disbursed close to Rs. 84,413 Cr under the scheme.
ICICI Bank aid to Armed Forces (BL 10.10.17)
ICICI Bank committed a financial assistance of Rs 10 Cr to the Indian Armed Forces. The contribution, payable in two equal tranches this year and next year, will be utilised towards welfare activities and betterment of the families of ex-servicemen who have lost their lives guarding the nation, the bank said in a statement. Chanda Kochhar, MD & CEO, ICICI Bank, handed over a cheque worth Rs 5 Cr to Defence Minister Nirmala Sitharaman at a function in the Ministry.
PNB puts 32 NPAs with outstanding loan of Rs 1,176 cr on block (BS 10.10.17)
Punjab National Bank (PNB) has put assets of as many as 32 bad loans with outstanding loan exposure of Rs 1,176 Cr on the block in an effort to bring down its NPAs. These non-performing assets (NPA), include Hanung Toys and Textile, Harbs India, United Foods, and Harman Textile. PNB has a total exposure of Rs 771.65 Cr to the consortium that extended the loan to Hanung Toys and Textile, as per public auction notice put up by the bank. The listed toys and textile company is the biggest defaulter in the list with consortium lending to the tune of Rs 2,960 Cr. Assets owned by accounts would be e-auctioned on November 8, the notice said, adding auction would be conducted by Delhi zonal office. For the quarter ended June 2017, the gross NPAs in absolute term stood at Rs 5,77,207 Cr, while the net NPAs were Rs 3,45,727 Cr. In percentage terms, the gross non-performing assets (NPAs) declined marginally to 13.66% of gross advances as on June 30, 2017 from 13.75% a year earlier. However, on a sequential basis, gross NPAs increased from 12.53% as on March 31, 2017. Net NPAs came down, both yearly and sequentially, to 8.67% of the net advances. Net NPAs stood at 9.16% and 7.81% as on June 30, 2016 and March 31, 2017, respectively. The provisioning to cover bad loans also came down to Rs 2,559.71 Cr from Rs 3,165.67 Cr parked aside in the June quarter of the previous fiscal.
Will banks take large haircuts on stressed companies assets? Investors want 60%, lenders willing to do just 5%! (FE 10.10.17)
Prospective investors in stressed companies — private equity firms, stressed asset funds and corporates—are expecting banks to take large haircuts in return for an equity infusion. Sources familiar with the development said investors want lenders to take a hit of as much as 50-60% on their dues. Most companies are near-bankrupt and have been admitted by the National Company Law Tribunal for insolvency proceedings. Not surprisingly, lenders are unwilling to take such huge haircuts, pointing out the assets command more value and they should be realising far greater value. “Buyers are hoping to strike a bargain by pressuring banks. This is creating the problem,” a resolution professional said. Bankers indicated a haircut of 5-10% is feasible. A banker with a large state-run bank said the discussion are likely to get over by end-October, and subsequently the resolution plans are likely to be submitted by the interested investors. Global stressed asset and special situation funds like AION Partners, Deccan Value, Oaktree Capital, TPG and large Indian companies including Tata Steel and JSW Steel have shown initial interest in buying stake in the stressed assets. “Banks are also not interested in holding on to the assets, but they will take a haircut only if they see a resolution coming through,” the resolution professional said. “Since there is a delay in decision making and getting onto a resolution plan, there will be a lot of deliberation, a lot of brainstorming before a plan can be finalised.” Sources said the on-going discussion are particularly tough for assets in the steel sector since the overall sector is depressed. Among the steel assets, Monnet Ispat and Energy, Electrosteel Steels, Bhushan Steel, Bhushan Power & Steel and Essar Steel have invited expression of interest from potential investors. “There is no dearth of interest in the stressed assets. But the challenge is a lot of these assets are in sectors that are already suffering – steel, textile, power, etc. When the steel sector is overall not performing well, where will you get an attractive offer from? The potential investors will only want to buy a distressed asset if they believe they are getting a deal at a good value. But for the banks, the market determined rate is a very tough thing to accept. The challenge is that there is a disconnect between market valuations and expectations,” said Reshmi Khurana, MD and Head of South Asia, Kroll.
Govt. Searches for Merger Candidates Among PSBs (ET 10.10.17)
The central government has started an internal exercise to ascertain merger candidates from among the public sector banks (PSBs). The move comes as state-run lenders are yet to approach the finance ministry with their consolidation plans. A senior government official, while confirming the internal exercise, said the final decision will be taken by banks after commercial considerations. “We are just looking at all the options and their viability. If banks ask us, we will suggest to them what our findings have been but it is for the banks to initiate the process,“ he said, adding that that the exercise will also help identify any other impediments or legal issues that may delay the process. Under the Bank Nationalisation Act 1969, there are provisions allowing such mergers. However, such decisions must be approved by Parliament. To speed up the process, the government had announced in August an alternative mechanism, comprising a panel of ministers, for in principle approvals to merger proposals. The finance ministry had then sent a letter to all state run banks informing them about the process. “There have been some informal discussions but no bank has yet shared any concrete plans,“ said a finance ministry official. The government has also exempted the consolidation among PSBs from the scrutiny of the competition watchdog, the Competition Commission of India. The exemption will cover all cases of reconstitution, transfer of the whole or any part of nationalised banks, and the exemption will be available for a period of 10 years. Some of the factors the government is looking at while making its own assessment include geographical spread, branch numbers, capital adequacy, technology platform on which the banks are operating, and bad loans on the lenders' books. A senior bank executive said that merger within banks will only go through if the combined entity takes on a new name. “It is imperative that the new merged entity has a new name because it has been seen in the past that the employees of the bank, whose identities are lost, are short-changed in the long run,“ he said.
Lenders Move to Take Control of Essar Power Guj (ET 10.10.17)
Led by State Bank of India, lenders will invoke pledged shares to take control of Essar Power Gujarat, an arm of Ruias-promoted Essar Group. The decision to acquire 51% equity interest has been taken weeks before a slice of the 4,500-Cr outstanding loan gets the tag of non-performing asset, or NPA, in banks' books. The unsustainability of Essar Power Gujarat (EPG), owing to a cost-tariff imbalance, culminated in the decision taken recently at a lenders' meeting. The decision has been conveyed to Essar, a senior banker said. Over the next 18 months, banks will have to find a buyer. While Essar would continue to hold 49%, the lenders are expected to place their nominees on the board and call the shots. “The 18-month standstill period will ensure uninterrupted operations at the 2x600 mw imported coal-fired plant at Salaya (Gujarat), which has a 25-year PPA (power purchase agreement) with GUVNL (Gujarat Urja Vikas Nigam, a discom).This will not only preserve the value of the asset, but will also ensure continued availability of power to the grid, because these are base load stations,“ said a spokesman for Essar Power, of which EPG is a subsidiary. Investments of more than one lakh Cr are estimated to be under stress across the country for various policy-related issues such as access to coal mines, non-allocation of coal linkages, and state governments' refusal to honour PPAs and accept any change of terms demanded by power producers (or sellers). These factors have cast a shadow on the viability of 10,000 mw generating capacity. In fact, EPG and two other private power producers had offered to sell a majority stake to GUVNL for a token sum of one rupee. “Any private company will face the same problem in recovering the fuel cost...But it is felt the tariff can be revised if a government utility takes over the plant. This is up to the Gujarat government,“ said another banker. Under the circumstances, banks chose to invoke a provision similar to strategic debt restructuring (SDR), in which a chunk of the loan is converted into equity to enable lenders take majority control. In case of invocation of pledged equity , the shares against which loans are raised are taken over by lenders.
Bank Union Seeks Probe into Top 100 NPA Accounts (ET 10.10.17)
A union of bank employees asked the Centre to order an investigation into the top 100 NPA account holders. The probe in these accounts should be carried out by the Serious Fraud Investigation Office (SFIO) or any other competent agency, the Bank Employees' Federation of India said. NPAs of the public sector banks have increased to about Rs 8 lakh Cr, of which 89% pertains to corporate accounts, BEFI (Andhra Pradesh and Telangana) said in a statement.
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DBS sees more policy fine-tuning from govt in weeks ahead (BL 10.10.17)
The Development Bank of Singapore (DBS) expects policy fine-tuning from the Indian government — on the lines of the Goods and Services Tax (GST) — in the coming weeks. According to DBS, incoming high-frequency data are likely to improve. The index of industrial production for August — due this week — is poised to extend gains from July’s 1.2%, said DBS in its daily economic report. As GST-driven distortions fade, expectations are set on festive-driven demand, a good monsoon, remonetisation and higher disposable income following an increase in wages or allowances to provide support to the production outlook, it said. Production in 2017-18 is likely to be around 2% slower than last year’s 4.6%, added the Singapore banking group. It saw more such pockets of improvement in high-frequency data prints, including the core industries index, PMIs (Purchasing Manager's Index) and auto sales. This should translate into a growth average of 6-7% in the second half of 2017-18 after the trough in the June quarter, the bank said. While this still implies that full-year growth will be at a three-year low, the urgency to adopt pump-priming measures is lower, the lender felt. In the long run, the onus is on the government to support growth once the impact of GST uncertainty rolls off, it added. More emphasis will be on recovery of non-performing assets and rebuilding bank balancesheets, according to DBS. It sees less room for further rate cuts, with the budget seen to modestly miss its 2017-18 targets owing to revenue shortfall. A less rigid deficit target will also reduce the extent to which spending needs are to be compressed in the second half of this fiscal. The lending agency also noted that the government has just relaxed a handful of GST restrictions by lowering rates on 27 items and 12 services.
India Post Payments Bank will push financial inclusion: Sinha (BL 10.10.17)
Communications Minister Manoj Sinha said the government is working on establishing 650 branches for India Post Payments Bank to facilitate financial inclusion, and unveiled two new offerings by the postal department. “For India Post Payments Bank...we will be opening nearly 650 branches across India. Two, namely in Raipur and Ranchi, have already started. The aim is that through 650 post payments bank, we can push financial inclusion in 1.55 lakh villages,” Sinha said. Sinha exhorted postal employees to continue reorienting themselves with technological changes and disruptions in order to bring innovative offerings to consumers, while upholding the societal values. “With the way technology is changing, it is good to link yourself with technology but department’s values too have to be maintained, and that is the biggest challenge,” he said highlighting the long history of Indian postal services, particularly the significance of the postman in rural India. The Minister said the Indian postal department has undergone a major transformation over the years, be it inter-operability of ATMs, core banking or providing of Passport Seva and Aadhaar enrolment.
Urjit Patel: GDP may exceed 7%; important to have growth but not with inflation (FE 10.10.17)
RBI Governor Urjit Patel feels that GDP growth will pick up in the third and fourth quarters (of the current fiscal year) to above 7%. In an interview to Mint, the Governor has said though there is a drop in GDP growth in the June quarter (to 5.7%), the transitory effects relating to GST must be taken into account. Patel’s comments come in the backdrop of lower growth forecast by the RBI and opposition claiming that there is a climate of worry surrounding the economic growth of India. Last week, the RBI kept its repo rate unchanged at 6.00%, and raised inflation projections. Patel has suggested that there is an upturn in the economy. “The Nikkei India Services PMI Business Activity Index rose more than 3 percentage points in September over August; the core sector IIP (Index of Industrial Production) saw a 4.9% rise in August,” he said. Patel also said there is an upturn in the automobile and two-wheelers sales. On the recent monetary policy where the rates remained unchanged, Patel said, “Growth is always there in the MPC’s scheme of things; we don’t lose sight of that, but not at the cost of inflation.” The RBI said, “The loss of momentum in Q1 of 2017-18 and the first advance estimates of kharif foodgrain production are early setbacks that impart a downside to the outlook.” The neutral stance was attributed to a possible rise in inflation from its current level to 4.2-4.6% in the second half of FY18. The central bank said the monetary policy committee (MPC) had taken note of a 2-percentage point rise in CPI inflation since its last meeting in August.
RBI guidelines to enable interoperability between non-bank wallets: Wallet firms (FE 10.10.17)
As the fintech industry gears up for the RBI’s guidelines for issuers of prepaid payment instruments (PPIs), industry players say the guidelines will enable interoperability between non-bank wallets alone, without encroaching on banks’ turf. The central bank had in March circulated draft guidelines for non-bank PPI issuers. Last week, it said the revised master directions will be issued by October 11 and interoperability among PPIs compliant with know your customer (KYC) norms shall be implemented within the next six months. “In line with the vision for payment and settlement systems in the country, the revised framework will pave the way for bringing inter-operability into usage of PPIs,” RBI said on October 4 in a document titled ‘Statement on Developmental and Regulatory Policies’. While the statement does not clarify on interoperability between bank and non-bank wallets, non-bank issuers have taken it to mean that only non-bank wallets will become interoperable. Sameer Nigam, co-founder and CEO, PhonePe, said, “Banks are not threatened by this type of wallet to wallet interoperability. Banks would have objected if wallets were becoming fully interoperable with banks, but it doesn’t look like the RBI is permitting that yet.” Bipin Preet Singh, founder and CEO of MobiKwik, said, “For the user, this means that they do not have to download another wallet if they already have MobiKwik. They can pay across the merchant network of any other PPI.” In fact, the guidelines may force wallet-issuing companies to compulsorily enter into member-sub-member relationships with banks, if they have not done so already, said AP Hota, former managing director and CEO of National Payments Corporation of India (NPCI).
RBI Launches 3rd Tranche of Gold Bonds This Year (ET 10.10.17)
RBI will sell gold bonds -third tranche for this year-at 2,956 a gram, the central bank said in a circular issued to banks. Online applicants who pay digitally will get a 50 discount per gram, it said. The sale would be open between Monday and Wednesday of every week starting from October 9 to December 27. The 2.5% interest bearing bonds, which will be sold to resident Indians -individuals, trusts as well as charitable institutions and universities, will be capped for different category of buyers. Individuals, jointly with another individual or a minor can buy up to four kgs of gold annually, the ceiling for trusts and charities is 20 kgs. The RBI has clarified that this ceiling will exclude holdings as collateral by banks and other financial institutions.
India's external debt is more than its reserves (ET 10.10.17)
India's record high $400 billion forex may have bolstered the Indian rupee but might flounder in the face of short-term debt that needs to be repaid in the next 12 months if the global financial markets tighten, though it may not be as bad as it was in 2013. Nearly $200 billion worth of debt are coming up for repayment between June 2017 and June 2018, data from RBI shows. The total external debt is at $485.8 billion as at the end June 2017, which is more than the total reserves, making the external economy vulnerable. “India's foreign exchange reserves are much higher than in the recent turbulent period of 2013 and able to buffer any potential outflows,“ said Saugata Bhattacharya chief economist at Axis Bank. A lot of India's residual maturity short-term debt is not at high risk of creating volatility at the time of maturity. About half are trade credits, and a significant amount of the rest is rupee-denominated, nulling currency risk. While in general short-term debt is rolled over, the timing can create trouble if it coincides with any global financial markets turmoil. In normal circumstance the rollover would be smooth, but if a Fed tightening roils the financial markets, that could lead to a `sudden stop' of inflows, sparking currency volatility. The current debt includes short term trade credit as well as NRI deposits with residual maturity of up to one year. Significantly, of the $199.5 billion debt, which comes up for maturity over the next one year, $80 billion are NRI deposits. Barring major events, NRI deposits get rolled over easily as overseas Indians find it profitable to keep funds in local deposits than in investments overseas where returns are poor. “The situation is not alarmist. It is not a matter of immediate concern as short-term debt tends to get rolled over,“ said Madan Sabnavis, chief economist at Care Ratings. “There could be an issue with NRI deposits, but a lot could depend on how the exchange rate moves.“
Age limit for NPS entry to be raised to 65 years, says pension regulator (BL 10.10.17)
Pension regulator PFRDA will soon notify the increase in maximum entry age limit for National Pension System (NPS) to 65 years, its Chairman Hemant Contractor has said. “Our Board has already taken a decision and the entry age limit will go up to 65 from existing 60 years,” Contractor said. PFRDA Chairman expects several CPSE employees to come on board the NPS platform in the coming days. “As on date, there is very little participation from CPSE employees in NPS. We expect the participation to increase as more awareness about the benefits are created,” Contractor said. He also said that PFRDA has left it to the CPSEs concerned as to whether their employees need to come through the employer or directly subscribe to NPS. Based on the recommendation of 3rd Pay Revision Committee, the Department of Public Sector Enterprises notified dispensing with the condition of minimum 15 years of service and superannuation from CPSEs to avail the pension benefit implemented by CPSEs. Separately, the Government has also amended the Income Tax Act providing for tax free migration of superannuation funds to NPS. This provision is expected to facilitate CPSEs to implement NPS for their employees. The total employee strength in CPSEs stood at 12.91 lakh (excluding contract workers) in 2014-15.
Companies with debt of Rs 32k cr fail at CDR cell in April-August (FE 10.10.17)
Companies with debt of around Rs 32,000 Cr have failed at the corporate debt restructuring cell (CDR) in five months of FY18, taking the total failures since inception of the cell in 2001 to Rs 1.69 lakh Cr. Data from the CDR cell showed that a bulk of the failures – Rs 29,830 Cr – occurred in August. Bankers said that debt recast of six large companies failed in August owing to lenders referring several companies to the National Company Law Tribunal (NCLT) and also because of their inability to meet CDR conditions. The list includes Era Infra (Rs 5,100 Cr), IVRCL (Rs 6,500 Cr), Electrosteel Steels (6,400 Cr), Coastal Projects (Rs 3,700 Cr), Orissa Manganese & Minerals (Rs 3,700 Cr). The RBI, had on June 13, asked banks to refer a dozen troubled companies — with a combined debt of close to Rs 2.4 lakh Cr — to the NCLT, following several failed attempts at loan recovery. Since inception, the cell has approved loans worth Rs 4 lakh Cr. In FY17, lenders had referred just one loan, Gangakhed Sugar & Energy worth 350 Cr, to the cell in January, taking the total referral since inception to Rs 4.74 lakh Cr. Banks had last referred a loan in March 2015 following which restructuring rules changes and banks stayed away from the CDR cell. Large CDR failures in FY17 include Rs 10,000-Cr loan recast of loss-making shipbuilder ABG Shipyard, PSL (3,300 Cr), Visa Steel (2,400 Cr), Moser Baer India (2,050 Cr), Shiv-Vani Oil & Gas Exploration Services (2,100 Cr). The primary reason for CDR failure is the inability of promoters to infuse the requisite equity capital in the defined period and non-compliance to CDR agreement in pledging shares in favour of the consortium of lenders. The restructuring schemes also often fail because promoters are unable to sell non-core assets to mobilise resources as promised.
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India Inc to see demonetisation, GST implementation pain ebbing in Q2… (BL 10.10.17)
September 2017 quarter is not expected to be very different from the past three quarters in terms of overall financial performance as India Inc is still reeling under the after effects of demonetisation in March quarter (first full quarter effect) and then goods and service tax implementation from July 1. Though topline growth is expected to get a mild leg-up from restocking post GST, there is unlikely to be any major reprieve from operating margin or earnings front due to rising input costs, according to consensus view. According to Edelweiss Securities, Nifty 50 companies are likely to see revenue growth of 13% year-on-year in September quarter compared to higher single digit in the previous quarter (June). Also it expects operating profit and net profit to increase 8% y-o-y each. Broader set of companies also likely to reflect a similar trend of profit growth lagging sales growth. The overall performance is largely expected to be helped by few sectors such as commodities (be it oil or metals) followed by automobiles, consumer (restocking effect post GST) and private banks while majority of the large sectors such as information technology, pharmaceuticals, telecom, private domestic industrials and public sector banks are likely to continue witness pain. There are hopes of a better second half with low base created by demonetisation. “Going ahead, H2-FY18E may witness a normalisation of the earnings trend as we expect a recovery in banking sector (moderation in provisioning for non-performing assets) and auto sector to be at the forefront of the trend. Also, support from cyclical sectors such as capital goods and cement will cushion recovery,” pointed out ICICI Direct in its preview note.
Sept CV Sales Rise Fastest in 6 Years, Hint at Eco Rebound (ET 10.10.17)
India's commercial vehicles sales in September rose at the fastest pace in nearly six years, suggesting a recovery in the economy. Manufacturers dispatched 77,195 commercial vehicles, 25.27% more from a year earlier, to dealerships in the past month, according to data released by industry body Society of Indian Automobile Manufacturers (SIAM). This is the fastest growth since November 2011, when it was 34.97%.Commercial vehicle sales are often seen as an indicator of economic growth. “This could be indicative of a recovery in the economy, provided there are no more disruptions,“ SIAM deputy director-general Sugato Sen said. “We have been seeing a consistent improvement in commercial vehicle sales over the last few months.” Commercial vehicle sales declined 22.93% in April and 6.36% in May, before expanding 1.44%, 13.78% and 23.22% the next three months. Last month, while sales of medium and heavy commercial vehicles (MHCVs) increased 25.61% to 31,086 units, those of light commercial vehicles went up by 25.05% to 46,109 units. “The light commercial vehicles segment should continue to grow due to better demand from consumption-driven sectors. We expect freight demand also to see an improvement, given ... good monsoon and a better crop output,“ Sen said.
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