Companies & Sectors
Kingfisher not a systemic risk: Chakrabarty

According to the RBI deputy governor, debt-laden Kingfisher Airlines, which owes 17 banks about Rs7,000 crore, does not pose any systemic risk to the banking system

Mumbai: The debt-laden Kingfisher Airlines, which owes 17 banks about Rs7,000 crore, does not pose any systemic risk, reports PTI quoting Dr KC Chakrabarty, deputy governor of the Reserve Bank of India (RBI).

 

When asked about the troubles at Kingfisher Airlines, Chakrabarty said that "it does not pose any systemic risk to the banking system".

 

He was talking to reporters on the sidelines on an SME event organised by the Bombay Chamber of Commerce and Industry.

 

The aviation regulator DGCA had recently served a show-cause notice to the company asking why its licence should not be revoked.

 

Within the lenders consortium, SBI has the single largest exposure with Rs1,580 crore, followed by IDBI Bank (Rs720 crore), Punjab National Bank (Rs435 crore), Bank of India (Rs575 crore), Bank of Baroda (Rs530 crore), Central Bank of India (Rs420 crore), UBI (Rs350 crore), Corporation Bank (Rs150 crore), and Federal Bank (Rs80 crore which is not a loan but an en-cashed bank guarantee to BPCL).

User

COMMENTS

rajeshpai

5 years ago

YES.
There is no risk as long as bankers act like bankers.Enforce securities offered and proceed against Dr Vijay Mallya who has given his personal guarantee.Surely he is worth more than the amount owed to the banks.
Start selling his mansions,IPL Franchise, UB city,yachts,shares of various group companies, enforce corporate guarantees of the group, declare the group as NPA.Why not??Why the hesitation!!

If the banks act tough, money is secure .That is where the systemic endurance comes into play.

Moneylife, please keep following up on what the banks propose and what they do to recover money from KFA.
If they write off, then it is at the cost of the poor depositors of these banks.

RBI to come out with new definition of sick units soon

The central bank is trying to redefine sick units and would soon come up with the new definition, says Dr Chakrabarty

Mumbai: The Reserve Bank of India (RBI) will come out with a new definition of sick units shortly, reports PTI quoting RBI Deputy Governor KC Chakrabarty.

 

"We are trying to redefine sick units... very soon we will come up with a new definition," Chakrabarty said while addressing a conference on SMEs organised by the Bombay Chamber of Commerce and Industry.

 

Talking about bank financing to SMEs, the senior most deputy governor said entrepreneurs have to be trustworthy and units have to be credit-worthy for getting bank finances. The SMEs have to maintain utmost transparency in their transaction with banks.

 

"Availability of timely credit is more important for SMEs than the cost of credit," he said, adding businesses can't only run on borrowed money and promoters have to bring in capital for growth.

 

He also said that SMEs should foresee their cash flow for at least the next 18 months to arrange for timely availability of bank credit.

User

FDI in pension: What purpose can it serve?

FDI in pension funds is a welcome step for pensioners and the New Pension Scheme would benefit all subscribers, many of whom may have also opted for such schemes in operation in the private sector. How it will benefit a person who has subscribed to both remains to be seen

Last week, finance minister P Chidambaram announced sweeping reforms in terms of Foreign Direct Investment (FDI) in insurance up to 49% (from the existing level of 26%) and set a similar limit in the case of the pension funds.

 

The stock market reached favourably to both the proposals and the Sensex breached the 19,000 mark to close the day at 19,058. These moves, however welcome they may be to the stock market, are likely to draw both favourable and unfavourable reactions from the public once full data is made public. In fact, both issues are highly debateable.

 

The finance minister stated that all the five recommendations of the Standing Committee on Finance, which examined the Pension Fund Regulatory & Development Authority (PFRDA) Bill, 2011, have been accepted, without any reservations. Prima facie, the market reacted favourably but is awaiting full details.

 

Read here about what the PFRDA says about NPS.

 

In order to implement the New Pension Scheme (NPS) effectively, at the very outset, this has been made mandatory for all employees, except the Armed Forces, who have entered into service on or after 1 January 2004.  However, with effect from 1 May 2009, the NPS has been opened to all citizens of the country, which, again, has been welcomed by all.

 

In due course, it is believed, a statutory PFRDA will be put in place so as to benefit NPA subscribers.

 

Read more about what ails the New Pension Scheme.

 

This is a welcome step for pensioners and the scheme would benefit all subscribers, many of whom may have also opted for such schemes in operation in the private sector. How it will benefit a person who has subscribed to both remains to be seen.

 

While full details of the scheme are expected shortly, the Cabinet-cleared scheme permits the NPS, which seeks minimum assured return, to opt for investing his/her funds in various schemes that may be notified by PFRDA from time to time.

 

Click here to read more stories by the same writer.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)

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)