LOK Adalat For DRT Cases on 2nd March 2012 at Chennai

Notification DRT Chennai :6 Feb 2013

Holding LOK-ADALAT  for DRT-I,DRT-II and DRT-III
Chennai And Pondicherry On 02-03-2013

Lok Adalat is being held as per the direction of the 
Department of
Financial Services,Ministry of Finance 
,in association with the
 Tamilnadu State Legal Services Authority,Chennai .

It is proposed to hold the next Lok Adalat on 
2nd March 2013
at 10.30 Hrs in  TAMILNADU STATE LEGAL
 SERVICES AUTHORITY
( TNSLA ) High Court Campus,Chennai.

The details of OA / TA cases where adjudication is 
pending before this Tribunal and there is a serious
 possibility of settlement of the 
cases where defendants are likely to appear before 
Lok Adalat only be forwarded to this Tribunal positively 
by 22nd feb 2012 for onward transmission to
the TAMILNADU STATE LEGAL
 SERVICES AUTHORITY ..

by DRT-India
9500012019
Chennai

SBI’s bad run continues

Overall, SBI added `4,255 crore to bad loans during the December quarter compared to `2,016 crore in the preceding three months. Photo: Hemant Mishra/Mint

Live Mint : Ravi Krishnan :Thu, Feb 14 2013. 03 07 PM IST

Despite advances growing at 15.5% from a year ago, the bank saw a decrease in net interest income

Mumbai: State Bank of India’s (SBI’s) bad run continued in the December quarter as both operating metrics and asset-quality parameters disappointed.

Despite advances growing at 15.5% from a year ago, the bank saw a decrease in net interest income. That was probably owing to a slip in net interest margins. In a statement, the bank said that while the average cost of deposits increased 41 basis points (bps) from a year ago, the yield on advances declined by 18 bps. The result was that net interest income declined by 3%, the first time in at least 12 quarters that this has come to pass. A basis point is 0.01 percentage point.

In the event, the bank was bailed out by a 76% increase in “other income”. Further details are awaited as to what component of this push came from fee income. It is likely that the boost to the component came from trading gains/sales of investments.

Thus, SBI’s operating profit grew a tepid 7.3% from a year ago. The bank also had to set aside more money as provision against bad loans which crimped net profit growth to 4.1%. But even these were not enough as the provision coverage ratio slipped further to 61.49% from 62.78% at the end of September.

Overall, the bank added Rs.4,255 crore to bad loans during the December quarter compared to Rs.2,016 crore in the preceding three months.

 As a result, gross non-performing assets as a ratio of total loans jumped to 5.3% at the end of December compared to 5.15% three months earlier. Reports from TV channels indicate that SBI had gross slippages of Rs.8,000-odd crore and recast loans worth anotherRs.2,300 crore.

The results are not too much of a surprise given the poor macroeconomic scenario. But with a turnaround not in near sight, asset quality pains will likely continue.

Wilful Defaulters...CIBIL..ARCIL...

Photo: Aditya Kapoor

BT :Anand Adhikari   :Edition: March 3, 2013

One morning, two years ago, when the officials of the Asset Reconstruction Company of India Ltd (ARCIL), which buys and sells bad loans acquired from banks, turned up at a Bangalore housing complex to repossess a defaulter's flats, they were nonplussed. 

The defaulter's tenants - a police inspector, a politician and a small-time businessman - were all influential. One had removed all the locks on the outside of the front door. Despite the backing of an order from the chief metropolitan magistrate and a team of cops, the ARCIL officials could do little but request the tenant to open the door. Morning passed into afternoon, and finally the police decided to smash in the door. Alarmed by the noise, the tenant finally opened it. 

The second tenant threatened the ARCIL team with dire consequences. 

The third threatened to commit suicide. "We persisted with our request for the lease agreements executed by the defaulting borrower," says an ARCIL official.

 But the tenants cited the law to prevent the officials from entering the flats. After much discussion, the tenants sought 10 days to find other accommodation, and promised in writing to vacate.

The story did not end there. .....

"We granted them the time, as the police also advised us," the ARCIL official said. But the very next day, the tenants obtained a temporary stay on the repossession order, from the debt recovery tribunal. The ARCIL officials are still doing the rounds of the court to repossess the flats.

There is no dearth of stories about defaulters using every means possible to scuttle the legal process. A jewellery exporter offered disguised copper alloy as part of the collateral for a loan, and later sued the bank for his 'missing' gold. In another case, ARCIL had to arrange a contingent of 200 policemen and private security guards to repossess a textile manufacturing company's factories.

"We end up getting the most difficult borrowers," says P. Rudran, Managing Director and CEO, ARCIL. Bankers tend to sell whatever they cannot recover on their own, he explains.

The concept of focused asset reconstruction companies for the recovery of non-performing assets (NPAs) was born in early 2000 to help banks. The 63-year-old Rudran, who operates from a tenth-floor office in a suburban Mumbai tower, has his work cut out, judging by the mounting NPAs in the banking system. 

Arun Thukral, CEO of credit tracker CIBIL, at Mumbai's busy Churchgate station. He says: 'A bad credit history can mean trouble. If fresh loans won't go to bad borrowers, it naturally improves the credit culture.

Gross NPAs are expected to touch 3.5 per cent, and corporate debt restructuring, 5.7 per cent, of total advances in the banking industry in 2012/13. Loans and advances in the system stood at Rs 50.74 trillion (a trillion equals 100,000 crore) in 2011/12. 

Rudran's ARCIL so far has bought nearly Rs 50,000 crore worth of NPAs in the past decade.

"No one borrows money to default, and not all NPAs are wilful defaults," says S. Ravi, who runs a chartered accountancy firm in South Delhi, and also sits on the board of IDBI Bank Ltd. "You have to separate the wheat from the chaff," he adds.

Ravi's argument can be justified, as even good borrowers can get trapped in NPAs because of ups and downs in the economy, a sudden rise in interest rates, inflation and other reasons beyond their control.

But Indian borrowers can be reckless, too. The track record suggests that a part of stressed assets turns into wilful defaulters. The value of suits filed against defaulters has more than doubled in five years to reach Rs 23,439 crore in 2011/12. 

The alarming trend of borrowers disposing of assets prompted the Reserve Bank of India (RBI) to expand the definition of 'wilful defaulter'. Before 2008, it simply meant someone who had the capacity to repay, or who diverted or siphoned off borrowed money. Now, the definition includes promoters who dispose of collateral assets without the knowledge of the lending bank.

Another symptom of bad credit behaviour is the over four million cases of bounced cheques - mostly retail - pending in the courts. The volume of bounced cheques is equivalent to the volume of cheques issued every month in a city the size of Ahmedabad, Bangalore or Kolkata.

Do Indians have a cavalier attitude towards timely payment ? Some in the industry believe so. For example, global credit insurer Atradius, present in India for well over a decade, has documented payment delays in the country, and found that business-to-business payment delays of more than three months stood at 8.4 per cent of domestic invoices in November 2012 - well above the Asia average of 5.5 per cent. And the value of uncollectable (written off) business-to-business receivables was 7.5 per cent in India, compared to the Asia average of 5.3 per cent.

This would make any foreigner hesitate to do business with Indian promoters. "We have seen delays in the IT sector or amongst the small and medium enterprises," says Arun Rajan, country manager, Atradius.

This bad payment habit extends to bank loans. Even some young borrowers, such as students, default, in their first relationship with a bank. Today, gross NPAs in education loans are over seven per cent of advances. As that number is rising, banks are going slow on education loans. Former finance minister Pranab Mukherjee had even proposed a credit guarantee fund to compensate the banks, but it never materialised for lack of budgetary allocation. RBI Deputy Governor K.C. Chakrabarty highlighted the problem of student loan defaults during a lecture at the Noida-based JRE School of Management last year. "I suggest school alumni associations should become active in inculcating ethics and values among students," he said.

Sudip Bandyopadhyay, former CEO of Reliance Money, who now runs a firm called Destimoney Securities Pvt Ltd, says students are not mature borrowers. "Also, many times, the placement is not commensurate with the money spent on a course," he says.

Bankers say students sometimes leave the country without paying up. "We don't have a good tracking system - it is still evolving," says IDBI's Ravi. Some experts suggest that banks could reach out to such defaulters through their parents or by coordinating with immigration authorities.

Another area where borrowers often behave erratically is credit cards. Bankers have turned extremely cautious here: RBI data shows that the number of credit cards actually fell from 23.1 million in March 2007 to 17.7 million in March 2012. Card spend has, however, increased from Rs 41,400 crore to Rs 96,600 crore. "It is better to have a few good customers than many bad ones," says Bandyopadhyay of Destimoney. Bankers say nonsalaried people with an irregular income are more likely to default.

Foreign banks and their non-banking arms, too, have had bitter experiences in consumer finance after the economic downturn in 2008. Fullerton India, a non-banking finance company (NBFC) backed by Singapore-based Temasek Holdings, started with a nearly 90 per cent unsecured lending portfolio around five years ago. It suffered huge losses in the unsecured segment, with gross NPAs rising to over 10 per cent in the overall business. Since then, it has cut its exposure to half in the unsecured segment, especially personal loans.

The only disciplined borrowers, data suggests, are mortgaged borrowers. "We haven't seen people not paying up on a home or car loan in India," says Arun Thukral, CEO of the 12-year-old Credit Information Bureau (India) Ltd, or CIBIL. The bureau keeps records of all banks' borrowers, assigning each a credit score between 300 and 900, where 900 indicates the best repayment behaviour. The score helps a new lender assess the credit behaviour of an individual or company.

Thukral points out that Indians are not as leveraged as borrowers in the US or UK, but adds that credit tracking infrastructure is well developed in those countries, recovery mechanisms are more robust and borrowers are mature enough to admit to mistakes. "Post-2008, we all heard the stories of people leaving their cars on the road or abandoning their well furnished flats for bankers to repossess," says Bandyopadhyay. ARCIL's Rudran says he is not hopeful of such behaviour in India any time soon.

The lack of credit tracking infrastructure in India until recently has contributed to borrowers' lax attitude towards financial obligations. "There was always another bank ready to welcome you with open arms," says a banker who does not want to be named.

CIBIL is still struggling to rope in many institutions to get a better picture of credit behaviour. Four leading cooperative bank associations in Maharashtra joined CIBIL 10 long years after it was set up. "Politicians sell the loan waiver carrot, advising farmers not to repay banks," says an NBFC official who travels extensively in rural India. Banks are wary of lending to farmers as this segment has a history of default.

Sanjay Agarwal, group head for retail business at ARCIL, says there is a tendency in India to resort to litigation to scuttle the recovery process. For instance, he says, as soon as ARCIL buys an NPA from a bank, the borrower approaches the court, challenging the asset transfer.

"There are cases that are unresolved for more than eight years," says ARCIL's Rudran. "Asset recovery is a very tough business. You have to find out new methods to deal with rogue borrowers." He adds that defaulters often make all sorts of excuses and try to stymie the recovery process by approaching the courts.

"The borrower also uses indirect pressure from influential people," says a banker in the NPA department of a public sector bank who has received many calls from politicians. Deepak Gupta, Joint Managing Director, Kotak Bank - one of the few banks that specialise in buying NPAs from other banks - concurs, saying: "Most corporate default cases get resolved only through courts."

P. Rudran, MD & CEO, ARCIL, at the Bombay High Court, 
where many default cases are heard. 
He says: 'Some cases are unresolved for over
 8 years. Asset recovery is a tough business. 
You have to find new ways to deal with 
rogue borrowers.' (Photo: Nishikant Gamre)

The courts are flooded with such cases. Take, for example, litigation between companies and banks over forex derivatives contracts. Many midsize exporters and importers who hedged their foreign currency risk suffered losses when the rupee-dollar rate moved beyond their comfort zone. 

Companies that had foreign currency exposure blamed the banks for mis-selling, and banks countered by saying the companies had failed to read the fine print. In November last year, the Supreme Court settled the wrangle by ruling that 'wilful default' covers not only normal banking transactions such as borrowing and lending, but also derivatives contracts. The borrowers lost, and bankers can now go after defaulters in derivatives contracts.

Another reason for bad behaviour by borrowers is the multiplicity of lenders. Apart from banks, there are NBFCs of varying shapes and sizes, microfinance institutions, district cooperative banks and regional rural banks and unregistered sources. At a recent seminar, Anand Sinha, another RBI Deputy Governor, cited the example of Andhra Pradesh, where microfinance institutions lent indiscriminately. "This would not have reached the proportions it did if there was information-sharing amongst MFIs," says Sinha.

CIBIL's Thukral says the bureau is gradually helping improve the credit culture, as more and more people are aware that a bad credit history can mean trouble. Banks put credit bureau reports at the top of their checklist. "If fresh loans won't go to bad borrowers, it naturally improves the culture," says Thukral.

With the role of credit reports becoming more important, some see a business opportunity. Two Mumbai-based entrepreneurs have set up Credit Sudhaar, a startup that offers advisory services to improve one's credit score. "Our clients are not only those who made a mistake in the past, but also those who want to maintain a good credit score," says co-founder Arun Ramamurthy, who formerly worked with Citibank.

CIBIL's Thukral says it is a reflection of growing awareness that hassled borrowers sometimes walk in or call CIBIL's helpline to discuss negatives in their report. "The cultural fabric of India is very different from the West," says Thukral. "Our parents and grandparents keep reminding us: jitni chadar ho utnay hi paon phelane chahiye (stretch your legs only as far as your blanket will go)."

Today, the CIBIL effect is not restricted to borrowing . A European bank in India, for example, requires job applicants in India to submit credit reports before it offers them a job. A professional who works for a private company and does not wish to be identified, said his friend was asked for a credit report when he approached Delhi Public School for admission for his daughter.

The possibilities for rogue borrowers to hide are shrinking. Taking the locks off a door or moving to another city won't work much longer. Time to check your credit score

Kingfisher stock slumps as banks plan to recall Rs 7,000-cr loan

 B L :K. S. BADRI NARAYANAN :CHENNAI, FEB 13:  2012

Kingfisher Airlines’ stock slumped 5 per cent to Rs 10.55 on the NSE in the opening trade, after banks said that they are considering to recover Rs 7,000-crore loans that they had lent to the company.

The stock, however, recovered slightly to trade at Rs 10.70, still a fall of 3.6 per cent over the previous day’s close. The stock was very active with 1.19 crore changing hands till 11 a.m. on the NSE.

The move by a consortium of 17 banks could be the end of the road for the beleaguered Kingfisher Airlines. Bankers described the consortium’s decision as unanimous. Loan recall normally triggers initiation of recovery proceedings.

Fund infusion

“Despite several rounds of meetings over the last year or so, the management of the country’s once second-biggest airline did not come up with any concrete plan of action for pumping in funds to get the grounded airline up and flying,’’ said the bankers.

According to Shyamal Acharya, Deputy Managing Director, State Bank of India, the bankers’ consortium has run out of patience.

“We (the full consortium of banks) first met in December. After that, there were two small group meetings. The consortium has given the airline almost two months time but they have not been able to come up with any concrete development on any front.

“The consortium felt that it will be difficult to give the airline any more time, so it is a case for terminating the relationship,” said Acharya. As giving a loan is a decision of the bank’s board, recalling the loan is also its decision.

Final decision

So, each bank will brief its board about the position and a final decision will be taken by the consortium in the next 7 to 10 days.

On the basis of today’s decision, Acharya said, if the bankers decide to recall the loans, legal action will follow.

A decision on further action will now be taken by the boards of the 17 creditor banks, after which the consortium will take a decision on valuing the assets and potentially pursuing legal options, Acharya said, adding that it is a lengthy process.

Banks to recall loans given to Kingfisher

 The Hindu :MUMBAI, February 12, 2013

The consortium of lenders led by State Bank of India (SBI) has taken an in principle decision to recall the loan given to troubled Kingfisher Airlines, thus putting a possible end to the Kingfisher saga.

Seventeen banks have an exposure of Rs.7,000 crore to Kingfisher Airlines. The banks have now said the Kingfisher loan matter had reached a dead end.

“We gave them enough time. They are not saying anything new or credible. Banks did not find any progress by the airline’s promoters to restart operation or get money on the table. We gave them over two months but nothing concrete happened. Banks have run out of patience. Consortium members felt that the matter has reached a dead end. Here is a case for may be for the termination of relationship (with Kingfisher). So we decided to consider recalling the loan,” said Shyamal Acharya, Deputy Managing Director, State Bank of India.

“Now each bank will go back to their respective boards to take the final approval for the recall of loan. I think the final decision will come in 10 days after which the recovery proceedings will start in due process of law,” Mr. Acharya told waiting journalists at the Trident Hotel in Mumbai.

Banks had to consider this drastic step as the airline’s management could not come up with any credible revival plan. Its flying licence has been cancelled since January 1, 2013. It stopped flying since October 1, 2012, following a strike.

“The Kingfisher management only said that they were trying to revive the airline and waiting for money to come from the Diageo deal. They said it was a complex deal and it would take time. But we were not satisfied as Kingfisher is a different company nothing to do with Diageo deal,” Mr. Acharya said.

With this, banks will start recovery proceedings to get whatever possible from the troubled airline. Apart from mortgaged shares of United Spirits and other group companies, Kingfisher Airlines Chairman Vijay Mallya has given personal guarantee for the loans. 

The Kingfisher brand with a previous valuation of over Rs.4,000 crore has been mortgaged with the banks. The Kingfisher Villa in Goa and Kingfisher house near the Mumbai airport are mortgaged. Bankers did not quantify as to how much they could recover but they are prepared to take a haircut.

UB Group CFO Ravi Nedungadi, who participated in the meeting along with Kingfisher Airlines CEO Sanjay Aggarwal, said that he would not negotiate (with the banks) through the media.

Indian Banks Start Process to Claim $1.6 Billion From Kingfisher

 Bloomberg :Anto Antony - Feb 13, 2013 12:21 PM GMT+0530

 Indian lenders to grounded carrier Kingfisher Airlines Ltd. will start the process to recover as much as 85 billion rupees ($1.6 billion) of dues after owner Vijay Mallya failed to pay the debt, the biggest creditor said.

“We have decided to start recovery process on the loans to Kingfisher,” Shyamal Acharya, deputy managing director of State Bank of India, said in an interview to Bloomberg TV India today. “Banks have already given Mallya enough time to repay.”

State Bank of India has set aside the 15 billion rupees it lent to Kingfisher following Mallya’s inability to pay the debt. Liquor tycoon Mallya in November 2011 pledged to raise money through new loans, a rights offer and property sales to pay debt and avoid grounding of the carrier. Kingfisher Airlines stopped operations 11 months later.

Remedies for the lender “include, going to the Debt Recovery Tribunal, enforcing pledge of movables,” said Rabindra Junjhunwala, Mumbai-based partner at law firm Khaitan & Co. The law also “gives certain classes of secured creditors additional remedies, such as attachment and sale of the secured assets of a borrower, taking over management of defaulting borrower.”

Kingfisher Airlines fell 2.3 percent to 10.85 rupees at 12:16 p.m. in Mumbai after dropping as much as 5 percent. The shares have plummeted 60 percent in the past year. United Breweries Holdings Ltd., which owns stakes in Mallya’s six companies, plunged 6.1 percent to 73.25 rupees, the lowest since July 4.

McDowell Holdings Ltd. fell 4.7 percent to 61.2 rupees. Mangalore Chemicals & Fertilizers Ltd. advanced 7.3 percent to 35.85 rupees, while United Spirits Ltd., which is being acquired by Diageo Plc, dropped 1.3 percent to 1,932.4 rupees.

No Operations

Prakash Mirpuri, spokesman for Kingfisher Airlines, declined to comment on the lenders move to start the process to recover dues.

The carrier reported a net loss of 7.55 billion rupees in three months ended Dec. 31 compared with 4.4 billion rupees a year earlier, exchange filings show. The carrier didn’t have any sales from operations, compared with 13.7 billion rupees a year earlier after suspending operations from Oct. 1.

Kingfisher has also defaulted on payments to fuel suppliers and airports as losses widened amid rising fuel costs and price competition. 

Kingfisher, which was No. 2 in India by market share in 2011, has debt of 85 billion rupees, according to data compiled by Bloomberg.

Kingfisher dues: Banks to meet on Feb 12 to initiate recovery proceedings

BS MUMBAI, FEB. 8:2013  

A consortium meeting of 17 lenders led by State Bank of India is likely to take a call on February 12 on initiating recovery proceedings, including change of management, against the beleaguered Kingfisher Airlines, said a senior banker clued in to the development.

With no sign of either capital infusion or a strategic partner being roped in to revive the grounded KFA, banks are facing a tough call on how to recover the Rs 7,000 crore they lent to the airline.

The KFA loan account has become a non-performing asset for almost all the banks concerned. If banks press for recovery, then they may be able to recover just about 20 per cent of their loans.

The airline’s management has held several parleys with banks in the last one year or so to get banks to loosen their purse strings. However, banks first want the promoters to pump in funds into the airline as it will serve as an assurance that they are serious about its revival, said a banker.

POWER SUPPLY CUT

Meanwhile, spelling fresh trouble for KFA, the power supply to the airline’s Mumbai office, The Qube, was snapped last week for non-payments, according to sources.

While the amount of unpaid electricity bills could not be ascertained, the airline employees’ were reportedly asked not to attend office till further orders. The once second-biggest airline of the country has been grounded since October 1 last year and lost its flying licence on December 31.

KFA promoter Vijay Mallya on Thursday met Law Minister Ashwani Kumar in Delhi to reportedly discuss ways/alternate solutions to deal with the situation.

The grounded Kingfisher Airlines reported a loss of Rs 755 crore in October-December 2012.

Apart from salaries to employees, the airline has outstanding service tax dues and payments to oil companies . Besides, the airline has huge debts to the lessors of its aircraft and to Airports Authority of India (AAI). The airline owes Rs 290 crore to AAI towards landing and parking fees.

AAI has insisted on dues being cleared before the airline is allowed to fly again by aviation regulator DGCA.