Economy
India's rating at risk from government debt levels: Moody's
Hong Kong : American credit rating agency Moody's on Wednesday retained India's outlook at 'positive' saying the country's history of double-digit inflation, high government debt levels, weak infrastructure and a complex regulatory regime have constrained its credit profile, while China featured high on the scale of leverage, or debt, risk for sovereigns in the region.
 
In its report on Asia-Pacific sovereigns, Moody's Investors Service also cautioned that a prolonged worsening in asset quality at state-run banks is the main threat to India's sovereign credit profile and suggested the government provide for higher recapitalisation of stressed banks.
 
"The main threat to the sovereign credit profile would be via a significant and prolonged worsening in asset quality at state-owned banks, beyond the recognition of bad loans currently under way, that causes contingent liabilities to crystallise on the government's balance sheet," it said.
 
"Our positive outlook on India's rating is based on our expectation of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balance sheets," it added.
 
The report also said that implementation of the Goods and Services Tax (GST) and bridging large infrastructure deficit are a difficult task before India's government.
 
Moody's, which has given for India a credit rating at 'Baa3' that is just a level above their junk category, said it would consider a rating upgrade after 12-18 months, depending on improvement in macroeconomic parameters.
 
Public sector banks (PSBs) are currently engaged in an asset quality review (AQR) following a Reserve Bank of India directive, which has led to an increase in bad loans and provisioning.
 
Industry body Assocham said last week that the slowdown in steel, textiles, aluminium and others coupled by the ongoing AQR is likely to push banks' stressed assets to Rs.10 lakh crore-mark in the fourth quarter of 2015-16.
 
"At the end of December (2015), the total stressed assets of all the banks were at Rs.8 lakh crore which is expected to see a significant jump in the current quarter itself," said a study by the industry body.
 
It said total stressed assets of banks rose four-fold to Rs.7.40 lakh crore by the end of March 2015 from Rs.2.33 lakh crore as of March 2011.
 
Assocham noted that in nine months from April to December 2015, gross non-performing assets (NPAs), or bad loans, rose by Rs.1 lakh crore from Rs.2,98,641 crore to Rs.4,01,590 crore.
 
In percentage terms, gross NPA ratio of public sector banks shot up from 5.43 percent in March 2015 to 7.30 percent by December 2015, while mounting loans have made 11 PSBs report losses of Rs.12,867 crore in Q3 of 2015-16.
 
Noting that China, which has 'Aa3 negative' rating and whose state-owned enterprise (SOE) liabilities are particularly large, Moody's said on Wednesday that total liabilities in the SOE sector rose to more than 115 percent of GDP in 2015, from under 100 percent in 2012.
 
"Stress in China's SOE sector implies a rising probability that some liabilities will crystallize on the government balance sheet. China's climbing debt burden and sizable contingent liabilities were a key driver of our decision to place a negative outlook on the sovereign rating in March 2016," the report said.
 
"Three factors will likely determine sovereign credit trends in the region. First, the degree and nature of the build-up in leverage, and the extent of buffers that counterbalance related risks. Second, how economies respond tothe opportunities and challenges offered by China's rebalancing," it added.
 
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.

User

COMMENTS

Ramesh Poapt

10 months ago

Govt has directed to PSBs to find out ways to recapitalize of their own.it is a tough task for them.Recovery is equally difficult.RBI is diluting provision and reserve norms and resorting to liquidity infusion.Mergers may not solve the problem.Proposed insolvency act,refurbishing DRTs,SARFARASI Act may help to some extent.But payment banks,small banks may snatch away the business share.FII limit to 49% will play its role in due course.MoreNPAs expected by fy 2017 end.Tricky situation indeed! May be future opportunities somewhere.........!

Possible Class Action against PACL in Australia
The action holds out hope for PACL victims. But will the Supreme Court appointed committee act quickly
 
An Australian law firm, Piper Alderman, has offered to file a civil action suit to recover over AU$170 million transferred overseas by Nirmal Bhangoo, the alleged mastermind of the mammoth Rs49,100 crore ponzi scheme that has duped over 50 million Indians over a 25-year period. These investors were sold fractions of land in projects being developed by two Pearls group companies—Pearls Agrotech Corporation Ltd (PACL) and Pearls Golden Forest Ltd (PGFL). An extensive investigation in Australia by investigator Niall Coburn and the local media there has uncovered transfer of at least AU$170 million to companies in Australia, Hong Kong and Singapore that are directly or indirectly controlled by Nirmal Bhangoo, founder and brain behind the Pearls 
group.  
 
Many Indian investors, angry with the slow investigation and unexplained delay in freezing and recovering their money, have formed two associations representing over 60,000 people duped by Pearls and are attempting civil action in Australia to get back their money. They are PACL Employees and Customers Protection Forum and the Janlok Prathishtan Sanghata Committee (India). 
 
The associations hired Temple Law and Nayak Associates to handle their case. These lawyers, in turn, approached Niall Coburn and Piper Alderman to pursue the class action in Australia to recover their funds. On 2 February 2016, based on an order of the Supreme Court of India (SC), the Securities & Exchange Board of India (SEBI) had constituted a committee headed by Justice RM Lodha to oversee the liquidation and sale of Pearls group’s assets and refund of money to investors at the earliest, preferably within six months from the date of the order. 
 
Hence, Piper Alderman, the law firm, has written to Justice Lodha and the SEBI chairman, offering to file cross-border proceedings in Australia to bring overseas assets under control, liquidate them and get back investors’ money. The law firm’s letter says that Niall Coburn, who has been investigating PACL assets in Australia for two months, has traced assets of around $170 million and there may be “more assets held in complex structures.” It provides an extensive list of assets that have been traced in Australia through their investigation, explains the connection with Mr Bhangoo’s family and even provides a chart of the group and its linkages. These include AU$100 million in properties such as Sheraton Mirage Resort (Sheraton) on the Gold Coast through a company called Pearls Australasia Mirage 1 Pty Ltd incorporated in October 2009, Pearls Infrastructure Projects Limited and several homes and properties that are connected through Nirmal Bhangoo’s children.
 
Worryingly, Piper Alderman says that these foreign assets are not under receivership in India and can be dissipated during the slow investigation. In fact, the Sheraton is already listed for sale. Shockingly, it says that the Indian government has not even filed applications to “preserve the investor funds in other jurisdictions, such as Australia, Singapore and Hong Kong.” 
 
An international class action of this type, with approval from the regulator, has never been attempted before. Even if the Australian legal process is swift and enables recovery of assets, the government will have to evolve a mechanism to distribute the money among an estimated 50 million investors. The task is humungous and SEBI is still in the process of collating investor data with proof of investment. It is, however, unclear why the government is not invoking the draconian provisions of the Prevention of Money Laundering Act or acting swiftly to preserve the overseas assets of Nirmal Bhangoo’s family. 
 
Meanwhile, the Pearls group, which has been adept at gaming the legal system for over 20 years, has already enlisted a phalanx of expensive and influential lawyers to continue its fight. There are also dark rumours about powerful people trying to derail action against the group. It is also curious that the PACL scam has evoked little interest in the Indian media, despite the massive sum involved; it is the Australian press that unearthed the massive transfer of funds and assets owned abroad. Will the Lodha committee really succeed in getting investors even a part of their investment back? Or will this be another lackadaisical pursuit that yields no result?

User

COMMENTS

Senthil Vel A. Mylathal

10 months ago

For the safety of Investors in PACL the government Regulators could have suggested a proper procedure to get refund of the Invested amount through TV Channel, Newspaper etc. while they are holding PACL business with Legal actions. Still they will give awareness to the Investors not to loose amount Invested and making compliants with all Documents of Investment.

REPLY

syed Javeed basha

In Reply to Senthil Vel A. Mylathal 8 months ago

Hi Senthil Vel, I'm one of customer, I want to know when they will release the payment, I was waiting since 3 Years. can you replay me asap

manoharlalsharma

10 months ago

Moneylife sharing such a HUGE information certainly I wish HEARTY thanks and wish in SHARING in future also.

Nandan Nilekani invests in train travel app
New Delhi : Train travel solutions app RailYatri.in on Wednesday said Infosys co-founder Nandan Nilekani has invested an undisclosed amount in it.
 
"What excites me about RailYatri is the fact that this is a new-age product made by Indians for fellow Indians, which intelligently harnesses the power of smartphones, data and mobile payments, has a huge opportunity of impacting the lives of millions of travelers," Nilekani said in a statement.
 
Using deep analytics technology, RailYatri.in app makes intelligent predictions to make smart decision for an upcoming journey.
 
The app uses a traveller's phone GPS to predict train delay and also gives information on platform number, coach position, speed of the train, personalised alerts, on-time history of a train and also check if a waitlisted ticket will get confirmed, the statement said.
 
RailYatri.in also forayed into digital transactional marketplace, facilitating booking of onboard meals, bus tickets, budget rooms and other services.
 
"Our aspirations align with Nilekani and we believe his treasure trove of experience will help us in our endeavors," said RailYatri.in co-founder Kapil Raizada in the statement.
 
Founded by Kapil Raizada, Sachin Saxena and Manish Rathi, RailYatri.in app is currently being used by two million users per month.
 
Other existing investors of the train travel app include Helion Ventures, Omidyar Networks and Blume Ventures.
 
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.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)