Mathew Varghese V/S The South Indian Bank Ltd.

A.IR:327/2007

Record of proceedings on 1.11.2012 in  IA No.1527/07 (delay);  No representation for the petitioner .  Petitioner is called absent.

Ld. Counsel Shri Arun Prasad appearing on behalf of Ld. Counsel Shri Girish Kumar for the respondent bank took this tribunal through the averments made by the petitioner in the affidavit and stated that the petitioner has not filed the medical certificate and that from the non filing of the medical certificate it can be inferred that the reason stated in the affidavit cannot be believed.  Ld. Counsel further stated that the reason stated by the petitioner  has not been substantiated by the petitioner and that this tribunal cannot venture to condone the delay when the petitioner himself has chosen not to file the medical certificate. 

 Ld. Counsel further stated that no sufficient cause has been shown by the petitioner for not filing this appeal within the prescribed time and that thereafter the delay has also not been explained.  Ld. Counsel further stated that this petition deserves only a dismissal as the petitioner has filed this petition only to drag on the proceedings and further to delay the recovery of public money and that this tribunal also should take a serious note of the public money involved in this case and prayed that this IA should be dismissed.

Heard the Ld. Counsel for the respondent bank.

It is seen that the petitioner has chosen not to be present in this tribunal to put forth his case.  A perusal of the affidavit filed along with this petition sans the medical certificate drives this tribunal to  come to the conclusion that the illness of the petitioner has not been proved and that therefore the delay has not been properly explained. 

 It is also seen that the petitioner has not repaid public money borrowed by him. 

Therefore for the reason that the delay has not been properly explained and  for the reason that public money has to be recovered this IA is dismissed.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on 1 st  Nov 2012

Vijay Mallya's last stand : Selling his crown jewel United Spirits

Asha Rai & Boby Kurian, TNN | Nov 10, 2012, 04.41AM IST

BANGALORE/MUMBAI: "I feel sorry for him" or "he has my sympathies" are not the phrases you would ordinarily associate with as flamboyant a person as Vijay Mallya. But, indeed, they cropped up often when talking to a large number of people who have known him personally and professionally for this story.

Sympathy that less than two weeks after publicly, almost defiantly, proclaiming that he would not sell family silver to fund his grounded airline Kingfisher, he had to do precisely that. A sense of sorrow for a man who has been felled by hubris. Or, as an associate memorably put it, through "nasha."

Mallya was always a high-stakes business operator. He built the liquor and beer businesses he inherited from his father, the late Vittal Mallya, at the young age of 28 in 1983, not only into dominant market players in India but in the case of the former into the world's largest drinks company by volume. Much of the growth was fuelled by debt. His heavily leveraged balance sheets would have felled a lesser mortal but Mallya sailed through with minor hiccups though 'Is Mallya broke?' has been a constant refrain among the chatterati and corporate chieftains for two decades now. Alas, a similar tactic did not work in the airline that he launched with much fanfare on his son Sidhartha's 18th birthday in May 2005.

Standing personal guarantee to the debt raised by the airline and pledging much of his stake in other businesses to keep the airline afloat have today pushed him to sell the crown jewel in his portfolio: the liquor company, United Spirits, which has 50% of the Indian market and was the source of Mallya's clout: economic and political, and his flamboyant lifestyle.

"Vijay has an emotional and rational side to him. But somewhere in recent times he lost the sense of proportion allowing the Kingfisher crisis to spiral out of hand. He's extremely passionate about the businesses he built, not that he loved the inherited ones less. That's what made him stick out for a company (KFA) which was beyond any reasonable sense of business," says Ravi Jain, a joint venture partner and former managing director of Mallya's brewing unit, who used to drive Mallya and his ex-wife Sameera around Kolkata in his old fiat car.

Ramesh Vangal, who was outbid by Mallya for Shaw Wallace, believes, "This is the end of an era. He built an enormous business with great potential. Allowing it to fall into the hands of an MNC is a little of a regret. But it's the practical thing to do." Vangal, the former Pepsi senior executive who has interests in the Indian liquor industry, points out, "It's Karma actually. Vijay has seen the best of times. Now he's facing the most challenging. It's part of the circle of which we are all in. We learn as we go around."



Nobody doubts Mallya's intelligence or his ability to build a business or a brand. Especially the latter. Even the ill-starred KFA is a testimony to his brand-building prowess. "He had this terrific grasp of any situation and could talk straight however difficult it was," UB Bhat, a senior executive who worked with him in the 1980s, reminisces how the young Mallya flew into Bangalore from the United States 48 hours after his father's sudden demise. "He was hardly 28 then, and there were whispers that his father's close aides H P Bhagat or Srinivasa Rao could be considered for the role of chairman. He recovered swiftly to take charge of the affairs and went to create a strong corporate identity for the diversified businesses ( Herbertsons, Phipson, Kissan Foods, etc) his father had built. In the process, he brought several chieftains under his direct control just like what Ratan Tata managed within Tata Group," says Bhat, who was involved in organizing Mallya's first marriage to Sameera (formerly Sakina), sometimes doubling up as a priest, at a temple in Goa.

Jain argues, "He would have done this (Diageo) deal in the ordinary course, but now it's unfortunately seen as him being forced to sell the family business. The liquor market is changing and his own operations have become too big for him to manage alone. One can philosophically argue this is the beginning of retirement, and why not? He was at the top of his energy for thirty years."

Mallya's often described by those close to him as proverbially a man with nine lives. He's been in umpteen scrapes before and come out of it. While the general consensus is that his luck finally ran out, there are others who think by doing this deal with Diageo he's actually doing a smart thing, getting the 10th life perhaps.

K P Balasubramaniam, former chairman of Mysore Breweries (now SAB-Miller India) and an old Mallya friend from Bangalore believes, "It's a smart thing he's done. Diageo is a well run, profitable company. His 15% stake will appreciate in value and he will get good dividends. Same is the case with the beer business (where Heineken is the equal owner)."

A sentiment echoed by Kishore Chhabria with whom he settled long-standing disputes recently. Said he, "The good thing about him is that he continues to be lucky. He would have been gone without this deal, but he has pulled it off. A lot of people might say bechara mar gaya but watch out. His 15% stake will be worth far more in three years than 29% he had. This was a pragmatic deal to do. Good for him and good for the industry." Chhabria, the chairman of Allied Blenders & Distillers, the largest Indian-owned spirits company now, added, "I am sure he will enjoy playing the investor role from now on. People move on like the Singh brothers of Ranbaxy. There's no need to be emotional."

And emotional Mallya has never been about business. He's bought and sold businesses whenever he's seen value. He sold Kissan to Hindustan Lever, after dallying with Nestle a bit. Berger Paintswas sold for a huge profit. He offloaded the brilliant portfolio he inherited from his dad - large stakes in Cabdury and Hoechst - saying there were not core to his business.

Nobody also disputes Mallya's generosity, large heartedness to his family and friends. Says a Bangalore corporate chieftain, "He's a very nice guy. Very generous. Never malicious. Unfortunately, a lot of people misuse that. There are lots of people who take advantage of his hospitality, fly in his planes, attend his parties and then snigger behind his back."

His flamboyant lifestyle - close associates say his personal life was never as colourful as made out by the media - the yachts, the planes, the cars, the horses, the girls, the islands, FI and IPL teams, multiple homes - in the end damned him in the public eye.

But all agree that the very expensive lifestyle - an apocryphal story has it that a big, global PE which did a due diligence when it was looking to invest in Kingfisher put the cost of the lifestyle at $60 million annually - would have to be piped down. Perhaps Mallya was readying for such a life with his recent tweets which suggested happiness at his loss of billionaire status.

Sri.G.Raja Rao V/S Corporation Bank

A.IR:943/2010

Record of proceedings on 6.11.2012 in IA No.1904/2010(delay): No representation for the petitioner. Petitioner is called absent.  Ld. Counsel Shri A. Periasamy appearing on behalf of the respondent bank stated that this Tribunal should dismiss this appeal as per the orders of the Hon’ble High Court of Madras dt 28.8.2012 passed in WP Nos. 13456/2012, 8381/2012 and 12970/2012 as condonation of delay does not arise in  cases of  appeals filed under Sec.18 of the SARFAESI Act..

  Hence this IA is dismissed in obedience to the orders of the Hon’ble High Court of Madras passed in WP Nos.13456/2012, 8381/2012 and 12970/2012.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on 6th Nov 2012

M/s.S.L.T.Farms (P) ltd & anr V/S IOB

A.IR:236/2010

Record of proceedings on 7.11.2012 in IA No.586/2010 (delay):  No representation for the petitioners.  Petitioners are called absent.    

Ld. Counsel Shri Benjamin George appearing on behalf of the respondent bank drew the attention of this Tribunal to the order of the Hon’ble High Court of Madras passed in WP Nos. 13456/2012, 8381/2012 and 12970/2012  and stated that in obedience to the above said order this Tribunal should dismiss this IA as condonation of delay does not arise in  cases of  appeals filed under Sec.18 of the SARFAESI Act.

Heard the Ld. Counsel for the respondent bank.

This IA is dismissed in obedience to the orders of the Hon’ble High Court of Madras passed in WP Nos. 13456/2012, 8381/2012 and 12970/2012.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on 7 th Nov 2012

Vijaya Bank V/S Mr.M.Nagaraj

R.A(S.A):122/2010

Record of proceedings on 7.11.2012 in IA No.1143/2011 (set aside petition);  Norepresentation for the petitioner.  Petitioner is called absent.

Ld. Counsel Shri Om Prakash appearing on behalf of the respondent bank drew the attention of this tribunal to the fact that orders have already been passed in this matter and stated that the question of setting aside of  the order of this tribunal by this very same tribunal does not arise at all more particularly when the petitioner has chosen not to be present and pursue his case.  

Ld. Counsel further stated that the appeal was allowed on 15.9.2011 and that this tribunal should not keep this IA pending and should dismiss the same as the petitioner has chosen not to be present and urge his case for setting aside the order passed by this tribunal more particularly when the petition has been adjourned on 9.8.2012 to today at the behest of the petitioner.  

 Ld. Counsel emphasized the fact that this tribunal cannot set aside the final order and that it is for the petitioner to work out his remedy before a higher forum and submitted that the petition itself is not maintainable and that the same may be dismissed as not maintainable.

Heard the Ld. Counsel for the respondent bank.

This petition is dismissed as the same is not maintainable.

The above Order was passed by the Hon''ble Chair Person of DRAT ,Chennai on7th Nov 2012

SBI: Mid-corporate, SME loans still stressed

MVS Santoshkumar, BL Research Bureau Nov 10,2012

The net profit growth of State Bank of India was driven by one-off items even as asset quality stress continues unabated.

Muted net interest income growth due to fall in margins also took a toll on the profitability. SBI wrote provisions worth Rs 260 crore back, which it had set aside for investment depreciation.

This coupled with Rs 230 crore profits on sale of investments led to a net profit growth of 30 per cent.

The domestic net interest margin declined from 3.86 per cent in the June quarter to 3.68 per cent on the back of lending rate cuts and lower credit-deposit ratio.

Rising deposit costs, reversal of interest income accrued on stressed loans and booking of net present value loss on restructured loans also led to fall in margins.

The slippage of assets into non-performing category in the case of SBI was lower than most public sector banks.

SBI’s gross NPAs rose by 16 basis points sequentially as compared to 50 basis points jump in the case of many other public sector banks.

But the NPA rise would have been higher had SBI not written off Rs 2,000 crore worth of NPAs.

Asset quality continues to deteriorate in three segments — SME, mid-corporate and agriculture loans.

The SME and mid-corporate group showed severe stress with fresh slippages from these two segments accounting for 77 per cent of fresh slippages in the September quarter.

While the loan growth to these segments declined, rising slippages continues to be a concern.

Incidentally, including the restructured loans, the net stressed assets of the mid-corporate group was close to 20 per cent as compared to around 6 per cent for the whole bank.

In agriculture loans, the bank is increasing collateral based lending to cap asset quality pressures.

Kingfisher revival: Bankers optimistic after USL-Diageo deal

BL :MUMBAI, NOV.9:2012

Most of the lenders have already classified the airline as an NPA.

 

With Diageo set to acquire majority stake in United Spirits Ltd (USL) from the United Breweries (UB) Group, bankers feel there is a ray of hope that the beleaguered Kingfisher Airlines (KFA) will fly again.

Bankers feel that UB Group promoter, Vijay Mallya, will channel the funds raised, estimated at around $2 billion, from the stake sale to revive KFA.

KFA’s licence has been suspended by aviation regulator.

State Bank of India Chairman said “for the airline, nothing can get any worse from here”.

Commenting on the USL-Diageo deal, Chaudhuri said, “If at all it (KFA) starts flying and gets capitalised, there can only be an upside and to that extent this news is positive.”

SBI has classified the KFA account as a non-performing asset and the entire loan has been provided for. There is no downside in Kingfisher, said the SBI chief.

“We have always maintained that Kingfisher needs capital. Where the capital comes from, we are absolutely agnostic to it. It can come from his (Mallya’s) group company, his personal capital, foreign money or foreign airlines… it is better for the airline,” he said.

Corporation Bank Chairman Ajay Kumar also maintains Kingfisher as “nothing (regarding revival of KFA) is on the table as of now.” At present, Corporation Bank’s exposure to the financially troubled airline stands at Rs 160 crore and classified as a non-performing asset.

A consortium of 17 banks amounts has an exposure of about Rs 7,000 crore. SBI, the leader of the consortium, has an exposure of Rs 1,458 crore. Most of the lenders to the grounded airline have already classified KFA as NPA.

Central Bank hopes Kingfisher account will become regular

BL : 9th Nov 2012

NEW DELHI, NOV 8: 2012

Central Bank of India is hopeful of Kingfisher Airlines turning into a regular account for the bank.

The issue of recovery should arise only after December 31 when the licence of the private airline expires, R.K. Dubey, Executive Director, Central Bank of India, said here today.

Central Bank of India has an exposure of Rs 350 crore towards Kingfisher Airlines. This account is currently a non-performing asset for the bank.

Dubey said that it was for the 17-bank consortium to take a call on the future course of action against the ailing airline. No date has yet been decided on when the consortium will meet next, he said.

“We are hopeful. We live on hope. The Government has done its part by allowing FDI in domestic airlines. It is the turn of Mallya to bring in the funds. He could have some deal or divest stake in his portfolio of big companies where cash flow is better,’’’ Dubey said.

The 17-bank bank consortium may look at invoking personal or corporate guarantees only after December 31, he indicated.

“When hope dies, then naturally we have to do everything to recover monies. I alone won't be deciding what should be done.

The consortium has to decide that. We have only 5 per cent of the total Rs 7,000 crore exposure of banking system to the airline,’’ he said.

With Central Bank of India’s non-performing assets registering a sharp increase so far this fiscal, Dubey said that the bank has decided to focus on asset quality improvement and recovery during the next six months

Diageo to take 27.4% stake in United Spirits for Rs 5,725 cr

BL :10 th Nov 2012

BANGALORE, NOV.9: 

The £11-billion British liquor giant Diageo Plc has agreed to buy 27.4 per cent stake in the Vijay Mallya-owned United Spirits concluding one of the longest drawn courtships between the two liquor majors.

Post an open offer for 26 per cent, Diageo will own 53.4 per cent in United Spirits that will involve a total payout of Rs 11,166.5 crore.

Diageo will buy from USL’s promoters, including UB Holdings, the 27.4 per cent for £ 660 million (around Rs 5,725 crore) at Rs 1,440 a share. Then, it will make an open offer for the 26 per cent shares held by the public.

Out of Rs 5,725 crore, United Spirits will get Rs 3,300 crore while UB Holdings will get the rest.

“It is a win-win for both the companies. I have not sold my family jewels. I have only embellished them,” Mallya, who will continue to remain Chairman of United Spirits post the Diageo takeover, told newspersons hours after signing the deal.

The deal is considered the biggest inbound M&A this year. Mallya clarified that the money raised through the stake sale will not be used to clear the debt of Kingfisher Airlines. “Each of our group companies are strong listed entities. There is no cross contamination. There never has been. There will never be,” he said. The liquor baron did not agree it was a sell out though it was clear that in case the open offer gets fully subscribed, USL will become a subsidiary of Diageo. “It is not a sell out. I understand the compulsions behind this decision and I appreciate the needs of Diageo in structuring such a deal,” Mallya said.

He said in case the open offer did not get fully subscribed, the promoters will retire the rights of the UB Holdings’ stake of 14.9 per cent. United Spirits debt total about Rs 8,500 crore mainly on account of the funds raised to buy the Scottish bulk Scotch whisky maker Whyte & Mackay.

With the acquisition of USL, Diageo will own Whyte & Mackay and Bouvet Ladubay, a French wine company based in the Loire Valley.

Mallya clarified that as part of the agreement, all security interests over the USL shares to be acquired by Diageo will be released. As owning another UK-based company (Whyte & Mackay) could attract anti-trust laws, mandatory regulatory approvals (including competition approvals) in India and elsewhere will be sought.

Diageo to buy 53.4% in United Spirits for Rs 11,166.5 cr

the hindu :NEW DELHI, NOV 9: 2012

The world’s largest spirits maker Diageo Plc today announced it will acquire 53.4 per cent stake in United Spirits for Rs 11,166.5 crore in a multi-structured deal, which may provide Vijay Mallya a breather from troubles emanating from the grounded Kingfisher Airlines

.

In a joint statement, the UK-based firm said it has entered into an agreement with United Breweries (Holdings) Ltd and United Spirits Ltd (USL) to acquire 27.4 per cent stake in USL, the top liquor company in India at Rs 1,440 per share aggregating Rs 5,725.4 crore

Further, Diageo will also acquire 19.3 per cent stake in USL at a price of Rs 1,440 per share from the UBHL group, the USL Benefit Trust, Palmer Investment Group Ltd and UB Sports Management (two subsidiaries of USL) and SWEW Benefit Company (a company established for the benefit of certain USL employees).

The company will seek approval from USL shareholders for a preferential allotment to Diageo at a price of Rs 1,440 per share of new shares amounting to 10 per cent of the post—issue enlarged share capital of USL. It further said it will launch a tender offer to acquire a further 26 per cent stake in USL at a price of Rs 1,440 per share.

“On completion of the share purchases as described above and in the event that the tender offer were fully subscribed, Diageo will hold 53.4 per cent of the enlarged USL share capital at an aggregate cost of Rs 11,166.5 crore,” the company said.

Following completion of these agreements, Mallya will continue in his current role as Chairman of USL, and UBHL and he will work with Diageo to build the USL business as the current consumer trends for premiumisation accelerate in India, it added.

Kingfisher has a debt pile of over Rs 7,000 crore.

Keywords: United Spirits, Diageo, Vijay Mallya, United Breweries, Kingfisher Airlines

Jet Airways looking to sell and lease back aircrafts to repay $600mn debt

Good returns ;November 7, 2012, 10:13 [IST]

Debt laden, Jet Airways has said that it will retire USD 600-million debt by this fiscal end by way of sale and lease back of some its aircraft.

Ravi Shankar G, CFO Jet Airways said, "We have been steadily repaying our debt, both working capital and working capital loans. By March, we expect our debt to come down to USD 1.96 billion from the current USD 2.3 billion and we would have repaid over USD 600 million of our debt this fiscal."

The total debt on the company's balance sheet stood at Rs 12,000 crore by the end of the September quarter against USD 2.4 billion in the June quarter, Ravi Shankar said.

The airline is also looking at leasing some of its A330's which is expected to fetch a rental of USD 1 million per aircraft per year. Besides, airline is looking to further lease A777 whose lease with Thai Airways is set to expire next year.

Earlier in the previous quarter, Jet Airways raised USD 42 million by way of outright sales, and sale and lease back of seven Boeing 737s, which helped it reduce debt as well as working capital loans.

SBI wants ailing Kingfisher to pump USD 1 bn by month-end

PTI : November 8, 2012, 11:42 [IST]

State Bank of India (SBI), the largest lender to ailing Kingfisher Airlines, wants the airline's promoters to bring in a minimum of USD 1 billion (about Rs 5,400 crore) from any source by month-end for its revival. "We do not put a gun on their head...I think about USD one billion would be a good starting point but the more comes in the better because airlines are a very capital intensive business," SBI Chairman Pratip Chaudhuri told reporters on the sidelines of World World Economic Forum on India summit here. "We have said please attend to the capital needs urgently and we would like to see some tangible progress at least by November 30," he said.

"If a company has to be well leveraged financially and not over leveraged, looking at the company's financial position, USD one billion equity could be starting point," he added. Asked what happens after November 30 deadline, Chaudhuri said "there can be no, yes, or no answer." SBI, the consortium leader of 17 banks, has about Rs 1,200-crore of exposure to Kingfisher.

He said loans given to the debt-ridden airline, promoted by liquor baron Vijay Mallya, has been non-performing and SBI has already made provision for the debt as per RBI's norms. Emphasising that fresh fund infusion is imminent, Chaudhuri said "we are not interested where the capital is coming from—whether it is coming from Mallya, his group company, outside Indian, overseas, airlines whatever be the source we are agnostic about the source but we would like to see capital be infused." The consortium, led by SBI, has made available a total Rs 7,000 crore to Kingfisher to help it keep flying. Kingfisher is burdened with a loss of Rs 8,000 crore and a debt burden of another over Rs 7,524 crore, a large part of that has not been serviced since January.

Court asks Nokia India, Spice Retail to pay Rs 17K for selling faulty mobile

pardaphash; _{NEERAJ jOSHI :8TH NOV 2012} ;

New Delhi: Consumer forum in land mark judgement have directed Nokia India and Spice Retail to refund Rs 11,909 to a customer for selling him a defective mobile phone and its failure to repair it. 

The East District Consumer Disputes Redressal Forum passed its order on an uncontested affidavit of Delhi resident Susham Lat Bhulania who said that Nokia service centre was unable to rectify the phone defects in time. 

In its order, court said, "Contents of the affidavit of complainant (Bhulania) are unrebutted, they cannot be ignored and have to be taken as true regarding defects stated therein and in light of the papers filed in evidence by complainant, it is sufficient for holding respondents guilty of deficiency of service.

"We allow this complaint. The respondents (Spice Retail and Nokia India) are directed jointly and severally to pay the cost of mobile handset which is Rs 11,909. Complainant had been harassed and deprived of the service of the phone which she had purchased for her use. We allow compensation of Rs 5,000 which includes litigation charges," the bench presided by N A Zaidi said.

The bench’s comprising member T Vijayan has directed Bhulania to "handover the defective handset with accessories on receiving the entire amount of cost and compensation."

Bhulania had alleged in her complaint that Nokia E-52 phone, she had bought from Spice Retail for Rs 11,909 had several defects including low charging which could not be cured despite change of charger. 

The forum passed ex-parte order as nobody appeared on behalf of Nokia India or Spice Retail despite serving of several notice.

Financial system robust, but risks rising: RBI

Anup Roy &   |   Dinesh Unnikrishnan  :Live Mint :Thu, Nov 08 2012. 09 18 PM IST

Mumbai: India’s financial system remains robust, but risks to its stability are increasing because of global and domestic economic factors, the Reserve Bank of India (RBI) said in a report released on Thursday, listing a sharp increase in bad assets at commercial banks as a big challenge.

“During 2011-12, the deteriorating asset quality of the banking sector emerged as a major concern, with gross non-performing assets (NPAs) of banks registering a sharp increase,” said the report.

Gross bad debts accounted for 3.1% of the total advances in fiscal 2011-12 against 2.5% in the year before. In absolute terms, outstanding bad debts amounted to Rs.1.423 trillion in fiscal 2011-12 compared with Rs.97,900 crore the previous year, RBI said.

Slowing economic growth, which dipped to a nine-year low of 5.3% in the quarter ended 31 March before increasing slightly to 5.5% in the following quarter, and high interest rates have made it difficult for many companies and individuals to service their loans, hurting the asset quality of banks.

The rise in bad debt was more pronounced in the case of public sector banks that account for 70% of the banking system assets. The gross NPA ratio for public sector banks was 3.3%, or Rs.1.17 trillion, in fiscal 2011-12 compared with 2.4%, or Rs.74,600 crore, a year ago.

“The spurt in NPAs could be attributed to the slowdown prevailing in the domestic economy as well as inadequate appraisal and monitoring of credit proposals,” RBI said.

In 2011-12, nationalized banks also resorted to restructuring their loans at a much faster pace than previous years because of the slowdown in the domestic economy. Restructured loans of the banks crossed 5% of their total advances compared with a little more than 3.5% of the advances in fiscal 2011.

“RBI officials themselves have said that as per historical data, 20-25% of the restructured advances turn into NPAs. But this time, a considerable portion of the restructuring has been done on account of government-owned companies such as state electricity boards and Air India. It is safe to assume they won’t be allowed to turn into NPAs in future. However, if the economy continues to slow down, asset quality will definitely deteriorate further,” said Saikiran Pulavarthi, a senior analyst at Espirito Santo Securities Ltd

.However, even as bad debt mounted, recoveries also improved in the banking system, again led by public sector banks. Loans were restructured to “contain the deterioration in asset quality caused by burgeoning NPAs”. Without restructuring, the bad debt would have mounted further.

RBI is also cautious about the rapid growth of non-banking financial companies (NBFCs). It said “the heavy reliance” of such companies on bank funding needs to be monitored closely”.

“In this context, the recent regulatory measures leading to tightening of norms with respect to raising of resources from banks is expected to bring down the NBFC sector’s reliance on the banking sector and to look for alternate sources of funds,” the central bank said in its report.

Gross NPAs of NBFCs rose to 2.26% of total loans in June from 1.72% in March last year, while net NPAs rose to 1.37% in June from 0.69% in March 2011, RBI said in the report.

According to Pankaj Agarwal, a research analyst at Ambit Capital Pvt. Ltd, bad loans in the banking system haven’t reached alarming levels. However, in view of the fast growth in the segment and the dependence of NBFCs on bank funds, the apex bank is likely to tighten the regulations further on such companies, Agarwal said.

“RBI has been tightening regulations for NBFCs to safeguard the system, especially considering their reliance on bank funding. RBI could stipulate more capital requirements and tighten regulations on bad loan recognition and provisioning, which could bring down the growth and return rations of NBFCs,” Agarwal said.

Indian banks’ loan outstanding to NBFCs rose to Rs.2.4 trillion as of September 2012 from Rs.1.8 trillion in September 2011, according to RBI data.

A key challenge for the banking sector is to migrate to new international norms for capital adequacy under the so-called Basel III regime, which requires banks to significantly raise their minimum capital in phases till March 2018.

Indian banks are, for now, well capitalized to carry on operations. They would require an additionalRs.75,000-80,000 crore of capital by March 2018 to adhere to the minimum capital requirement stipulated in Basel III, the report said.

Although Indian banks have fared well in reaching out to the unbanked population, more needs to be done, while reducing costs in banking remains a priority, RBI said. However, many banks failed to meet their so-called priority sector targets.

Banks need to lend at least 40% of advances to sectors such as agriculture, education, and small and medium enterprises. In 2011-12, a majority of public sector banks failed to meet their priority sector targets.

Big Bazaar to pay up for late delivery

The Hindu : 9 th Nov 2012


The washing machine was delivered after 23 days of purchase 

 A consumer forum ordered a retail store to compensate a customer for failing to deliver his washing machine on time. 

The forum directed Big Bazaar and the washing machine manufacturer, LG, to jointly pay Rs. 5,000 as compensation and Rs. 2,000 towards cost to S. Anandanarayan of T. Nagar, within six weeks.

Anandanarayan purchased an LG washing machine from Future Value Retail’s Big Bazaar store in Pondy Bazaar on May 16, 2010. He paid for it the same day and was promised delivery of the machine at the earliest.

In his complaint, Mr. Anandanarayan said the store delayed the delivery despite repeated reminders from him. 

The washing machine was delivered only on June 7, after a delay of 23 days. 

He then filed a complaint against the retail store and the manufacturer citing deficiency in service.

Even after receipt of notice from the consumer forum, the retail store and manufacturer did not appear before it or file their counter. Hence the matter was set exparte.

Disposing the complaint, the district consumer disputes redressal forum, Chennai (south), comprising its president V. Gopal and member L. Deenadayalan, said, “It is clear the washing machine was not handed over to the complainant within the reasonable period. The act of the opposite parties amounts to deficiency in service.”