Money & Banking
Bad loans of state-run banks double in 15 months
The gross non-performing assets (NPAs), or bad loans, of India's state-run banks, measured as a percentage of their advances, have ballooned from 5.4 per cent as on March 2015 to 11.3 per cent 15 months later, as per latest data available with the central bank.
 
In contrast, such bad loans of private banks and foreign entities in the industry, rose in a relatively less dramatic manner -- from 2.2 per cent to 2.8 per cent for the former and from 3.2 per cent to 3.7 per cent for the latter.
 
The data was available with Reserve Bank of India Deputy Governor S.S. Mundra at a conference on banking sector reforms here.
 
Taking into consideration the loans that have been restructured -- that is a recast of the modalities including repayment and interest -- the total stressed advances of state-run banks stood at a whopping 15.4 per cent of their gross advances as in June this year. 
 
As per the presentation by the Deputy Governor, the state-run banks also had dismal bottomlines. As against a net profit of Rs 30,869 crore in March 2015, they incured a net loss of Rs 20,006 crore a year later.
 
During this period, the net pofit of private banks registered a growth from Rs 35,832 crore to Rs 39,672 crore. While foreign banks also made a total net profit, it came down from Rs 12,764 crore to Rs 12,619 crore.
 
Mundra said that post initiation of the banking reforms in 1991, the banks' balance sheets were much stronger and NPAs had come drom from the peak of around 12 per cent to slightly over 2 per cent by the year 2008.
 
But after that two developments happened -- global financial crisis and introduction of the PPP (public-private partnership) model in infrastructure building, he said.
 
"Banks were enthusiastic, rather major partners, in the PPP model, supported by accommodative fiscal and easy monetary policies, but it got plagued," he added.
 
Weak governance, lax underwriting, high corproate leverage and policy logjams led to the current scene of stressed assets in the banking sector, Mundra said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Deepak Narain

3 months ago

If you want anything to fail, give it to govt, be they banks, Air India, MTNL/BSNL, Super Bazars, HMT, NTC, etc. If given to private sector, even railways could deliver better. Politicians and bureaucrats rob jointly and make such bodies die.

B. Yerram Raju

3 months ago

Mundra is very right. When there is deceleration in lending to MSMEs and farm sector it is the corporate lending that went for the spin. Here some banks made the medium enterprises defaulters. The PSB agreed for funding a project - after the EMD was paid out of the firm's account and when the bid was cleared and security deposit was also paid by debit to the firm's account, bank stopped lending for the project in the very second month. As long as the firm was concentrating on products it was on profit curve for 25 years. They got into projects with consortium of banks promising loans and they burnt their well-earned silver to turn into defaulters. They have sovereign dues, sundry debtors, OEM suppliers queing for payments, bundled up. The leader of the consortium after agreeing for multiple banking in writing, bolted the door. The leader did not allow the member also restructure. It also did not allow another willing lender to lend for another project as new member. Against a collateral security of around Rs.40 crore, outstanding loans are around Rs.450 crore. The Bank branded the firm as wilful defaulter. It would be wiser for the bank to restructure the loan and get back the entire sum in 4-5 years as the TEV study confirmed viability. But alas, Bank having termed the firm as wilful defaulter cannot grant the restructuring of debt. This is a typical case of fence eating the crop.

SEBI confirms interim ban order on entities connected with Dhyana Finstock
The Securities and Exchange Board of India (Sebi) on Wednesday confirmed its interim ban order on 10 persons and one corporate connected with Dhyana Finstock Ltd from dealing in the securities market for evading tax using the preferential allotment and stock market mechanism.
 
The markets regulator confirmed its interim order issued on June 1, 2016 restraining the 11 entitites from dealing in the securities market.
 
The Sebi confirmed its interim order after it considered whether its June 1, 2016 order issued against the 11 entities/notices need to be confirmed, vacated or modified during the pendency of the investigation in the matter.
 
According to it, the modus operandi employed by Dhyana, its directors/promoters, preferential allottees and Dhyana group was to make a facade of preferential allotment.
 
After the expiry of the lock-in period, it purchased shares from the preferential allottees at artificially increased prices.
 
"In the whole process, entities of the Dhyana Group provided a hugely profitable exit to the preferential allottees," Sebi said.
 
According to SEBI, the beneficiaries made a collective profit of Rs 107.43 crore on a collective investment of Rs 5.22 crore in a period of 20 months and claimed exemption from long term capital gains tax.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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92% of villages 'electrified' have houses without power
As many as 78 per cent of the 18,452 inhabitable villages the government set out to provide with power have been "electrified". However, 92 per cent of the 10,072 newly-electrified villages include homes which do not have electricity.
 
On August 22, 2016, the government issued an update to say that 28 villages were "electrified" the previous week (15-21 August), as part of the ongoing mission to electrify the remaining 18,452 un-electrified villages in India.
 
Last week, the government missed the quota, as an average of 252 villages must be electrified per week, 36 per day, in order to reach the newly pushed-forward completion target of March 2017. The target set out by Prime Minister Narendra Modi was 1,000 days; the live updated government website says the deadline is March 2017, just over 200 days away.
 
As many as 34 villages have been electrified per day, on average, over the past four weeks, so the project is on track to reach its goal on time, just.
 
The electrification process is now being closely monitored by the Gram Vidyut Abhiyanta (GVA), or the Village Electrification Engineer; there are monthly targets to be reached, and a 12-stage electrification process has been established.
 
All 12 stages must be completed across 18,452 villages to make the scheme a success -- a total of 221,424 milestones. Of these, 57 per cent or 126,116 have been achieved, according to data on the government website.
 
Up to 32 per cent of the milestones achieved are in the last four stages of the 12-stage electrification process; 35 per cent are in only the first four stages. Just eight per cent of electrification has reached the final stage, "handing over villages", at which point the village is said to be electrified.
 
However, to say these villages will be "electrified" is not to say all their residents will enjoy electricity, FactChecker reported in 2015. Only 10 per cent of homes in a village are required to actually have electricity for a village to be declared "electrified" by the Ministry of Power.
 
Of those homes truly electrified, quality of power is often an issue. Three-quarters of electrified homes in rural Uttar Pradesh received electricity less than 12 hours a day, IndiaSpend reported in October 2015.
 
The Ministry of Power's August 22 update said that the government has resolved to go on "mission mode" to complete electrification "in view of the Prime Minister, Shri Narendra Modi's address to nation, on Independence Day". During this address, the PM cited Nagla Fatela, a village in Uttar Pradesh, as electrified, but it was since reported that the residents of the village did not have electric power, unless by illegal means.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

shadi katyal

3 months ago


why are we defending the center? Should it not be center policy to see that proper electicfication is done of the village or just shout on roof tops how much we have electrifiede the village,
The test is in the taste of the pudding and not just claiming such emmpty ahcievments

Advance India

3 months ago

To blame Center Government for this is not right, as the Center Government is doing a great job towards the electrification of villages, In less than two years of the time the Center Government already electrified more than 10,000 villages out of 18,452. It’s the time for States Governments to ensure benefits reach the ground.

shadi katyal

3 months ago


what is the defination of village electrification if there are no customers. Is this what UPA not did in the past by jusst one bulb in the village or taking electric posts but no power?
Why is Govt not using the solar power and thus avoid all kinds of transmission lines and loss of power during runningpower.
Today national net work looses 35% of power during transmission as [pwer ;ines and old and worn out. and is anythiong being done about it

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