Citizens' Issues
Combing operations continue in Pathankot; focus on NIA probe
Pathankot/Gurdaspur : Combing operations continued on Wednesday to sanitise the Pathankot Air Force base in Punjab even as the NIA formed various teams to probe the terrorist attack on the high-security defence facility.
 
Sources in the Indian Air Force (IAF) said that every inch of the Air Force Station (AFS) was being thoroughly scanned.
 
The focus on Wednesday was on the investigation by the National Investigation Agency (NIA) into the entire terrorist attack, including any lapses by the police and security agencies.
 
The combat operation ended on Tuesday with Defence Minister Manohar Parrikar announcing that six terrorists were killed. Seven security personnel, including an officer of the National Security Guards (NSG), were killed in the attack.
 
Parrikar admitted to "gaps" which led to "security lapses" at the air base.
 
The role of the Punjab Police Superintendent of Police Salwinder Singh, who claimed he was abducted by the terrorists who attacked the Pathankot air base, was put under the scanner on Tuesday evening, as a team of NIA officials questioned him at his residence in Gurdaspur.
 
The SP will be questioned by NIA and Punjab Police officials on Wednesday also, along with his cook Madan Gopal and businessman friend Rajesh Verma.
 
All three alleged that they were abducted by the terrorists in his vehicle
 
The police superintendent, who was transferred from here last week only, had earlier claimed that he, along with Verma and the cook, were stopped and abducted by 4-5 heavily armed terrorists near Kolia village, 25 km from Pathankot, on the night of December 31.
 
Under fire and suspicion about the entire incident, Salwinder Singh told the media on Tuesday: "My information was 100 percent true. There is no doubt about it. I informed senior officers immediately. I don't know why the delay took place."
 
However, the investigators are looking at Salwinder's claims with suspicions due to inconsistencies in claims of the SP and his two companions who were abducted.
 
The police officer has said his car was stopped around 11.30 p.m. on Thursday (December 31), while the attack began early on Saturday (January 2).
 
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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Debt restructuring is a Band-Aid for a bullet wound
Religare's analysis of 10 out of 15 strategic debt restructuring -SDR cases suggest that this scheme won’t help Indian banks’ deteriorating asset health – instead it increases the risk by deferring an estimated Rs1.5 lakh crore of NPA formation. 
 
The strategic debt restructuring (SDR) is not a cure-all for deteriorating asset health of Indian banks and instead it exacerbates the risk by deferring an estimated Rs1.5 lakh crore or about $23 billion of non-performing asset (NPA) formation, which are 30-40 accounts or 2.2% of total credit, from FY16-FY17 to later years, says a research report based on analysis of 10 out of 15 SDR cases.
 
In the note, Religare Capital Markets Ltd, says, "Grim tidings from the Financial Stability Report (FSR) on stress in the system from large borrowers and weak sectors would prod the Reserve Bank of India (RBI) to tighten provisioning norms. We raise credit cost estimates across our coverage, pare target prices, and downgrade the sector to underweight."
 
"Our detailed interactions with companies under SDR, lenders, lawyers and industry experts suggest that banks may end up refinancing 30-40 ailing accounts under the scheme in the next one year, thus postponing NPA recognition of Rs1.5 lakh crore, or 2.2% of credit. We think banks have little scope to fully recover loans via the sale of assets given several pitfalls to SDR," it added.
 
 
 
Pointing out towards the inevitable massive write-offs, Religare says, SDR invocation is not treated as restructuring for asset classification or provisioning, and thus most cases have standard restructured assets with low provisions of 5%. It says, "Our analysis of 10 SDR cases invoked so far reveals that interest accruals and loss funding will push up debt by 70% from first restructuring via corporate debt restructuring (CDR) until conclusion of SDR. Banks will thus have to write-off 35-95% of interest (debt + equity) in FY17-FY18 if stressed assets find no takers. The lenient 5:25 scheme may also see slippages from cyclical sectors."
 
 
"The haircut in case of a takeover will also be high, resulting in huge provisions for banks even if the SDR is successful. Our fair enterprise value (EV) for six cases (three engineering, procurement, construction- EPC, three metal players) representing 67% of total SDR debt is 65-85% lower than the current EV," it added.
 
In its previous report too, Religare had pointed out that if banks fail to attract buyers for these troubled companies within 18 months, they would face a large Market-To-Market hit on their debt-turned-equity holding, apart from a massive surge in stressed asset formation. (Read: Strategic debt restructuring: Banks may face large losses, massive surge in stressed asset of 7 companies)
 
 
The FSR released by RBI also highlighted that levered companies’ debt as a proportion to total debt in the system has gone up by 200 basis points (bps) in the last one year. RBI’s two stress tests on credit concentration (group borrowers) and weak sectors (infrastructure, iron & steel, MSME & textile) reveal a severe impact on bank NPAs and net worth in case of defaults.
 
This, Religare feels, will make the RBI to strike back at banks. At present, banks retain existing classification on assets that have been stressed for one and a half to two years and also book income on the same. "To ensure lenders do not take undue advantage of SDR or the 5:25 schemes (most cases are concentrated in stressed sectors and/or with large group borrowers) to postpone NPAs, the RBI may require them to start building provisions for these accounts and/ or defer income recognition. This apart, the RBI’s recent list of 150 truant borrowers that may be classified as bad by FY17 would put further pressure on banks," it said.
 
 
Religare says, as of now, different banks treat the same account differently even when the structure of the loan is identical. It is this disparity in loan treatment that the central bank may like to address. "As per our discussions with industry experts, the RBI has asked banks to seek an auditor’s certificate if they wish to retain any of these loans under the standard category. Banks will have to classify such accounts as NPAs if any irregularities are found," it added.
 
According to the research note, FY2016 would be a painful year for corporate lenders. Religare cut its target price to book (P/B) multiples across its coverage that reflects the stress on bank books and adjusted its target prices for the restructuring hit. It says this would be around 50% from 20%-25% estimated earlier, due to surging debt in SDR cased and the likelihood of onerous write-offs. Religare has downgraded State Bank of India (SBI), Axis Bank and ICICI Bank to sell from buy, and for Bank of Baroda, CBK and Punjab National Bank (PNB) to sell from hold.  
 

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COMMENTS

SuchindranathAiyerS

1 year ago

Bank Mismanagement: This is one of those things that every genuine Banker knows but will never say. In India it is easier to get away with pushing NPA under the carpet because, like the Praful Patel - Mrs Antony Air India, most Banks are owned by and operated for the benefit of the Neta-Babu-Cop-Milard-Jounralist-Crony Kleptocracy via an indtrument known as Bharath Sarkar and subsidized by the sweat and blood of the Mango Man:

Weight-Loss Products That May Only Trim Your Wallet
Is losing weight on your New Year's resolution list?
 
They come in pills, powders and creams, meals and tastants (definition to come) — products whose marketers claim can help you lose weight, in many cases, without diet or exercise. Americans spend billions of dollars based on these advertising claims every year and every year marketers are called out on deceptive weight-loss claims. If you’ve penciled in “lose weight” among your New Year’s resolutions, here are a few cautionary tales: 
 
Nutrisystem
 
Has Nutrisystem reverted to making the same type of deceptive weight-loss claims that got it into trouble with the FTC in the leotard-loving days of the early 90s? That’s what a petition filed in 2015 sought the FTC to investigate. The claims at issue included losing five pounds and an inch off your waist in your first week on one of the company’s Fast 5 meal plans. Now Nutrisystem is running ads for a weight-loss program — turbo 10 — that claims you can lose 10 pounds and five inches off your waist in your first month. Whether this new system breeds more consumer complaints — hundreds have already been filed against Nutrisystem with the FTC — we’ll just have to wait and see.
 
Roca Labs
 
Marketed as an alternative to expensive gastric bypass surgery, this company’s purported stomach-shrinking powders, which start at $480 for a three-to-four month supply, may only end up shrinking your wallet. A 2015 FTC complaint bellyached that Roca Labs did not possess scientific evidence to back up several of its weight-loss claims. The agency also took issue with the company’s non-disparagement provision or gag clause, which it said unfairly sought to block bad reviews.
 
 
Genesis Today and Pure Health
 
An appearance on the Dr. Oz Show catapulted Lindsey Duncan and his companies, Genesis Today and Pure Health, into the miracle weight-loss arena. On the show, Duncan pointed to a clinical study that supposedly supported claims that consumers could lose weight with his green coffee bean extract — without diet or exercise. Duncan reaped millions. But the FTC said the clinical study was severely flawed. And in 2015, Duncan agreed to refund millions — $9 million to be exact –to consumers.
 
Sensa
 
Going to the gym in 2016 may require a lifestyle change on your part. And change can be hard (that Netflix queue won’t watch itself). In 2011, Sensa claimed that its product required “no change” in lifestyle. “Simply sprinkle Sensa on, eat all the foods you love and watch the pounds come off,” was the pitch for the tastant, a substance that stimulates your sense of taste. Sensa claimed the tastant, which costs $59 for a month’s supply, helped “you feel full faster.” But the FTC said Sensa was full of it and did not have sufficient scientific evidence to support its claims (a popular refrain). Sensa, which reported U.S. sales topping $350 million, agreed to cough up some spare change and return $26.5 million to consumers.
 
L’Occitane
 
You’ve tried everything but nothing seems to work. But what’s this now, a “body slimming” cream? Might this pave the way to a skinnier you in the new year? Probably not. In 2015, the FTC mailed out more than 10,000 refund checks totaling more than $400,000 to people who purchased two cellulite creams marketed by L’Occitane. The FTC cited “flawed” studies purportedly supporting claims that the creams help consumers slim down. The seven-ounce creams cost between $44 and $48. But apparently they were not the cream of the crop.
 
Sale Slash
 
Just because fake Oprah says one weight-loss supplement is “excellent” doesn’t mean you should buy that supplement. It is, after all, not the real Oprah. “Sale Slash is a fraud trifecta,” said the FTC’s Jessica Rich in a press release announcing a 2015 action that temporarily halted Sale Slash operations. “The company made outlandish weight-loss claims for its diet pills using fake news sites, phony celebrity endorsements, and millions of unwanted spam emails,” Rich added. Premium Green Coffee and Pure Garcinia Cambogia were among the supplements touted. Purists Choice was also named as a defendant.
For more on weight loss, click here
 

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