Rahul Gandhi announces a basic income scheme called the Nyuntam Aay Yojana, to give a dole of Rs 6000 per month to families earning less than Rs 12000 per month, if the UPA is voted to power. Says it will benefit 5 crore families

News Snippets

  • Reports say that BJP candidate from Begusarai, Giriraj Singh, has refused to contest. Senior leaders are trying to convince him
  • Goyal's departure from Jet raises the possibility of the airlines' revival with banks now expected to release funds for the cash-strapped entity
  • Time to pass on the baton, says Naresh Goyal as he quits Jet Airways
  • Naresh Goyal and his wife Anita quit Jet Airways board
  • Amit Shah to contest from Gandhinagar, the seat held by veteran L K Advani whose name does not figure in first list
  • PM Modi to contest from Varanasi again
  • BJP comes out with its first list of 184 candidates across 20 states
  • Nirav Modi termed as "flight risk',denied bail by UK court
  • Aseemanand and three others acquitted in Samjhauta Express blast case
  • BJP wins floor test in Goa. 20 MLAs vote for the Pramod Sawant government while 15 vote against it
  • Mukesh and Nita Ambani help Anil to clear Ericsson dues. Anil thanks them publicly.
  • Anil Ambani escapes jail by clearing his dues to Ericsson within the time set by the Supreme Court
  • BJP's Pramod Sawant to be next chief minister of Goa. The party brings allies MGP and GFP in line by offering them posts of deputies to the CM
  • Despite overnight meeting, BJP yet to come up with a replacement for the departed Manohar Parrikar as Goa CM
  • Mid-air collision of two international flights luckily averted over Mumbai skies
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Banks Taking Big Haircuts To Sell Stressed Assets

By Linus Garg

About the Author

Linus Garg Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

Asset reconstruction companies (ARCs) never had it so good. With the financial year coming to an end, they are seeing booming business as banks pressed for cash are putting large blocks of stressed assets for sale and that too at lucrative prices for cash payments. They want cash payments because they want to avoid provisioning for NPAs in the year-end balance sheet. A report in The Financial Express says that ARC executives are upbeat about business as banks are willing to take even 60% haircuts, with Central Bank even willing to take an 84% haircut in Alok Industries, as its reserve price suggests.

In the last two years, there were reports from various sources that suggested that banks would have to take upwards of 50% haircut to clean up the NPA mess. In July 2017, credit rating agency Crisil said that the exposure of banks in top 50 stressed assets was close to Rs 4 lakh crore and they could realize only Rs 1.6 lakh crore, implying a haircut of 60%. Crisil classified the haircuts into four broad categories — marginal (less than 25 percent), moderate (25-50 percent), aggressive (50-75 percent), and deep (greater than 75 percent). One-fourth of the debt analyzed was identified to need marginal or moderate haircuts, while a third needed aggressive, and nearly 40 percent, deep haircuts. It seems 21 months later, the suggested haircuts are actually taking place.

As banks realize that chances of recovering the loans are getting slimmer by the day, they want to get some amount back instead of not getting any. The other benefit is that the provisioning liability comes down and it frees up capital to that extent. Banks are also under pressure from the RBI to clean up their balance sheets. Banks want to settle National Law Tribunal-related exposures at a much lower rate provided they get cash payments. Delays in resolution through the fledgling Insolvency & Bankruptcy Code (IBC) also seems to have forced the banks to go through this route.

pic courtesy:thehindubusinessline.com

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