Money & Banking
Need to keep morality aside to deal with NPAs: Rajan
New York : RBI Governor Raghuram Rajan has said the morality needs to be kept aside while dealing with the recovery of non-performing assets (NPAs) of banks.
 
He was referring to the recent stringent action against beleaguered liquor baron Vijay Mallya in the loan fraud case. 
 
“What's happening on the NPA front...this becomes loaded with a lot of morality, are these good people, bad people. I think one should take out the morality from the NPA clean-up," Rajan said during the Inaugural Kotak Family Distinguished Lecture at Columbia Law School here on Monday.
 
Referring to the "big names and big companies" being involved in loan default cases, Rajan said, "We do want to have our banks get their money back. For that we need a proper bankruptcy system, a court system that functions in finite time and we didn't have that in the past."
 
Mallya currently has a non-bailable warrant issued against him along with his passport being revoked for non-payment of Rs.9,000 crore IDBI loan.
 
Rajan said that there could be multiple reasons why loans become non-performing but "we very much want these assets to be back on track”.
 
“It may have become non-performing simply because you had terrible luck or somebody else's fault. Somebody cancelled your licences, didn't give you approvals on time, your partner didn't perform. There could be all sorts of reasons why companies get into trouble," he said.
 
"It is a completely separate issue of who to blame and whether there is criminal liability involved. In some fraction of the cases there may be criminal liability involved. That should be separated from the whole issue of putting the assets back on track," he added.
 
Talking about improving upon the administrative structure in the banks, Rajan said there is reasonable chance of the bankruptcy code bill to be passed soon to ensure a fully functioning system "where you can renegotiate outside of bankruptcy but the shadow of bankruptcy keeps you from getting away with too much either on the banking side or the promoter side."
 
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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256 districts hit by drought, government tells SC
New Delhi : The government on Tuesday conceded in the Supreme Court that 256 districts with a population of about 33 crore spread over 12 states were affected by drought, even as NGO Swaraj Abhiyan argued that the budget allocation of Rs.38,500 crore to the rural job guarantee scheme for 2016-2017 was far short of the actual requirement.
 
As the government it has released Rs.19,000 crores under the Mahatma Gandhi National Rural Employment Guarantee Scheme as a relief measure, the bench of Justice Madan B. Lokur and Justice N.V. Ramana said that the affected population was about 25 percent of the country's population.
 
At this, Additional Solicitor General P.S.Narasimha told the court that it was not that everyone living in these drought-affected district was hit by the calamity.
 
However, thrashing the government telling the court that it was taking steps for ameliorating the plight of the people including farmers in drought-affected areas, the NGO took the bench through government's own statistics to show that for 217 crores person days under the MGNREGA, the central government has allocated Rs.38,500 crore whereas it should have been Rs.71,820 crore.
 
Telling the court the government has reduced, by a third, the labour demand of 314 crore person days projected by the state governments, counsel Prashant Bhushan, appearing for Swaraj Abhiyan which has sought relief for people in drought-hit states, said that of Rs.38,500 crore allocated under MGNREGA for 2016-17, Rs.19,000 crore has been released of which Rs.12,483 crore would be required to service the last fiscal's unpaid dues.
 
Thus, the actual allocation, as of now, was Rs.7,000 crore, he said.
 
For 217 crore person days as fixed by the central government coupled with requirement of additional 50 days work per household in the drought-hit states, Bhushan said that actual amount that would be required to be paid would be Rs.71,820 crore.
 
Besides the allocation of Rs.38,000 crore which was well short of actual requirement, Bhushan said that minimum wages being paid under the MGNREGA was not at par with the prevailing rate of minimum wages in the states.
 
Similarly, he told the court that compensation being paid to the farmers for crop loss on account of drought too was far short of the actual cost that a farmer bears, and sought the compensation cover the cost of cultivation of different crops.
 
Claiming that what was being paid for crop loss was without taking into consideration the cost of seeds, fertilisers, pesticides, water and labour, Bhushan said that what was coming to farmer's family was not even the minimum wages paid to worker.
 
Pointing out that both farmers and farming sector were in deep distress, he said that the last 15 to 20 years have witnessed more than three lakh suicides by farmers.
 
Meanwhile, the government told the court that farmers in drought-hit areas were entitled to restructuring or rescheduling of their loans from the bank.
 
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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High speed Spanish train arrives next week to outpace Gatiman
New Delhi : Even as the railways have decided to start work on the Rs.98,000-crore bullet train project next year, a swanky new Spanish high-speed train will arrive here next week for trials, for a service between the national capital and Mumbai.
 
"This Spanish high speed train is expected to cut travel time between Delhi and Mumbai to 12 hours," a senior rail ministry official said, referring to Talgo's variable-guage train that will be tested initially for speeds of up to 200 km per hour.
 
"The trial will commence between Mathura and Palwal by the end of this month or in May."
 
With a 70-year history behind it, Talgo of Spain is a top global supplier of high speed trains. Among its various projects, it is the lead supplier of rolling stock for the Haramain line between Mecca and Medina in Saudi Arabia.
 
The Spanish high-speed train is expected to reduce the travel time between New Delhi and Mumbai by up to four hours.
 
Currently, the super fast Rajdhani Express train takes around 16 hours to complete the 1,384 km stretch between New Delhi and Mumbai. 
 
The Mumbai Central-New Delhi Rajdhani Express has an average running speed of nearly 91 km per hour. It can attain a top speed of 130 km per hour.
 
Recently, the Indian Railways launched the country's first semi-high speed train -- Gatimaan Express on April 5, 2016.
 
The Gatimaan Express can attain a maximum speed of 160 km per hour. It operates between the national capital's Hazrat Nizamuddin station and Agra Cantonment station. 
 
In February, the Indian Railways had entered into a Rs.98,000-crore pact with Japan for a high-speed bullet train linking Mumbai and Ahmedabad. 
 
India's first high speed train service has been envisaged to operate at speeds of 300-350 kmph. It would mostly be funded by the Japan Investment Co-operation Agency (JICA) which would provide around 80 percent of the investment as a soft loan.
 
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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