Top 30 defaulters of PSBs account for one-third of total bad loans: RBI

  

Top 30 loan defaulters of the public sector banks account for one-third of the total gross non-performing assets of state-run lenders, according to the Reserve Bank data.

The gross non-performing assets (GNPA) amount of top 30 accounts of public sector banks (PSBs) stood at Rs 63,671 crore at the end of June 2013.

The total GNPA outstanding of 26 PSBs was Rs 1,82,829 crore. Thus the top 30 accounted for 34.83 per cent of total gross bad loans.

In case of nationalised banks, top 30 defaulters contributed 43.5 per cent to the GNPA with Rs 48,406 crore.

The combined GNPA of 19 nationalised stood at Rs 1,11,209 crore.

The GNPAs of SBI Group, comprising SBI and its five associates, were worth Rs 71,620 crore at the end of first quarter of the current fiscal.

Top 30 loan defaulters of SBI group had a loan outstanding of Rs 15,266 crore or 21.3 per cent of the total loan.

Punjab & Sind Bank tops the chart with 62.53 per cent of GNPA is contributed by top 30 loan defaulters.

Punjab & Sind Bank is followed by State Bank of Hyderabad with 57.50 per cent, Vijaya Bank with 53.64 per cent and Corporation Bank with 53.40 per cent.

Last month, Finance Minister P Chidambaram had said the government is monitoring the top 30 NPA accounts in each PSU bank and asked the lenders to set up separate verticals to recover money.

“We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting,” Chidambaram had said.

Reserve Bank Governor Raghuram Rajan had last week sent out a clear message that wilful defaulters would be dealt with strongly.

Asserting that the Finance Ministry and the RBI were on the same page when it came to recovery, he had stated that “this is not being said to create an atmosphere of fear or to be vindictive“.

He promised that the central bank will soon take some nuanced measures to get stressed assets back on track.

This article was published on November 4, 2013

Happy Diwali Greetings

DLF cuts net debt by Rs 861 cr to Rs 19,508 cr

Press Trust of India  |  New Delhi  

October 31, 2013 Last Updated at 14:31 IST

Sale of non-core assets and internal accruals helped the company in bringing down the net debt level to below Rs 20,000 crore level

India's largest realty firm DLF has reduced net debt by Rs 861 crore in the second quarter of this fiscal at Rs 19,508 crore and the company is targeting to cut it further at Rs 17,500 crore level by March next year.

In an analyst presentation, DLF also said that it is negotiating with the multiple investors to sell luxury hotel chain Amanresorts and expects to close the transaction soon.

"Sequentially, the net debt has declined by Rs 861 crore from Rs 20,369 crore to Rs 19,508 crore. Given the pipeline of divestitures already executed but not yet closed, we maintain the FY14 guidance of net debt of Rs 17,500 crore," DLF said.

Sale of non-core assets and internal accruals helped the company in bringing down the net debt level to below Rs 20,000 crore level.

Realisation from divestment of non-core assets stood at Rs 870 crore during first six months of this fiscal and the company hopes to garner another Rs 1,000 crore in second half of this fiscal from this process.

On the status of divesting Amanresorts, DLF said it is in "negotiations with multiple bidders/investors on the Share Purchase Agreement. Substantial diligence has been completed. Targeting closure of the transaction in near future".

In December 2012, DLF announced the deal with Indonesian hotelier Adrian Zecha to sell Amanresorts for an estimated $300 million and expected the transaction to close by February 2013. Zecha, the founder of Amanresorts, missed the February deadline and exclusivity period was extended till June end.

In July, DLF walked out of a pact to exclusively negotiate sale of Amanresorts with Zecha and opened talks with 4 other potential buyers.

To reduce debt and focus on core realty business, DLF has been selling its non-core businesses and assets such as plots, hotels, wind mills and insurance venture.

It has raised about Rs 10,000 crore in last three years through divestment of its non-core assets.

Bad debt takes toll on OBC, IDBI Bank earnings

Photo: Pradeep Gaur/Mint

Remya nair : Anup Roy : Mint :30 Oct 2013

Oriental Bank of Commerce reported a 17% fall in profit to Rs.251 cr, and IDBI Bank’s profit dropped 60% to Rs.192 cr

Delhi/Mumbai: Two state-owned banks that declared their results on Wednesday saw a sharp decline in net profits—caused by rising bad debt and falling treasury income.

Delhi-based Oriental Bank of Commerce (OBC) reported a 17% fall in net profit to Rs.251.41 crore for the second quarter of 2013-14 as provisioning for bad debt and measures by the Reserve Bank of India (RBI) to curb the rupee’s volatility in July impacted income.

Net interest income rose 10.7% during the quarter, though non-interest income contracted 23% due to a sharp fall in treasury income.

OBC booked a treasury loss of Rs.16.86 crore for the three months ended September. It had posted a profit of Rs.51.92 crore in the corresponding year-ago period.

Net interest margin, a key measure of profitability, increased to 2.84% from 2.79%.

But asset quality continued to remain a worry, with gross non-performing assets increasing to 3.77% from 2.92% in the year-ago period. Net bad loans increased to 2.69% from 2.04%.

“The pressure on asset quality has continued. Banks were hoping that the economy has bottomed out. Till the economy does not revive, it will be a challenge for banks to rein in bad debts,” chairman and managing directorS.L. Bansal said.

The bank made a provision of Rs.332 crore for bad loans in the quarter as against Rs.301.02 crore in the year-ago period. Advances grew 9.2% and deposits 6.7%.

Bansal said the bank will not look to grow its advances book at the cost of asset quality. “We will look to consolidate during this period,” he said, adding that clearances of projects by the cabinet committee on investments is yet to translate into actual corporate credit demand.

The bank, which has received Rs.150 crore from the government as capital infusion, has no plans for additional fund-raising through a qualified institutional placement, Bansal said. It also has no plans for raising its lending or deposit rates at present.

Mumbai based IDBI Bank Ltd’s second-quarter profit dropped 60% toRs.192.27 crore from Rs.483.53 crore in the year-ago period, dragged down by heavy provisions to provide for bad debts and sharp fall in treasury income, the bank said in a statement. Total income increased to Rs.7,114.4 crore fromRs.6,880.01 crore a year ago. Provisions surged 78% to Rs.878.72 crore fromRs.494.58 crore in the year-ago period to take care of the bad debt, which stood at 4.98% of its advances against 3.45% a year earlier.

Shares of OBC fell 4.10% to Rs.153.25 on BSE on Wednesday and IDBI Bank’s scrip fell 3.94% to Rs.65.90, while the benchmark Sensex rose 0.5% to 21,033.97 points. “The managements of both the banks have indicated that the stress on the asset quality is likely to continue for at least two more quarters due to the economic situation. Till growth does not pick up, the situation is unlikely to improve on its own,” said Vaibhav Agrawal, an analyst with Angel Broking Ltd. “This is true of the banking sector as a whole as well,” he added.

Lawyer on a mission with guide to RTI

M T Saju, TNN | Oct 29, 2013, 06.02 AM IST

CHENNAI: Three years ago when S P Nedumaran published a book in Tamil on the Right to Information Act, he wanted to provide people with an idea about the subject. Though the act came into force in October 2005, many are still unaware of it. In 2011, he translated the book into English.

Titled 'Right to Information Act: A Weapon for the Common Indian', a revised edition with the 2012 amendments was released recently. With 30 models of applications, the three-part guide contains articles, success stories, and question and answers related to the act. "I have narrated everything related to RTIin simple language. There is no legal jargon. It helps the reader understand the act and how to use it," said Nedumaran, who has filed more than 400 RTI applications.

A practicing advocate, he travels across Tamil Nadu to conduct free workshops on RTI in villages. "I have conducted more than 40 workshops. In villages, people are not aware of the act. I teach them basics of how to prepare an RTI application with relevant questions," he said.

The book is divided into three parts. The first contains general articles on RTI and clears doubts about the act. The second deals with the methods of using the act to solve problems, and provides specimens of applications, while the third part gives the act.

It was while working as a legal advisor for a non-governmental organisation that Nedumaran realised the importance of the RTI Act. "Many who came to see me from villages were not aware of the act through which any citizen can get information from the government just for 10. I explored the possibilities of reaching those people. Still, there are a lot of people who are ignorant about the act. This should be changed," he said.

Intelligence is might, according to Nedumaran. "If one uses the act cleverly, even an ordinary person can become mighty. The RTI Act is our second Independence. I will be travelling to remote areas of Tamil Nadu to create awareness."

Banks can’t shame defaulters with pictures: Legal experts

Swati Deshpande, TNN Oct 27, 2013, 02.48AM IST

MUMBAI: In a rapidly rising trend that experts term disquieting, unauthorized, even defamatory, many public sector banks publish photographs of defaulters and guarantors of loans in the media as public notices. Defaulters of commercial loans and even personal and educational loans increasingly run the risk of finding their pictures in print. The name and shame operation that so far the public sector banks, consider necessary to recover their money, lacks the backing of any specific legal provision say lawyers, citing a recent judgment of the Kolkata high court.

The Kolkata HC had this May prohibited the State Bank of India in two cases from publishing pictures of loan defaulter or their guarantors. It had differed with the ''unfounded'' view taken in 2006 by two other high courts—in Mardras and Madhya Pradesh—and said the banks by publishing photographs without any legal sanction damaged the reputation of guarantors.

The practice of the banks however remains unabated. It had led to an outcry and protests a few months ago in South India, and has now led to experts to question the regulatory mechanism governing bank loans. Avocate Ashok Paranjpe of MDP & Partners said despite the Kolkata HC order and the fact that there is no provision in any law or guideline to allow banks to print by way of public notice the photographs of defaulters or guarantors, the SBI had a few months ago sent his client a seven-day notice that it would do just that if it failed to repay its long outstanding loan. He wrote to the bank to desist from taking such ''inappropriate, unlawful and arbitrary steps'' or to issue such ''misconceived threats'' and the bank desisted. It was not a willful default he said.

But others who do not respond to notices which the banks send, are not as lucky. The photographs of the defaulters where no other information apart from names, pictures and amount pending is displayed in print are "completely wrong'' said lawyers. Amit Desai, senior counsel in Mumbai said, "even where notices speak of 'symbolic possession' of properties taken by a bank, there is no need for photographs of defaulters since names and particulars of properties are given.''

"These types of advertisements do not seem to be in keeping with any type of circulars,'' said Desai. "What if there is a valid disputed claim? If there is a final decree from a tribunal or court too the photographs are not essential to be printed.'' He said, "This kind of a unilateral pre determination of defaulters' status appears to be wholly unjustified because it gives an impression that the person is not credit worthy and could amount to defamation, especially since the counter point of the person alleged to be defaulting has not been put across.''

The public sector banks which appear to have started and continue the trend however don't see anything wrong, illegal or arbitrary about what they do. One senior officer of a government bank, not willing to be quoted, said, "We take due precaution by sending the defaulter a prior notice before printing the names and pictures.'' He said, "We also included it in loan agreements now.'' He admitted that there '' is no specific legal provision that stipulates such publication of photographs with names'' but added, ''there is no provision that prohibits the banks either.'' While loan agreements which contain such clause of displaying defaulter's picture may put a defaulter in a bind, the question is about earlier loans which had no such clause.

In such a scenario, where thousands of crores are due to banks in outstanding loans, solicitor M V Kini who represents more than 50 banks said, "Banks have the discretion to act for the public good to ensure swift recovery of loans.'' He said main objective of the two enactments The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) Act of 2002 and the Debt Recovery Tribunal law was to secure and recover bad debts quickly.

Kini said, "Summary proceedings by DRT and quasi judicial proceedings by the Authorized Officer under the SARFAESI Act, are intended to recover the bad debts with certain amount of coercion and that is the intention of the legislature.'' He said, "Public notice with defaulter's picture thus cannot be faulted with,'' and said the Kolkata HC had erred in its findngs.

But the Kolkata judgment, which is said to be in appeal, has clearly held against publishing a photograph in public good. "Since publication of photograph of adefaulting borrower or guarantor has the potential of exposing him to irreparable loss, injury and prejudice, such publication cannot be resorted to in the absence of an express power or an agreed term in this behalf.

New norms for designating senior advocates in Madras High Court

R Sivaraman: The Hindu :28 Oct 2013

An advocate should have completed 15 years and should have argued successfully for landmark judgements

Aimed at providing greater transparency, the Madras High Court comes out with new norms on conferring the designation of senior advocate. According to the norms, an advocate should have completed 15 years of professional experience and landmark judgements should have been delivered in cases taken up by such a person.

Pointing out that the declared gross income from the profession should not be less than Rs. 7 lakh annually for the past three years, the norms spell out that an advocate should furnish at least fifteen judgments where he/she has contributed to the growth of law, in the preceding three years.

Welcoming the norms, R. Muthukumaraswamy, president of the Madras Bar Association (MBA) toldThe Hindu that “In those days, a senior advocate would recommend to Chief Justice the case of a junior advocate who has experience of 10 years for granting senior advocate’s designation and the matter would be placed before the full court for approval. Now, for first time, the Madras High Court has now made it public the norms.”

Explaining the procedure to be adopted while designation, the notification said “a Select Committee comprising of 10 judges of the High Court, preferably representing different facets of law, which would identify such of those advocates, who by their ability, conduct, standing at the bar or special knowledge or experience in law and distinction are eligible to be designated as Senior Advocates in terms of Section 16(2) of the Advocates Act, 1961”

“It appears that the gross income is too low. Today, it is nothing for a person who has fifteen years experience. The message clearly should be brought out that there shall not be application by candidate or recommendation letters by two seniors as practised now,” viewed senior advocate R. Krishnamoorthy.

The notification further said advocate, for being designated as senior advocate, on being invited by the High Court, should furnish the information in a prescribed format.

After verifying the credentials of the advocate, the Select Committee will forward the list to the Chief Justice. The selection list of names will thereafter be placed for approval before the High Court for designation as senior advocates.

Withdrawal

The notification made it clear that the High Court, by simple majority, will withdraw the designation of a senior advocate in case he/she committed professional misconduct or shown intemperate behaviour in court or has been found invariably negligent in professional duties.