Skip to main content

Wilful defaulters cannot bid for their cos

By
Wilful defaulters cannot bid for their cos
State Bank of India (SBI) chairman Rajnish Kumar on Monday said that promoters of defaulting companies are within their rights to bid for their businesses which are on the block following insolvency proceedings. However, wilful defaulters or those borrowers who have diverted funds will not find any place in the bidding process, he said.
Kumar’s remarks come at a time when the insolvency process has come under criticism as it allows existing borrowers to bid for the companies at steep discounts. For instance, in the case of Innoventive Industries — one of the first cases in the National Company’s Law Tribunal under the new Insolvency and Bankruptcy Code — the best bids that the lenders have received requires them to take a haircut of 75% of their loan amount, resulting in a stalemate.
“Ethically, I don’t know, but legally they are within their rights to participate,” said Kumar, responding to queries on whether it was ethical to let a defaulter buy back a company at a discount. Kumar said that among the preconditions that banks will have for the bidding process is a requirement that they should not be classified as wilful defaulters. Second, the forensic audit should give them a clean chit and not hold them responsible for fund diversion and, finally, lenders have to find the resolution plan viable. Kumar was speaking on the sidelines of a banking summit jointly organised by FICCI and the Indian Banks Association.
The RBI has asked banks to initiate insolvency proce- edings against 41 companies. Banks have already started proceedings against 11 companies which include Essar Steel, Bhushan Steel, Bhusan Power, ABG Shipyard and Alok Industries. The Ruias of Essar Group have submitted an expression of interest (EoI) for Essar Steel. “If the law permits existing promoters to participate then we can’t help it. We have to abide by the law,” Kumar said.
Earlier, speaking at the summit, RBI deputy governor N S Vishwanathan said that digitisation can reduce the need for financial intermediation and one example of that is peer-to-peer lending. He added that banks and other traditional financial institutions will have to look at alternative business models. “In India, the environment is so conducive to digital adoption that one could say the country is in a very sweet spot in this area,” said Vishwanathan. 10,001-1lakh and Rs 15 for Rs 1-2 lakh. For NEFT transactions of over Rs 2 lakh, there was a fee of Rs 25.
However, any NEFT or RTGS transaction carried out at the bank branch will be payable. “The revision in NEFT/ RTGS online charges is applicable across all retail savings, salary and non-resident customers effective November 1, 2017,” HDFC Bank said in a notice to customers.
On chequebook issuance, HDFC Bank said a customer can avail one chequebook of 25 leaves free only once in a year in contrast to two such chequebooks. However, the cost of requesting an additional chequebook (25 leaves) has been kept unchanged at Rs 75 each.Also, if a cheque is returned due to insufficient funds, each such cheque will now attract a penalty of Rs 500 each.
The Business Standard, New Delhi, 08th November 2017

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more