Securitisation Dives 80% during the First Half on Moratorium Blues: CRISIL
Securitisation transactions plunged 80% to just over Rs20,000 crore by value in the first half of the current fiscal, following the COVID-19 pandemic and the moratorium on loan repayments allowed thereafter, says a note from ratings agency CRISIL, adding since September, however, number of originators and investors have increased.  
 
In the report, CRISIL says, "September saw a rebound in transactions to about Rs10,000 crore as economic activity began clawing back. Overall volume, however, continues to be well below the levels seen in the past few years, when securitisation had become one of the preferred fund-raising tools for non-banking financial companies (NBFCs). Volume in the first half of fiscal 2018 was around Rs37,000 crore, which surged to about Rs 68,000 crore in the same period of fiscal 2019, and onwards to around Rs96,000 crore in the first half of fiscal 2020."  
 
According to the ratings agency, NBFCs have had to increasingly take recourse to securitisation to raise funds after the default by a large financial institution in September 2018. Securitisation proceeds accounted for 26% of the disbursements done by the top-20 non-banks (13 NBFCs and seven microfinance institutions) in fiscal 2020. In fiscals 2019 and 2018, the numbers were 18% and 12%, respectively, it added.
 
Krishnan Sitaraman, senior director at CRISIL Ratings says, “Disbursements by non-banks had declined sharply in the first half as business activity hard-braked. That also reduced the need for non-banks to access the securitisation market to churn assets. Investors also preferred to wait on the side lines, assessing the impact of moratorium on collection efficiency and credit behaviour, and awaiting clarity on improvement in borrower cash flows and economic activity. Further, in the interim, NBFCs were able to secure funds through alternate means such as targeted long-term repo operations and partial credit guarantee scheme.”
 
According to the ratings agency, asset-backed securities constituted 70% of the overall securitised volume in the first half of this fiscal, which marked a 1,000-bps (basis points) growth on-year (see Chart 1 below). 
 
 
The direct assignment (DA) route, being the most preferred mode for mortgage-backed securities, accounted for nearly two-thirds of all deals (see Chart 2 above). In terms of asset classes, commercial vehicle and gold loans comprised more than half of the transaction volume in the first half of this fiscal.
 
Direct assignment transactions supported by partial credit guarantee of the government, saw renewed interest from banks in the past few months, accounting for nearly 12% of volumes.
 
According to CRISIL, the number of active originators have increased in the past three months as portfolios under moratorium fell. "Consequently, interest of investors, too, picked up, as more data became available on borrower behaviour during the moratorium. Investors preferred to acquire loans given to borrowers who had not opted to avail of the moratorium from June to August," it says. 
 
While private banks and insurers remained the main investors, as per the ratings agency, public sector banks and NBFCs also put money into some securitised pools. However, it says, mutual funds, major investors in recent years, have been largely inactive this fiscal.
 
With containment measures beginning to be relaxed from June, economic activity is picking up and NBFCs have begun disbursement of loans—but on a limited scale—amid operational constraints.
 
According to Rohit Inamdar, senior director at CRISIL Ratings, as more data becomes available on borrower behaviour at portfolio and pool levels, and if they point to predictable, and pre-pandemic-level, collection efficiencies, investor interest will increase. "The contours of the one-time restructuring likely for borrowers will determine the extent of the securitisation recovery in the near term,” he added.
 
CRISIL says, the spread, intensity and duration of the pandemic and further lock-downs will also be monitorables.
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    Rajiv Bajaj says Don't Want My Child to Inherit an India Built on Hate: Report
    Rajiv Bajaj, managing director of Bajaj Auto Ltd has reportedly said that he do not want his children to inherit an India built on hate. He was commenting on his decision to stop advertising on TV channels involved in the television rating point (TRP) scam. 
     
    In an interview with Swati Chaturvedi of GulfNews the Bajaj Auto MD says, "“I have a friend, who I will not name because he will not like it, told me when I was upset about MS Dhoni’s daughter and the way Amitabh Bachchan was wished death on social media when he was suffering from COVID-19 that you can do something about this. Stop funding this hate. To me it is a wise decision because my child, my brother’s children can’t inherit an India and a society where such hate festers. It was a simple choice and I made it."
     
    “Dhoni, is a close friend and I was incredibly hurt when someone gave a rape threat to his five-year-old baby girl, who is part of my family. I said enough of this toxic hate. Bajaj Auto does not endorse hate mongering in society and a strong brand is the foundation on which you build a business,” Mr Bajaj told the portal.
     
    Bajaj Auto is the first corporate to withdraw advertising from three TV channels, which Mr Bajaj, terms as 'indulge in toxic hate mongering'.
     
    Justifying his decision to boycott the three TV channels, Mr Bajaj has reportedly said, "I strongly believe that a strong brand is a foundation on which you build a business. Purpose of strong base is to contribute to the society. Bajaj brand does not endorse toxicity and hate mongering in the society. Therefore, Bajaj as a brand has blacklisted three channels for advertising for some time."
     
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    COMMENTS

    priyankaniperpharma

    2 weeks ago

    Almost every one who takes loan from Bajaj finance hates .

    beaumind

    2 weeks ago

    Good initiative by Bajaj and Parle-G. Hope Indian corporates do themselves a favor and support honest journalism, not hate. I don't have much hope though given their silence in the last 6 years even as India is gradually losing whatever economic status it had.

    saharaaj

    2 weeks ago

    Indi awas not built on hate but refurbished and remodeled on hate by rulers

    s5rwav

    2 weeks ago

    As the ilk of Mr Anand Mahindra and Mr Mukesh Ambani and Mr Ratan Tata and Mr Uday Kotak and Mr Kumar Mangalam Birla Keep Mouth Shut at Rampant High Level Corruption and Unpardonable Heinous Crimes against Humanity, at least Mr Rahul Bajaj and Mr Rajiv Bajaj Speak their Minds. I am Babubhai Vaghela from Ahmedabad on Whatsapp Number 9409475783. Thanks....

    kunaldutt204

    2 weeks ago

    Rajiv - - - Rahul - - - - - XXXX

    A family close to Congress names his sons on the basis of Fake Gandhi names... Glad Rahul is unmarried... And they were saved to name that poor kid... Not because of hate but because of bootlicking Gandhis...your kids are safe...

    REPLY

    beaumind

    In Reply to kunaldutt204 2 weeks ago

    And I thought where are all the a****les.

    s5rwav

    In Reply to kunaldutt204 2 weeks ago

    ???

    psgchandel

    2 weeks ago

    I guess, Mr. Bajaj is trying to become another Amir Khan of India. I can see his obsession with current Govt may be due to some unwarranted business benefits which he will not like that. So, I urge Mr. Bajaj to sell his wonderful business to another businessman and participate in active politics. Coz, I will just considering him as a coward who attacks Govt in the name of business despite it's becoming evident that, they are more inclined towards Congress. Until then, despite being very good Indian brand, I no longer want to purchase their products.

    REPLY

    s5rwav

    In Reply to psgchandel 2 weeks ago

    ???

    khushkid

    2 weeks ago

    I think by giving publicity to his decision to boycott three tv channels for purposes of advertising Mr.Bajaj is also joining the Hate Campaign.It is his "hate" v/s."the hate of others". He is indirectly endorsing those channels who go out to promote an accused by arranging a special interview for the entity. It would be better to take a non-partisan view and ask for a correction of the entire system. Selective cure will not serve the purpose but increase divisions.

    mahesh.bhatt

    2 weeks ago

    Cricket is grand Politico Business Legal betting games so this is new normal Mahesh Bhatt

    Subray

    2 weeks ago

    Kudos to Mr Rajiv Bajaj on his action of blacklisting 3 channels. I hope that is just a beginning. Because I feel there are many more channels who also sensationalize and contribute.

    Is he willing to stop funding the main National parties, who are the chief perpetrators of this hate atmosphere.
    He may not be raring to do so.
    By and large, I feel only the economically marginalized sections of the society would react and agree to these hate mongering news.
    The normal layman and white collared community has no time to respond.

    swarke

    2 weeks ago

    100 chuhe maar ke billi hai ko chalee.
    His family had no issue with giving indians 3rd grade engineered product like scooter n rickshaw after making them wait for 10 years.
    These crooks have just exploited their proximity to then government after independence to ensure monopoly to manufacturer & dump lousy products for decades n decades.

    REPLY

    s5rwav

    In Reply to swarke 2 weeks ago

    ???

    Newme

    2 weeks ago

    How cruelly Bajaj Finance treats their loan defaulters.

    amitjainpc

    2 weeks ago

    What a fake man, just like his father... this is not the first time the man has spoken filth..

    i_sakarwala

    2 weeks ago

    Love you Mr Rajiv Bajaj....... You have proved that these fake nationalist who scream and shout on television are nothing but lusty sensationalist.
    You are the hope that we Indians still have in democracy. Truly HAMARA BAJAJ.

    Central Bank of India too Writes Off Rs17,239 Crore Bad Loans of Big Defaulters and Recovers Just 7% in 8 Years
    Following in the footsteps of other large public sector banks (PSBs), Central Bank of India too wrote off Rs17,239.74 crore and recovered a paltry 7% or Rs1,205.92 crore over the past eight financial years from big defaulters. As it has become a norm with PSBs, Central Bank too denied sharing names of big defaulters under the Right to Information (RTI) Act.
     
    Information shared by the Bank with Pune-based RTI activist Vivek Velankar shows that the Central Bank has written off Rs17,239.74 crore as technical write-offs in the eight-year period from FY12-13 to FY19-20. As against these write-offs, the recovery was just 7% or Rs1,205.92 crore. This applies only to loan defaults of Rs100 crore and more. 
     
     
    In its reply, the Bank says, "Year-wise recovery in particular accounts of Rs100 crore and above is not available with us. However, total recovery in those accounts till FY19-20 is Rs1,205.92 crore."
     
    Overall, for the past eight years, Central Bank wrote off Rs21,988.60 crore while recovering just Rs1,922.69 crore from all defaulters, the information shared under RTI shows.
     
     
    Mr Velankar, who is president of the Pune-based Sajag Nagrik Manch, also pointed out various excuses used by PSBs while declining to share names of big defaulters. He says, "So far only State Bank of India (SBI) had shared names of its big defaulters. But maybe it shared because I had asked the information as a shareholder during SBI's annual general meeting (AGM). But then, two other banks, where I am a shareholder, declined to provide me with the names of defaulters with a loan of Rs100 crore and more."
     
    While Bank of Baroda (BoB) and Bank of Maharashtra (BoM) denied sharing names of big defaulters to Mr Velankar as a shareholder, other lenders like Union Bank of India, IDBI Bank, which became a private sector lender a few months ago, Punjab National Bank (PNB), and Indian Overseas Bank (IOB) refused to divulge these details under the RTI Act using multiple excuses. 
     
    Many banks, however, have used 'confidentiality of borrowers', 'fiduciary relations' as excuses for not sharing names of defaulters of Rs100 crore and above. 
     
    An aggrieved Mr Velankar says, "If this indeed is a matter of confidentiality or fiduciary relations, then how did the SBI give me the entire list with names and why can’t the other lenders do the same? When a common borrower defaults, the same banks publish his name and all details through advertisement in newspapers. Why do they want to keep the names of defaulters hidden? Why doesn’t the 'confidentiality' or 'fiduciary' clause apply while publicising the names of common borrowers?"
     
    The strangest reply the Pune-based RTI activist received under the RTI Act came from the Indian Overseas Bank (IOB). The Bank told him, "Information sought for is not readily available and the culling out of such information will disproportionately divert the resources of the bank and will affect the normal working of the bank. Under the RTI Act, the central public information officer (CPIO) can provide only that information which is available and existing with a public authority."
     
    "When other banks have information about write-offs and recovery of bad loans, how come IOB has no such details in its records? The information about loans written off and the recovered amount is part of the bank’s mandatory reporting to the Reserve Bank of India (RBI). This data is also used by the bank’s own staff for recovery. So how can it deny the information and say it will affect normal working of the bank?” Mr Velankar asks.
     
    Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean-up process. The beneficiaries are invariably some of our biggest industrialist defaulters. 
     
    In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. However, as SBI and then BoB have shown, most of the times, there is no recovery or negligible recovery for the amounts written off.
     
    Mr Velankar says, “There were a lot of heated arguments in the country a few months ago on written off loans of big accounts. At that time it was clarified by the union finance ministry that technical write-off does not mean waiving off loans and efforts are on for the recovery of these written off loans. Since banks, especially PSBs, are not revealing any information about written off loans and recovery, I am asking these questions as a common customer of banks to bring it in the public domain." 
     
    According to the RTI activist, all big claims about strict adherence to the recovery of written-off loans are hollow. "The information provided to me as a shareholder by SBI, BoB, BoM and Union Bank of India, IDBI Bank, PNB, and IOB proves that something is not right the way bad loans are written off and almost no efforts are being made to recover these loans."
     
    "Basically, there is no control on banks either by the Reserve Bank of India (RBI) or the finance ministry," the RTI activist says, adding, "In fact, since these are written off debts and are no longer part of the balance sheet of the banks, nobody really keeps an eye on this and banks are taking undue advantage of this. It also shows how these PSBs who talk big about transparency are in reality more keen on hiding things from public view."
     
    As in the cases of the State Bank of India (SBI), Bank of Baroda (BoB), Bank of Maharashtra (BoM),  Union Bank of India (UBI), IDBI Bank, PNB and Indian Overseas Bank  that have been reported by Moneylife, this is one more example of massive ‘technical’ write-off with minuscule recoveries, leading to frequent recapitalisation of banks with the taxpayers’ money. Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts. 
     
    As reported by Moneylife, IOB wrote off a massive Rs41,392 crore as technical write-offs in the past eight years from FY12-13 to FY19-20. As against these write-offs, the recovery was just 17% or Rs7,253 crore.  (Read:  Indian Overseas Bank, Another PSB to Write Off Rs41,392 Crore in 8 Years; Recovers Just 17%)
    PNB too wrote off a massive Rs44,565.59 crore as technical write-offs in a four-year period from FY16-17 to FY19-20 . As against these write-offs, the recovery was just Rs12,027.97 crore. If one were to look at large loans of Rs100 crore and above, the technical write-off in this segment alone is Rs31,966 crore, while the recovery from big defaulters is only 22% at Rs7027.94 crore.  
     
    Similarly, IDBI Bank, which became a private sector lender a few months ago, wrote off total bad loans worth Rs45,693 crore but could recover just 8% of it after spending more than Rs29 crore during the past seven years. (Read: IDBI Bank Wrote Off Rs45,693 Crore Bad Loans and Recovered Just 8% in 7 Years)
     
    Union Bank of India too wrote off bad debt worth Rs26,072.81 crore between FY11-12 and FY19-20 (this information pertains only to loans of over Rs100 crore). 
     
    Bank of Maharashtra has written off bad loans of over Rs7,402 crore in the past, while recovering a paltry 4% in over eight years through recovery efforts. The lender wrote off bad debts worth Rs7,402 crore during four out of the past eight years, while recovering just Rs253.55 crore. (Read: Bank of Maharashtra Writes Off Rs7,100 Crore Bad Loans; Recovers Just 4% in 8 Years)
     
    From 2012 to 2020, BoB had technically written off 97 accounts with bad debts of Rs100 crore and more. These add up to Rs21,476.89 crore over eight years, while recovery in that same period is just 4.91% or Rs1,056.53 crore. (Read: Bank of Baroda Follows SBI, Writes Off Rs21,474 Crore in Bad Loans; Recovers only Rs1,057 Crore in Past 8 Years)
     
    Similarly, from FY12-13 to FY19-20, SBI, the country's largest lender, wrote off bad loans worth Rs1.23 lakh crore of bad debt but recovered a paltry Rs8,969 crore. (Read: SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!)
     
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    COMMENTS

    S SRINIVASA RAJAN

    2 weeks ago

    Banks have used the public money for these bad loans and it is sad that they are refusing to reveal who are the borrowers. Worse due to these bad loans government has been forced to provide hundreds of crores during the last several years towards recapitalisation which is being borne by the tax payers. A PIL should be filed in Supreme Court seeking these details as PSU banks are answerable to public.

    mithunc3

    2 weeks ago

    No wonder why so many evade paying taxes and only 1% pays and that too salaried class mainly due to TDS !!!
    And when small guys don’t pay the same banks hound them and shame them!! What an irony

    komalhema4

    3 weeks ago

    Bank after bank,write of crores of loans and again will give loan to same defaulters so that a % of it will go to political parties as election fund and to serve as protection money.The common man especially senior citizens bear the burden by way reduced interest on deposits and more GST.

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