Companies & Sectors
RBI calls for ownership change of companies with sticky loan accounts
Reserve Bank of India (RBI) Governor Raghuram Rajan on Monday called for ushering new owners or managers for companies whose loans accounts have gone sticky, to improve their operational efficiency.
 
In his foreword to RBI's annual report for 2015-16, released on Monday, he said the asset quality review initiated during the year under review has improved recognition of non-performing assets (NPA) and provisioning in banks enormously.
 
"Now more focus should move to improving the operational efficiency of stressed assets, and creating the right capital structure so that all stakeholders can benefit. This implies simultaneous action on two fronts," Rajan said.
 
According to him, where it is necessary, new management teams have to be brought in, sometimes as owners, and where not possible, as managers.
 
"Creative search for new management teams, including the possible use of public sector firms or private sector agents, is necessary, as are well-structured performance incentives such as bonuses for meeting cash flow/ profit benchmarks and stock options.
 
"If the loan is already an NPA, there is no limit to the kind of restructuring that is possible. If standard but the project is struggling, we have a variety of schemes by which a more sensible capital structure can be crafted for the project," Rajan said.
 
Adding a rider Rajan said some of the current difficulties faced by banks are due to an unrealistic application by banks of a scheme so as to postpone recognition of a loan turning NPA rather than because of a carefully-analysed move to effect management or capital structure change.
 
"RBI will continue monitoring to see that schemes are used as warranted," he said.
 
Rajan also called for more competition in the financial sector so as to increase efficiency.
 
"The most appropriate institutions will prevail when the competitive arena is level, so we have to remove regulatory privileges as well as impediments, wherever possible, especially those that are biased towards some form of ownership or some particular institutional form," he added.
 
According to him, one of the critical components of the medium term strategy in the financial sector will be to strengthen the public sector banks in all aspects, including governance, cost structure, and balance sheets.
 
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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Adani's Australian coal project cleared, work from 2017
Adani Enterprises on Monday said it has overcome one of its last legal hurdles over the $16.5 billion dollar Carmichael coal project in Australia's Queensland state, and said construction will begin next year.
 
The country's Federal Court dismissed an appeal by the Australian Conservation Foundation that had argued that the authorities had failed to take into account the impact of burning coal and climate pollution on the Great Barrier Reef.
 
The $16.5 billion coal project in the state's Galilee basin is the largest in Australia but has suffered multiple setbacks from green groups' legal action.
 
Adani Australia, in a statement, said that it had welcomed the Federal Court ruling, adding that the decision closely follows an August 19 dismissal of another activist-driven legal challenge designed to delay the project.
 
Consistent with earlier decisions of Queensland's Land Court and the Federal Court affirming the company's approvals, it has determined that due process has been followed, the statement added.
 
"A recent report by PwC quantified the cost of these delays as being some 3 billion Australian dollars ($2.26 billion) to the economy and over 1,600 jobs annually over the first 10 years of the intended projects," it said.
 
"In local communities, a state and a national economy crying out for growth, this represents a significant cost to the community, not just to Adani."
 
The company said it has been consistently pointing out that these projects will supply better-quality coal for an increased thermal demand, in conjunction with significantly increased solar demand, in a growing Indian economy that will lift hundreds of millions of people out of energy poverty.
 
"If the better-quality, better-regulated coal from Australia is not sourced in Queensland, it will simply mean lower-quality, higher-emitting coal from elsewhere in the world will be used," Adani said.
 
"So the activists will not only harm local jobs, but if they get their way (it) would ensure higher emissions as well."
 
The company said activist-driven challenges were part of a known minority campaign, adding that they fly in the face of the strong support its job-creating projects have from local communities and other stakeholders in North and Central Queensland.
 
"Indeed, over six years, there have been multiple approval processes, some two years of cumulative community consultation and submissions as part of the processes and over 10 appeals and judicial processes brought on by activists," the statement said.
 
"There can be no question that there has been more than ample opportunity for consultation, input and appeal, and for activists to have their say," it said. The time, it said, has come for those who want the projects to be heard -- and not just the activists from out of town.
 
"Adani stands ready to deliver on its long-term future with Queensland, pending the resolution of a small number of outstanding legal challenges. As the company has previously indicated, if those issues are finalised, construction can commence in 2017."
 
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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BEST bus service losses mount to Rs905.3 crore as income from passengers dwindle
The BrihanMumbai Electricity Supply and Transport (BEST) Undertaking, which is civic transport and electricity provider public body based in Mumbai, has suffered a massive loss of Rs905.3 crore on transportation services during FY2015-16 reveals a reply received under the Right to Information (RTI) Act. RTI activist Anil Galgali had filed the application seeking information about BEST transport services.
 
During FY2015-16, the BEST incurred a loss of Rs905.3 crores due to higher per passenger cost at Rs21.41 while its income generated per passenger was just Rs12.88, reveals the reply received by Galgali. During that period, over 106 crore passengers used BEST services resulting in an income of Rs1,367.11 crore. However, to run these services, BEST incurred a cost of Rs2,272.41 crore during FY2015-16, the RTI reveals.
 
Galgali, in a letter sent to Maharashtra Chief Minister Devendra Fadnavis and Municipal Corporation of Greater Mumbai (MCGM) Commissioner, requested to bail out the BEST transport services. During FY2014-15 and FY2015-16, the BEST administration paid Rs139.7 crore and Rs136.8 crore, respectively as tax to various authorities. 
 
During 2011 and 2016, the BEST administration 11 times wrote to Urban Development Ministry, Transport Ministry to either reduce or waive off taxes it pays to different authorities. However, the successive governments ignored this, Galgali alleges. 
 
"When in 2014-15, the BEST wanted to increase fares, the MCGM gave it a grant of Rs150 crore for not going ahead with fare increase. However, now even the MCGM is not paying any heed to the demands of BEST. To strengthen the public transport system in Mumbai, the government should constitute a separate fund, which can be used to bail out undertakings like BEST, which are used by lakhs of commuters on daily basis,” Galgali said.
 

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COMMENTS

Laxmi Lobo

3 months ago

I think the mcgm is killing BEST to increase the pax for pvt cabs. One of the best toad transport systems in our country is being deliberately made useless. Many good, used routes are changed, non used routes pushed on and the ridiculous AC buses which have barely 3-7 pax will surely run at a loss. I'm sure the administration is also too heavy, drivers are surly and over paid perhaps.. Bus depots are being sold off to private developers, check Mahim. Just so much wrong
.

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