Banks to assist debt recovery tribunals

DRTS: NUTS & BOLTS

There are 33 DRTs and 5 debt recovery appellate tribunals in India Banks approach DRTs for disputed loans above Rs 10 lakh DRTs are expected to resolve the cases within 6 months Bankers say, Rs 2 lakh crore of loans are stuck in DRTs Of the Rs 2 lakh crore of suits filed, Rs 1.29 lakh-crore loan recovery certificates are yet to be issued

Source :BS:Parnika Sokhi / Mumbai November 3, 2011, 0:01 IST

Public sector banks are busy deputing manpower to under-staffed debt recovery tribunals (DRTs), after the finance ministry asked them to temporarily fill positions vacant since a few months. 

According to bankers, Rs 2 lakh crore of loans are stuck in DRTs, which were once established to provide banks with speedy resolution and recovery of disputed loans.

There are 33 DRTs and five debt recovery appellate tribunals in India. 

Currently, seven DRTs, including one of the three in Mumbai, are functioning without a presiding officer. 

There are vacancies for recovery officers and assistant staff as well.

We are in a process of deputing officers with legal background till the government completes fresh recruitment,” said a senior official of a public sector bank.

The finance ministry had called for a meeting with government-owned banks, after they failed to promptly respond to the directive given at the State Level Bankers Committee a month before, after which the bankers assured the postings would be made without further delay. The meeting was chaired by Financial Services Secretary D K Mittal.




Banks approach DRTs for disputed loans above Rs 10 lakh and for loans for which agricultural land was the underlying security. 
DRTs are expected to resolve the cases within six months. 


However, it takes much longer for them, given the insufficient staff and the rising number of cases.


Bankers who attended the meeting said of the Rs 2 lakh crore of suits filed in DRTs, recovery certificates are yet to be issued for loans worth Rs 1.29 lakh crore.


Lenders are banking heavily on recoveries, since the need for higher provisioning against rising non-performing assets is eating into their profits. Most public sector banks have reported lower net profits in the second quarter of the current financial year.


“We will dedicate this quarter to recoveries and cleaning up the balance sheet,” said M V Tanksale, chairman and managing director, Central Bank of India. The bank recorded a decline of 35 per cent in net profit, owing to high provisioning in the second quarter of the current financial year. Allahabad Bank, which announced its quarterly results today, said it had targeted Rs 1,000 crore of recovery for the current financial year.


“We have started a recovery drive and have collected around Rs 450 crore of dues in the first half of the current financial year,” said J P Dua, chairman and managing director, Allahabad Bank.

Kingfisher seeks switch to foreign currency debt

Source :BL:Nov3,2011

BANGALORE, NOV. 2: 

Debt-ridden private carrier Kingfisher Airlines has sought assistance from its banks to substitute high-cost rupee borrowings with lower-cost foreign currency debt.

The Vijay-Mallya owned airline hopes to support foreign currency debt by its international operations, which would provide with a natural hedge against currency movement, according to Mr Ravi Nedungadi, President and CFO, UB Group, in a press statement issued by the company.

He said that the company has sought the banks' help to release cash deposits held with lessors against maintenance reserves by providing bank guarantees in lieu.

Kingfisher Airlines has a total debt of Rs 7,000 crore, and currently a consortium of 13 banks, including State Bank of India and ICICI Bank, hold about 23 per cent stake in the company as part of the debt restructuring plans implemented last fiscal.

Mr Nedungadi also said that the company would seek banks' help to “appraise working capital requirements in the usual course to account for changes in the international prices of fuel and the change in rupee-dollar parity”.

He added that the banks were actively considering these requests, and ruled out another debt recast plan.

With the Government favouring 25 per cent foreign direct investment in private airlines, Kingfisher Airlines expects to reduce its debt burden. However, an aviation analyst with a domestic brokerage firm said that even if the company managed to raise funds through stake-sale to foreign investors it would find it difficult to repay its debt.

“Its first priority would be to make payments to employees and towards fuel, and the funds would be insufficient to repay its debt,” he pointed out. With the third quarter, which is supposed to be a good period for the aviation industry, not looking too bright for Kingfisher Airlines, the company could be faced with mounting losses in the coming months, he added.

Lenders reject Kingfisher Airlines debt recast plan

Source :Sidhartha, TNN | Nov 2, 2011, 03.08AM IST


NEW DELHI: Vijay Mallya-promoted Kingfisher Airlines is back with a debt restructuring plea but banks are unwilling to take a fresh haircut this time citing the company's weak finances and the loss they incurred on converting a part of their loans into equity. In addition, they fear that a fresh recast will force them to treat the loans as a non-performing asset (NPA), in line with the Reserve Bank of India norms. 

Further, they pointed out that Kingfisher was yet to fulfill a part of its commitment which included filing of the assignment agreement for the brand. This agreement with the Registrar of Trademarks would transfer the ownership of the brand to the lenders which will help banks trigger the default clause. 

While Kingfisher has not formally approached lenders with a proposal, bankers said the private airline which has been incurring losses, is looking to raise additional short-term loans, issue lines of credit in lieu of cash deposits lying interest free with lessors, substituting high-cost rupee debt with low-cost foreign currency loans and also raise Rs 2,000 crore via a rights issue. 


Airline executives have, however, raised the issue with government functionaries who have swung into action to see if fresh support from lenders is possible. Kingfisher Airlines CFO A Raghunathan did not respond to a text message and calls. UB Group's head of finance Ravi Nedungadi said he could not speak as he was tied up in meetings. 

Lenders said the biggest stumbling block will be RBI since loans have been restructured more than once and the regulator will now demand downgrading of the asset to NPA category if banks provide fresh succour. In the absence of compliance with earlier stipulated conditions, the task is going to get tougher, they added. Further, they pointed to the loss incurred on conversion of debt into equity. Against the prevailing market price of Rs 40 a share, on March 31 this year, there was preferential allotment to SBI and ICICI Bank due to conversion of compulsorily convertible preference shares into equity shares at a price of Rs 64.48 each, which represented a 60% premium over the prevailing market price. Since the end of March, Kingfisher's share price has declined 40% and closed at Rs 24.10 on Tuesday. "Given the impaired financial position and low security cover, taking additional exposure in the airline is not advisable," said a bank chief. "It is going to be very difficult to convince my board once again," added the head of another bank.

Panasonic sees $5.5 bln annual loss, worst in a decade

 
Head Office in Kadoma,Osaka


Source :REUTERS 31,Oct,2011


TOKYO: Japanese electronics maker Panasonic Corp forecast an annual net loss of 420 billion yen ($5.5 billion), its biggest in a decade, as it cut unprofitable businesses deeper and faster than first planned, while battling a soaring yen and weak demand in the United States and Europe. 


Panasonic accelerated the pace of restructuring as it races to shake off losses at its TV unit -- a problem it shares with rival Sony -- and strips out overlapping businesses after its buyout of subsidiary Sanyo. 


In April, Panasonic said it would cut 17,000 jobs by March 2013, but the maker of Viera televisions and Lumix cameras announced on Monday it now expects to reach its goal of slimming its work force to 350,000 or fewer a year ahead of schedule. 


Panasonic said it will stop liquid-crystal panel production at its Mobara plant near Tokyo and is canceling its plans to ship plasma-panel manufacturing equipment from another mothballed plant to Shanghai to start production there, as it aims to turn a profit on TVs in its next fiscal year. 


One analyst said the dramatic slide in profits might not lead to a sell-off of Panasonic's stock. 


"The net loss of 420 billion yen includes an increase in the cost of restructuring. It has lowered the assumed exchange rates to 76 yen, which gives the company some buffer even if the dollar slips from the current level after today's intervention," said Hiroyuki Fukunaga, CEO of Investrust. 


"So even though it is reporting a loss, the market may think all the negative factors have been priced in, especially given that its share price has fallen about a third from around 1,200 yen at the beginning of this year." 


Panasonic said it would incur 514 billion yen in restructuring costs, about half of it in the TV business, for the year to March, compared with an earlier forecast of 110 billion yen. 


The Japanese government intervened in the currency market for the second time in less than three months after the yen hit another record high against the dollar on Monday, selling yen to counter speculative trading that officials say is hurting the world's No.3 economy. 


Panasonic's annual loss, which will be its second biggest ever, compares with the company's previous forecast for a net profit of 30 billion yen in the year to March 2012 and last year's net profit of 74 billion yen. 


Shares of the company closed 2.1 per cent lower before the results. They have fallen 31 per cent so far this year, compared with a 13 per cent decline in the broader market .

'Big-time infra loans may turn NPA due to regulatory hurdles'

Source :23 OCT, 2011, 10.36AM IST, PTI 

NEW DELHI: Delay in regulatory approvals for infrastructure projects worth Rs 1.18 lakh crore poses a serious risk of huge loans disbursed by banks becoming non- performing assets, says an internal note of the Finance Ministry.

According to a list of big infrastructure projects, whose progress was reviewed by the Finance Ministry recently, 13 including 4,000 MW Sasan UMPP and Hindalco's Mahan are facing regulatory hurdles, mainly delay in getting clearances from the Environment Ministry for coal blocks.

"There is an increased risk of already disbursed loans turning into non-performing assets ( NPA)," the Finance Ministry has cautioned. The public sector banks have sanctioned around Rs 61,000 crore to the 13 projects.

This defeats the government's focus on infrastructure sector where it has envisaged an investment of over USD 1 trillion in the next five years. Of the total investment, private sector is likely to contribute nearly 60 per cent.

The 13 mega projects are a part of the 142 such schemes across the country that are stuck due to regulatory delays despite sanctioning of loans by the public sector banks, as per an official document.

"...disbursement in 142 large projects where loans of Rs 100 crore or more has been sanctioned by the public sector banks is held up as certain regulatory approvals are awaited. This...is impacting resultant benefits to the economy," the note said.

Of the 13 mega projects, nine are awaiting environmental clearances. Two are the projects of the mines and the urban development sectors. Eleven of the 13 mega projects pertain to capacity addition in the power sector by players like Reliance Power, Lanco Power, Jindal Power and Essar Power Gujarat Ltd.

Among the projects, Hindalco Industries' Rs 10,500-crore new aluminium smelter project at Singrauli in Madhya Pradesh is awaiting clearance from MoEF. The coal block which falls in the 'no go' mining zone as categorised by the MoEF was referred to a ministerial panel after clearance was rejected.

The Ministry has expressed concerns that the project is being delayed despite banks sanctioning loans to the tune of Rs 7,875 crore.

As far as Reliance Power's Sasan Project is concerned, its Chhatrasal coal block is awaiting green nod. The company is executing the 4,000 MW Sasan Ultra Mega Power Project in Madhya Pradesh and is also developing a project in the nearby Chitrangi district.

The document says that Rs 14,550 crore loan for the Rs 19,400 crore project has already been sanctioned and Rs 527 crore has been disbursed.

Last week, rating agency Crisil had said, "There is an urgent need for strong policy actions to reform the power sector ....we estimate around Rs 56,000 crore or 12 per cent of the lenders' total advances to the sector as potentially risky, if there is no meaningful progress on reforms in the next 18 months." 

New Debt collection Opration support System for banks

Source :Kochi, October 26, 2011 /India PrwirePress Relese/ -- Nexabion Solutions,

Nexabion Solution Kochi/Cochin kerala released a debt collection operation support system for HDFC Bajaj FinServ Bank's Collection Agencies. FinNex Support almost any indian banks data which are using finnOne as Lending System.

 Nexabion Solutions, a leading supplier of web-based automation softwares, today announced release of FinNex, India's first office automation solution for banking associates with a comprehensive integrated feature set and reporting tools. FinNex is unique software which helps collection agencies to automate allocations, define business flow, mange employee payroll, and analyze business performance.

FinNex has a Cloud based architecture for better usability that can be accessed from any corner of the globe, FinNex has been designed keeping in mind the intricacies that would otherwise have to be overcome in a manual process of maintaining records of outstanding dues, agent's incentives, report generation etc. Apart from these advantages, FinNex provides associates with accurate performance analysis and supports decision making in a better way. With FinNex, a banking agencies day-to-day management of debtor accounts is no longer complicated. This simplistic, yet thorough software is expected to improve the efficiency and effectiveness of all collection agencies.

A debt collection agency software like FinNex has been launched in a time when the rising interest rates, high inflation, high crude and energy prices and the Euro zone financial downturn are expected to keep the slippages elevated, and the margins for almost all commercial banks placed under pressure. With SBI already started recovering their NPAs and the other banks expected to follow the same route, debt recovery agencies can expect larger defaulters list every month.

Finnex is the first of its kind in India, said Abdul Rasheed project manager - FinNex. "It will be the first step in taking Indian collection agencies globally competitive. At present, FinNex is expected to help HDFC and Bajaj auto finance collectors in cutting there back office burden and reducing human efforts there. Nexabion is looking to expand FinNex by adding services to more banks that use FinnOne as their loan management system", he added.

A key capability of FinNex is its cloud based architecture. Users can automatically upload bank schedules via Internet, providing a user-friendly, built-in interface for complete analyzing and reporting. Users also can browse reports, review performance, generate reports on demand, configure each user account, save reports locally, calculate salaries and even export reports to MS excel. And, as an added convenience, no local installation of software is required on the user side making the application really platform independent. 
"We have set an ambitious goal of automating collection of all Indian banks those use FinnOne as their loan management system, by 2014. And we expect FinNex to help collection agencies to build a culture of innovation and entrepreneurship as well as making better decisions, collection networks, and revenue-generating customer support." Irshad MD, Nexabion said.