Money & Banking
PSU banks credit profile under risk due to heavy losses: Fitch
The credit profiles of India's public sector banks are under pressure as heavy losses have been reported in the last two consecutive quarters, weakening their core capital adequacy, says Fitch Ratings. 
 
In a report, the ratings agency says, "Core capital ratios for many public-sector banks are close to or below the Basel III financial year 2019 (FY19) minimum regulatory requirement of 8%, and the sector is unlikely to build capital through internal capital generation in light of the dim earnings outlook - at least over the next two years due to the ongoing provisioning pressure. The cumulative second half of FY16 losses at Indian public-sector banks were more than double the government's capital injection in FY16, and had eroded nearly 15% of capital as of FYE15. This has heightened the sector's need for additional external capital." 
 
Fitch says since long it has assessed India's banking system on a stressed-asset basis - rather than narrowly defined non-performing loans (NPLs) - to factor in the risks of significant under-provisioning and weak capital and the recent losses at public-sector banks support this approach.
 
The ratings agency is likely to reassess its $140 billion estimated capital need for the system under Basel III, of which public-sector banks will continue to account for the dominant share. The recent steps by Reserve Bank of India (RBI) to allow part of the revaluation reserves into core equity has helped counter some of the pressure, but is not enough - keeping in mind the higher capital requirements, it added.
 
According to Fitch, there are a few options for private-sector capital for now. "Public-sector banks' access to capital markets is likely to remain weak. There is little additional Tier 1 capital issuance either (around $500 million since January). The government remains the most important source of new capital for the sector. The sector's requirement for new capital needs to be addressed to meaningfully kick-start credit growth to lend support to the economy," it said.
 
The central bank's asset-quality review is a positive, as it has compelled banks to reclassify standard or performing restructured loans as NPLs, leading to higher loan provisioning, which triggered losses at many public banks. Small- and mid-sized public-sector banks were always the most at risk, but these results indicate that the standalone ratings of certain large banks may also be vulnerable, Fitch added.
 
The RBI review also highlights higher capital risks for government banks with an average net NPL to equity ratio at around 70% versus 8% at private banks. The impact on private-sector banks was relatively limited, as hidden problem loans were lesser from the start - while better credit growth and diversified income streams also helped offset the decline in profit from higher loan provisions.
 
"India's new Insolvency and Bankruptcy Code may significantly improve resolution timeframes if implementation is both timely and effective. The government's intention is encouraging, according to recent press reports, but it will take time to see whether the new code can help resolve the current NPL stock, especially since the broader economy remains relatively uncertain. The Reserve Bank of India's recent discussion paper on limiting banking sector exposure to individual corporate borrowers, when implemented, could further reduce systemic risk by limiting concentration risk to large corporates," the ratings agency concluded.
 

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Don't treat your garbage as garbage, but as a resource
An interaction between citizens and municipal officers of G-North and G-South ward led to a several interesting suggestions and thoughts on how citizens can collaborate in making Mumbai clean and green. The crux of it, however, was the need for greater engagement by citizens and a willingness to work together with the authorities, instead of indulging in a one-sided blame game.  The session started with a presentation and case study on what has worked in one particular ward. 
 
Kunti Oza, a well-known activist, who has been working on the issue of solid waste management for over 25 years made a presentation about how A-Ward, which includes the business district of Nariman point has made significant progress in working together with citizens, educational institutions and business houses to create awareness against litter and in favour of segregation and disposal of waste. She formed the Clean Bombay Foundation in 1992 (subsequently renamed as Clean Mumbai Foundation), which has been actively involved in making Mumbai a clean place. Officials from Brihanmumbai Municipal Corp (BMC) or Municipal Corp of Greater Mumbai (MCGM), Sudhakar Nanote, Asst. Engineer (SWM) and Shashank Thakur, SE (SWM) G-South Ward were also present during the session.
 
Well-known activist Ashok Ravat set the tone for the session introducing the issue of waste management, and highlighting the importance of segregating waste. Ms Oza enumerated the activities of Clean Mumbai Foundation. She said, “The problem is with education (relating to waste management).”
 
She added that instilling the right values in children at young age could go a long way in solving the problem of waste management. Educating people could go a long way in highlighting that garbage is a manmade problem, she went on to educate the audience on different types of waste. Stating the importance of treating garbage as a resource, she advised the audience to convert their garbage into compost.
 
Every person can do his bit by helping in his own way. In one year, a family of four can ensure that 120 kg of waste is recycled just through segregation. A building of 20 apartments can ensure that 2.4 tons is recycled in a year! She said that it was important to generate awareness about global warming.
 
Shaivi Shah, an intern with Moneylife Foundation, gave a brief pictorial presentation highlighting the contrast in cleanliness levels at different places in G-South and G-North ward. This led to an interaction with Assistant Engineers of G-North and G South Ward on how the community can participate in keeping the city clean. 
 

Mr Shashank Thakur, SE (SWM) from the MCGM (Municipal Corporation of Greater Mumbai) explained that there are three types of waste – dry, wet and domestic hazardous waste. He added that the willingness of people to do something actively for waste is less. Composting is one of the methods to recycle waste. There are different methods of composting. Pot composting (aerobic method), vermicomposting and Bokashi method are some of the methods of composting. For instance, in aerobic method, you put your dry and wet waste in different containers. Once the wet waste container is full, put its contents into the first compost pot. You can then add dried leaves of the same quantity as the waste. You can then add the semi-composted material, buttermilk or cow dung to start off the decomposition process. Turn the pile around every other day. Once full, the pot has to be kept open for 30-45 days. After two months, the waste will turn into rich compost that can be used or sold as manure. Though there are different methods of composting, Mr Thakur said, “Whatever way you like (it), do it.”
 
Plastic recycling is also extremely critical as it is non-biodegradable. A technique known as Pyrolysis process can convert plastic into a useful fuel. Using this technique, any type of plastic waste can be broken down into smaller molecules. The output derived from the process is known as bio fuel. Similarly, heat compression and thermal depolymerisation techniques are used in certain countries
 
The speakers explained the operational aspects of workings of waste management by the authorities. The speakers stated that change in culture takes time, but it will definitely happen.
 
Mr Thakur stated, “Don't believe that things can't change. Be optimistic. Our future is bright.”
 
An interactive Q&A session followed where questions on a number of issues such as expandable polystyrene (EPS) or thermocol waste, which is not biodegradable, and what could be done to reduce such waste were answered. On the question of what the citizens could do to reduce the problem of waste, Mr Thakur reiterated the importance segregation of waste, which is also the key to bring down cost of transportation etc. 
 
But again, the MCGM officials expressed their willingness to work with people and urged citizens of G-North and G-South to create Advanced Locality Management (ALMs) that could work with them and be suitably empowered to keep tabs on cleanliness.  There was also some discussion on incentivising housing societies, who create space for segregation and are able to dispose all their waste in-house. There are a couple of societies already doing this work, the best known of these is Marathon Era Cooperative Housing Society in Lower Parel, Mumbai, which treats over 300 kgs of garbage generated everyday in-house and does not even need garbage truck going to the society. He said this can be replicated by many of the bigger societies in Mumbai as well.
 

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COMMENTS

Jyoti Dua

9 months ago

I appreciate Moneylife publication for publishing such news. I also appreciate MCGM officials and Ms Kunti from Clean Mumbai Foundation for interacting with citizen. The citizen can play a vital role in cutting down the transportable waste. There is need to spread the awareness about segregation of waste and converting it into manure at the source. MCGM should take active part in awareness mission and associate NGOs, Senior Citizen, office bearer of housing societies. Many individual wish to take active part in converting waste into compost. However, there is need to educate them about the process.

Meenal Mamdani

9 months ago

Residents of Raghav Wadi, near French Bridge, obtained 2 separate containers for wet and dry waste. However after segregating the waste, the municipal truck that comes to collect the waste, mixed it all together in the truck. This is very disheartening. If the corporation wants the citizens to separate the waste at source, at least it can send 2 separate trucks to collect the separated waste.

REPLY

Shrikant Dattatraya Sahasrabuddhe

In Reply to Meenal Mamdani 9 months ago

BMC must educate its ground level staff first.Also they need to have concrete plans for end use of collected garbage.

Shrikant Dattatraya Sahasrabuddhe

In Reply to Meenal Mamdani 9 months ago

BMC must educate its ground level staff first.Also they need to have concrete plans for end use of collected garbage.

Monsoon yet to reach but Mumbai local trains already in panic mode
Almost every Mumbaikar and there are over 75 lakh, who travel daily on the Mumbai Suburban Rail Network (local trains), are a worried lot with the regular failure of train services due to one or the other reason. This too when the Minister and Mumbai man Suresh Prabhu is busy hitting headlines almost every day with new schemes for railways. Ever since, Mr Prabhu took over the reins, there are so several new schemes announced but life for the over 75 lakh daily commuter of local trains have remained the same, sometimes even becoming worse. Even just a mention of upcoming monsoon makes these commuters skip a heartbeat. 
 
Today, Mumbai has metro, monorails making grand entry but Indian Railway will always remain the first, preferred and cheapest choice for the aam admi. At the same time, it is becoming the most neglected, in terms of regular maintenance and providing facilities to lakhs of daily commuters.
 
In 2012, Dinesh Trivedi, former railway minister, while speaking at an event organised by Moneylife Foundation, had said that the entire railway system is a mess and there is a urgent need to modernize it so that people can travel safely with some dignity, unlike what every commuter, especially on Mumbai's local trains experience every day. “There are no maintenance contracts given by the Railways and they are carrying out even the basic repairs on ad-hoc basis,” he had said. 
 
The once-efficient suburban rail network is the lifeline of Mumbai. However, over the past two decades it is creaking under the weight of passenger influx, corruption and lack of investment in upgrading infrastructure. The extraordinary crowding of trains and poor commuter facilities such as stations makes the Mumbai suburban train system so prone to accidents that more than 10-12 people die in railway mishaps every day – a figure that would have made front-page news anywhere else in the world but meets with apathy in India.
 
Commuters face delays (5-10 minutes delay is regular!), or cancellation of local trains almost three to four days in a week. The entire suburban rail network needs to be overhauled as it is creaking under enormous pressure and lack of proper maintenance. Almost every Sunday, the Central Railway (CR) and Western Railway (WR), which run local train services, have their mega blocks for undertaking maintenance and overhauling work. But the regular technical failures point out that either these are not being carried out as expected or there is something missing, like an expert who knows how to get the job properly done. 
 
A look at the incidents in May 2016 alone is enough to show why local commuters are a worried lot.  
 
12 May 2016: Commuters had a tough time using the WR network following a signal failure between Goregaon and Malad during evening peak hours. This resulted in local trains halting at one spot for about 30 minutes and thus running behind schedule.
 
On the CR, at around 7pm there were technical glitches in between Masjid and CST due to which an Ambarnath-bound train was halted for over 30 minutes. The technical problem was solved at 7.40pm however, this delayed several trains leaving from CST. There was a huge chaos at CST. The local trains leaving CST were running behind schedule for next few hours. 
 
14 May 2016: A technical glitch affected signals on northbound slow and fast corridors at Andheri around 10.50am. The problem was fixed and traffic was restored at 11.30am on the fast track, while services resumed on the slow line at 11.55am. The disruption forced WR authorities to cancel 40 services. Over 100 services were delayed between 20-30 minutes. 
 
25 May 2016: Technical failures marred the Central Railway (CR) train services after the first drizzle that Mumbai experienced and the repercussions were felt even on next day. During that period, the CR cancelled 120 trains services owing to technical glitch. There was a failure of auxiliary transformer at Vikhroli and between Sion and Kurla on the CR main line. Commuters returning home from work had to sweat it out, with several trains being stalled on the tracks one after the other. Some of them went without electricity, which meant they had to stay in darkness for hours. Thousands of commuters were stranded and many of them got down from the halting trains and walked through tracks covering distances. This incident brought windfall to taxi drivers who made the most of the situation with surge pricing. 
 
31 May 2016: An empty coach derailed off a slow track between Lower Parel and Elphinstone railway stations at 2:15 am Tuesday disrupting train services. All trains on both slow and fast track of Western Railway remained affected during the morning peak hour. Rail officials told reporters that a 19-coach empty train was travelling from the Parel workshop to the yard when the second coach capsized onto the adjoining track, affecting services on both directions. 
 
However, technical glitches are not the only reason that causes delay in local trains. According to official data, as many as 47 bovine animals were run over by local and long-distance trains on WR in the past three months. Every time a cow or buffalo is hit by a train, services get delayed between 15 and 20 minutes.
 
Looking at the railways pre-monsoon disruption, it seems that the 75 lakh commuters from Mumbai have to travel through technically hit trains and suffer from the approaching monsoon fury as well.
 

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COMMENTS

Aditya G

9 months ago

Scary! But technical snags are common, even in the London Tube, Tokyo and New York metros. It's a question of resolving it quickly, in matter of minutes (not more than 10 minutes per issue). It'll be interesting to how much CR and WR have invested in signaling & feedback systems over the last few years. From what I've heard, engineers in Tokyo, for instance, are equipped with gadgets that gives feedback immediately whenever there is an issue, be it signal or track or anything else (even live track temperatures) -- and all in real time.

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