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Bank haircuts on NPAs go up to 80% Nine of the 12 firms on RBI list enter bidding stage As nine of the 12 companies on the Reserve Bank of India’s (RBI’s) first list of non-performing assets (NPAs) enter the bidding stage, the average haircut on bad loans, or loss to banks based on the offers made by suitors in five cases, ranges between 50 per cent and 80 per cent. The least loss is likely to be in the case of Bhushan Steel, for which JSW Steel has offered Rs 280 billion of cash and equity worth Rs 17 billion to banks. Bhushan Steel owes banks Rs 560 billion.The steepest haircut, however, is due to Jyoti Structures, which has got just one bid, from a clutch of high net worth individuals (HNIs) So far, the insolvency process has resulted in a mixed bag for the banks, with some of the cases going through a rebid and revision in offers. Alok Industries is going through a rebid, and Amtek Auto through a revision in offers. Liberty House has submitted a revised offer for the comp

Banks opposed to changes in MCLR calculation: Reserve Bank of India The banks proposed, that more "ideal benchmark could be constructed based on deposit rates of the banking system as a whole" Banks are opposed to the move to link marginal cost-based lending rate (MCLR) to an external, market-linked benchmark, the Reserve Bank of India (RBI) has revealed in a rare dissemination of feedback on its website. While it is standard practice for RBI-appointed committees to prepare their reports and seek feedback, those are not publicly disclosed, except in this case. The internal study group, looking at the issue of effective monetary transmission, proposed in October 2017 that banks must take into account either of the three external benchmarks — the treasury bill rate, the certificate of deposit (CD) rate and the RBI’s policy repo rate from April 1, 2018. These proposals were met with resistance from Day One, with bankers commenting publicly that such linking was not possi

RBI still processing returned notes The RBI has said that Rs 500 and Rs 1,000 notes, returned to banks when the government demonetised high value currency 15 months ago, are still being "processed for their arithmetical accuracy and genuineness".This is being done in an "expedited manner", the central bank said. "Specific bank notes are being processed for their arithmetical accuracy and genuineness and the reconciliation for the same is ongoing. This information can, therefore, be shared on completion of the process and reconciliation," the RBI said in reply to an RTI application filed by a PTI correspondent. To a query on the number of demonetised notes, it said, "...subject to future corrections if any, arising in the course of verification process, the estimated value of specified bank notes received as on June 30, 2017 is Rs 15.28 trillion (lakh crore)".Asked to provide the details of the deadline for finishing the counting of demone

Government measures to ensure MSMEs become growth engine: DFS secretary A slew of recent measures, including tax concessions in the budget, for micro, small and medium enterprises (MSMEs) has been taken with an aim to transform such enterprises worth Rs 6.33 crore into a growth engine for 'new India', a senior government official has said. These initiatives will bring down the tax burden on enterprises with an annual turnover of up to Rs 250 crore and also lower the interest burden, leaving more surplus for investment and growth of the MSME sector which is the backbone of the country's economy in terms of output, exports and employment generation. The RBI on its part too announced various measures for MSMEs hit by the implementation of Goods and Services Tax (GST) by giving them additional up to 180 days to clear their dues to banks."All these measures are aimed at making the 6.33-crore MSME enterprises growth engine for new India," Financial Services Secr

SEBI now looks to curb benami deals After its clampdown on shell companies, Sebi is turning its glare on 'benami trading'.The market regulator is trying figure out ways to pull up perpetrators who indulge in insider trading and share price manipulation through 'layering' of fund flows. This is an age-old technique of moving money as loan from one company to the next — in a chain of nine to ten entities — before the last outfit receiving fund buys or sells shares. These layers of companies — many of which are normal operating business entities and not shell firms — are used to mask the identities of men behind the trades and obfuscate the true nature of the transaction. The matter was raised last week by Sebi wholetime member Madhabi Puri Buch at a meeting that was attended by officials of stock exchanges, a few senior officials of Sebi and members of financial services industry. "It is tougher and more complicated than cracking down on shell companies. Such

Impaired assets to peak by FY20: India Ratings Impaired assets are expected to peak in FY'20 to 12.7% of advances, according to ratings firm India Ratings. Cash flow problem with respect to some good borrowers also add to the risk. Moreover, public sector banks will have to raise an addition Rs 2 lakh crore if credit picks up, it said. Impaired assets may peak at 12.7% by FY19-FY20, while credit costs will recover gradually. It is expected to come down to 178bps by FY'19 from 253bps in FY'17. This will be due to aging of a large stock of non-performing assets (NPAs) added over the last four quarters estimated at Rs 4.2 lakh crore in FY'17, said India Ratings in a report The profit oss account for most public sector banks would also be under pressure on account of the accelerated provisioning requirement on those accounts identified by the regulator for reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code in FY18 The India Rat

RBI suggests tax sops, self-regulation to build fintech space From suggesting tax rebates to merchants for adopting digital payments to light-touch regulations to help fintech innovations bloom and even suggestions around formation of a self-regulatory body of fintech companies, the Reserve Bank of India has come up with recommendations to strengthen the fintech space. In a report on fintech and digital banking, an inter-regulatory working group under the chairmanship of RBI executive director Sudarshan Sen, came up with suggestions for the government and regulators to help the fintech sector grow and contribute to improve financial services.For the fintech sector, RBI has identified technology startups working in the space of peer-to-peer lending, blockchain, big data, smart contracts, robo advisors and online aggregators. Highlighting how this sector has attracted huge interest from VCs and global investors the report states that investment in the fintech space grew to Rs 20