Chapter 4 - The Festering Twin Balance Sheet Problem
|
|
- Violet Gibbs
- 5 years ago
- Views:
Transcription
1 Chapter 4 - The Festering Twin Balance Sheet Problem India for sometime has been trying to solve Twin Balance Sheet Problem (TBS Problem) - which in simple terms can be put as over leveraged companies and bad loan encumbered banks-using a decentralised approach wherein the banks have put in charge of the decisions. The problem of NPAs (Non-Performing Assets) has festered further as in February 2016, banks reported that NPAs had soared to such an extent that they had overwhelmed the operating profits and hence the net income of the banks had taken a beating. The investors started fleeing the public sector bank shares as a result the market capitalisation of these banks came down (at a point, the market capitalisation of the 24 public sector banks was equal to that of HDFC bank!) It has been observed that whenever there is an economic crisis, the NPAs soar but since there was no economic crisis in India (contrary India was growing at the largest growth rate!), then what can explain this sudden surge in NPAs-one explanation is the Asset Quality Review (AQR) of RBI, following which the banks had to clean up their balance sheet. Nevertheless the NPAs kept on creeping upwards and reached 9% of the total loans by September 2016 (double to what it was a year ago) and more than 75% of these NPAs were in the public sector banks (gross NPA of PSBs has reached 12% of their total advances). On the other hand as per Credit Suisse, reported that 40% of the corporate debt was owed by companies which had an interest coverage ratio of lesser than 1 (the ratio basically represents what is the capability of a company to repay the debt, lower the value more difficult for the company to repay the debt) which meant that they did not earn enough to pay the interest obligation. Hence it is beyond any doubt that the in India both- the banks and corporate sectors-are under stress. The NPA ratio (as a percentage of Gross loans) for India is one of the highest in the world. Usually it has been seen that during the periods of boom, the corporations over expand, leaving them with obligations that they cannot repay and end up defaulting on their debts which will have a i pa t o the ala e sheet of the a ks. Ha i g said so I dia does t see to ha e tra ersed this path as there were prudential restrictions which kept the banks from expanding their credit and capital controls prevented undue recourse to foreign loans. The high NPAs usually derail the growth but in case of India this has not happened as there have not been cases of bank runs, no stress in the interbank market, and no need for any liquidity support from the time the TBS Problem has emerged in The explanation for this is 1. Bulk of the NPAs are concentrated in the public sector banks 2. These are ultimately backed by the government As a result the creditors have complete confidence in the banking system. That being said the TBCP experience has been puzzling in India and this chapter will try to answer 4 sets of questions 1. What went wrong?
2 2. What explains TBS syndrome with Indian characteristics 3. Is the strategy sustainable 4. What needs to be done In the beginning it was thought that the TBS problem was minor and would be resolved with growth but over the time it has been realised that the growth will not solve the problems of the stressed firms and on the contrary the problems of the stressed firms may imperil growth 1. What went wrong in the mid 2000s the GDP growth rate of India was high and was inching towards a sustainable double digit number? As per the expectations the corporates started making huge investment decisions (the investment-gdp ratio had soared 11 percentage points to reach 38% by ). These decisions were supported with huge growth in terms of non-food credit flow from the banking sector (between FY2005 to FY2008, the nonfood credit doubled), there was huge inflow of capital (in FY2008 it reached 9% of GDP). All of this added to the debt of non-financial corporations and with this these firms abandoned their conservative debt/equity ratios and leveraged themselves. Soon the negatives started creeping in the form of costs shooting over the budgeted levels (as there were difficulties in securing environmental and land clearances), the forecast revenues collapsed because of GFC, projects that were implemented with the forecast of double digit growth had to face half the level of growth. The situation worsened as the financing costs increased, firms that borrowed domestically had a setback as RBI increased lending rates to control double digit inflation and the firms that had borrowed from outside suffered because of depreciation of rupee. All these cumulatively squeezed the corporate cash flow which led to debt servicing problems. By 2013, nearly a third of corporate debt was owned by companies which and interest coverage ratios of lesser than 1 (IC1 companies) and by 2015 it has increased to 40% 2. What explains TBS syndrome with Indian characteristics India followed a standard path to the TBS problem as there was a surge in the borrowing, leading to overleveraging of the firms and that led to debt servicing problems. Having said so in other countries such as USA post GFC and Japan post the bubble burst in 1990s suffered from the stagnation of growth rates on the contrary in India high growth rates and high NPAs are running parallel. It seems I dia has de eloped its o ersio of TBS hi h has ee referred to as Bala e Sheet S dro e ith I dia Chara teristi s. The possi le e pla atio s are a. The unusual structure of banking system where there are stringent prudential norms b. India suffers from severe supply constraints-such as infrastructure-so when the investment increased, India invested in the infrastructure (such as power plants, roads, airports, ports etc) as a result of which there was ample room for growth even though there was a GFC (in comparison, the US boom was based on housing construction which was far less useful after the crisis)
3 c. In other countries, if the financial system was under such a huge stress then the creditors would have triggered bankruptcies leading to reduction in growth but in case of India, the banking sector has provided restructuring of the loans and other facilitative measures which have not had a great impact on the growth. The banks ha e follo ed the approa h of gi e ti e to ti e strateg allo ore ti e for the orporate ou d to heal a d e ergree i g here a ks le d o e to the fir s which is needed to pay interest rate obligations) 3. Is the strategy sustainable The problem of NPAs may get resolved under two scenarios a. Phoenix Scenario the higher growth would increase the cash flows of the stressed firms thereby allowing them to service their debts b. Containment Scenario limit the NPAs in nominal terms, once done they would shrink as a share of economy and a proportion of bank balance sheets as GDP is growing at a nominal rate of more than 10%. In this scenario they would fade away from importance For some time the second scenario was a possibility as the EBIT (Earnings Before Interest and Tax) of IC1 companies was over Rs Cr per quarter, this has come down because of deterioration in infrastructure companies to Rs Cr per quarter by These companies have subsequently been forced to borrow in order to continue their operations. (The debt of the top 10 stressed companies has tripled in the last six years). With this their interest obligations have also climbed rapidly. Starting from second half of 2016, a significant proportion of increase in the NPAs has come from mid-sized MSMEs. As smaller companies they have been suffering from poor sales and profitability for many years and this trend is likely to continue into The corporate stress is spreading along with stress on the power generation companies and on the MSME sector. In short the stress on the corporate sector is not only deepening, it also widening. There is another reason why the economy may not grow out of its debts, as it will have an impact on the investment scenario (the firms do not invest in new projects and banks will limit their lending). The private investment which was soaring in mid 2000s has contracted. Although the public investment has been increased, it has not been able to arrest the fall of the overall investment. In the medium term this needs to be reversed. Impact of TBS on Public Sector Banks (PSBs) a. At least 13 of these banks accounting for 40% of the total loans, are severely stressed b. 20% of these 13 banks have been classified as restructured or NPAs c. With ROA (Returns of Assets) turning negative, the investors are pulling back their investments in the shares of PSBs and as a result the share prices are declining d. The PSBs have responded to this situation as follows i. They are scaling back their lending (although some slack has been taken up by the private sector, there is limitation on what the private banks can do). As a
4 result the total credit to corporate sector has been decelerating steadily and is the lowest in the 23 years. The reduction of credit outflow has been uneven across the economy i.e. has remained stable in agriculture sector and has expanded in the household sector. ii. The PSBs in order to compensate for their NPAs have increased their interest margin rates. The gap between the average term deposit rate average base rate has widened to 2.7 percentage points (December 2016) from 1.6 percentage points (January 2015) This taxes good borrowers hence some of the borrowers have migrated to capital market (bond market and commercial papers). This migration has both advantages (growth of capital market) and disadvantages (banks are left with risky borrowers; MSMEs will be stuck with banks). Impact of TBS on power sector a. Some of the setbacks such as lack of supply side factors and infrastructural bottlenecks have led to cost overruns in the new power plants (50% on an average) b. PLF (Plant Load Factor actual production as a share of capacity) has decreased from 62% to 59.6% c. Merchant tariffs in the spot market have come down from Rs 4/kwh to Rs 2.5/kwh To sum it up, the financing strategy has worked in the last eight years but the stress assets are concurrently increasing which means that there is a need to address this debt problem or else there is a danger of this derailing the growth 4. What needs to be done RBI in the past few years, has introduced many mechanisms a. The 5/25 refinancing of Infrastructure Scheme: Under the scheme the lenders were allowed to extend the amortization periods to 25 years with interest rates adjusted every 5 years. The scheme is aimed at improving the credit profile and liquidity of the borrower while allowing the banks to treat these loans a standard in their balance sheets. Since the repayment period has been extended, the borrowers have found difficulty in repaying the interest which has led to evergreening thereby aggravating the initial problem b. Asset Reconstruction Companies (ARCs): Introduced SARFAESI Act (2002), with the objective of resolving the problem of the loans and reduce the burden on the banks. Initially the ARCs were paying very less amount to the banks on purchasing the NPAs, which was modified in 2014 and the payment was increased but so far only about 5 percent of total NPAs at book value were sold over and The problem is that the ARCs have not been able to recover much from the debtors c. Strategic Debt Restructuring (SDR): Introduced by RBI in June 2015 to provide an opportunity to banks to convert debt of companies to 51 percent equity and sell them to the highest bidders (subject to authorization by existing shareholders). An 18-
5 month period was envisaged for these transactions, during which the loans could be classified as performing. But as of end-december 2016, two dozen companies have entered into negotiations, only two cases have been actually been concluded d. Asset Quality Review (AQR): RBI emphasized on AQR (because resolution of the bad assets require their recognition), to verify that banks were assessing loans as per the classification rules issued by RBI. Any deviations from such rules were to be rectified by March e. Sustainable Structuring of Stressed Assets (S4A): Introduced in June Under this an independent agency (hired by the banks) will decide on how much of the stressed de t of a o pa is sustai a le. The rest u sustai a le ill e o erted into equity and preference shares. Unlike the SDR arrangement, this involves no change in the ownership of the company. So the question arises as to why the progress has been limited? The reasons are a. The schemes are new and financial restructuring negotiations will take time b. The AQR was conducted so as to make the banks identify the true state of their balance sheets but the banks have continued to evergreening of the loans c. Although RBI promotes formation of the Joint Lenders Forum (JLF). The JLF model has hit certain roadblocks-arriving at a decision has become difficult (as it requires 75% value and 60% volume of creditors to take a decision) d. The reward framework is absent (for writing down of the loans) whereas there is an inherent threat of punishment because of presence of referee institutions. Now the Banking Board Bureau (BBB) has created an oversight committee which can vet and certify the write down proposals The road to resolution is full of obstacles and it is much more acute in case of large borrowers (are few in number but per borrower debt is very high) because of the following reasons a. To restore the viability of these firms the write downs required are huge b. Such high write down would reduce the cushion capital of the banks c. Larger borrowers have more number of creditors. These creditors need to arrive at a strategy which is very difficult d. The bank officials are not only worried about the referee institutions but are also worried about public attention So will the new bankruptcy code change the situation? The systems under the bankruptcy code are not yet fully in place and once implemented it has to be first tested with smaller cases and then the complex cases involving large borrowers can be taken up PARA (Public Sector Asset Rehabilitation Agency)
6 These difficulties raise a fundamental issue which points to the fact that the present mechanism is not working hence there is a need for centralised approach. One of the possible strategies would be to create PARA. The following are the features which point to the need of PARA a. The dis ussio so far has ee re ol i g arou d the a ks apital hereas the ai issue here is the bad debts of the firms b. Majority of the problem is because of economic features such as exchange rates, growth expectations etc going wrong c. Majority of the stressed assets are concentrated in small number of borrowers and the issue can be overcome by solving small number of cases d. Cash flows have reduced to a great extent in many of these firms so only alternative that is left now is to convert the debt into equity (as cash flows have come down so will be the capability to repay the debt) e. Large debtors have many creditors and it is very difficult to bring all these creditors on the same page f. Since the banks have been unable in resolving these complex cases, the burden has been postponed. With the delay the costs will increase so will the bad debts g. The pri ate ARCs ha e t had good out o es How PARA would be better a. The mandate of PARA could be to resolve complex cases b. Since there is centralisation, there would be no problems of co-ordination (previously there was decentralisation wherein each bank had to take its own decisions) c. The centralisation will also lead to setting up of proper incentives, by giving it a mandate of maximizing recoveries within a fixed period of time d. It would separate loan resolution process from worries about the bank capital How PARA would be set up the funds for setting up of PARA could come from a. Government issues of securities could stre gthe the go er e t s fi a ial position by resolving the debt issue and thereby reducing the amount that would be provided as compensation to the banks b. Capital markets if PARA is structured in a way that attracts the private sector to take up equity share, it would also help replenish the capital of the PSBs, if the government decides to bring down its holdings c. RBI RBI would transfer some government securities thereby increasing the capital of PARA. There would be no implications for monetary policy, since no new money would be created
7 Working of PARA PARA would purchase loans of large indebted firms from the banks and work them out-either convert debt to equity to sell the stake in auction or granting debt reduction-based on the professional assessments of value maximization strategy Once these loans are off the balance sheets of the banks, the government will recapitalize, thereby allowing the banks to focus on their core business-giving loans. Similarly once the firms have attained financial viability, they would focus on their operations, rather than on their finances and will be able to consider new investments. During the process certain costs/losses will rise and the bulk of it should be taken up by the government as the objective is to minimize the existing liability by resolving bad loan problem as quickly and as effectively as possible Setting up of PARA is not a panacea as the experience with the government set rehabilitation agencies has not been uniformly positive. There are certain issues that have bedevilled other agencies which need to be resolved to ensure smooth functioning of PARA a. There is a need to have readiness to confront the losses and accept political consequences as there will be accusations of favouritism if the loans are written off and allegations of strong government when the companies are taken over and sold. To minimize such allegations it is imperative that PARA is very professional which plans to maximize recovery value b. PARA needs to follow commercial principles (not political principles). To achieve this, there is a need for PARA to be independent agency (could be set up on the lines of GST Network) c. The pricing of the loans has to be market driven. It would prohibit from banks transferring their losses to PARA but on the other hand determining market price is difficult and time consuming The pre ious ear s E o o i Sur e had re o e ded 4Rs-Recognition, Recapitalisation, Resolution and Reform. Under the Recognition there has been the most progress in the last one year. RBI has announced AQR (Asset Quality Review) and as a result the banks have recognised higher number of NPAs which has eaten into the capital base of the banks Recapitalisation has to be provided by the banks and as such is not the need of the hour Resolution is the key issue because there is no guarantee that even after recapitalisation, the banks will be willing to increase their lending until they know what are the true losses, which can be gauged through resolution and on the other side the borrowers would be able to invest unless their financial position is rectified. Until this happens, the economic growth will be under threat There is a need for fundamental Reforms as it has not been seen that large share of portfolios of PSBs have turned NPAs twice in a decade. If the reforms are not implemented then the problem will recur again. But with TBS problem being solved there is a danger of
8 getting into the significant moral hazard problems, wherein the banks forget about the past and start lending indiscriminately again as the balance sheet has been cleaned up.
Addressing NPAs of Banks: PARA-the last frontier?
Addressing NPAs of Banks: PARA-the last frontier? Contact: Madan Sabnavis Chief Economist madan.sabnavis@careratings.com 91-22-67543489 Manisha Sachdeva Associate Economist manisha.sachdeva@careratings.com
More informationA Study on the Debt Recovery Agencies
A Study on the Debt Recovery Agencies Dr. B.Saritha 1 PhD Finance Principal, MG University, Nalgonda Dist. Mrs. Seema Nazneen 2 Mrs CH Siva Priya 3 Research Scholar Assistant Prof School of Business Management
More informationNPAs and their assignment to Assets Reconstruction Companies (ARCs)
Introduction NPAs and their assignment to Assets Reconstruction Companies (ARCs) Dr. A.N. Garg NPA is a classification used by financial institutions that refer to loans that are in jeopardy of default.
More informationNon-Performing Assets (NPAs) of Banks in India
Non-Performing Assets (NPAs) of Banks in India 1. Build-up of corporate and banking sector vulnerabilities are grave cause for concern for the government of India as these have serious implications not
More informationVISION IAS
VISION IAS www.visionias.in NPA & Related Issues Table of Content 1 Reasons for NPAs... 2 2 Impacts of rising NPAs... 3 3 Major Sectors of the Economy having NPAs... 3 4 How to Reduce NPAs... 4 5 Recent
More informationECONOMIC ANALYSIS. I. Introduction and Historical Background
ECONOMIC ANALYSIS I. Introduction and Historical Background Accelerating Infrastructure Investment Facility in India (RRP IND 47083) 1. According to the Planning Commission of India s approach paper to
More informationIndian Banks: The final cleanup
Economic and Financial Analysis 25 June 2018 Global Economics 25 June 2018 Article Indian Banks: The final cleanup Indian banks are going through the final phase of their balance-sheet cleanup. This completes
More informationS4A an improvised financial engineering tool to abate NPAs albeit with formidable challenges
September 09, 2016 Ratings S4A an improvised financial engineering tool to abate NPAs albeit with formidable challenges What is S4A? The Reserve Bank of India (RBI), in order to improve asset quality of
More informationA PRESENTATION ASHOK GUPTA, SVP, IDBI CAPITAL
A PRESENTATION BY ASHOK GUPTA, SVP, IDBI CAPITAL CDR System CDR is a voluntary non-statutory mechanism based on DCA and ICA having a principle of approvals by supermajority. It covers only multiple accounts/
More informationArticle. RBI s Framework for revitalising distressed assets leaves everyone in stress Bank, NBFCs, Corporate Inc, CAs, advocates no one s spared
RBI s Framework for revitalising distressed assets leaves everyone in stress Bank, NBFCs, Corporate Inc, CAs, advocates no one s spared Nidhi Bothra nidhi@vinodkothari.com Abhirup Ghosh abhirup@vinodkothari.com
More informationIndia Infrastructure Debt Fund: A Concept Paper
India Infrastructure Debt Fund: A Concept Paper - Gajendra Haldea Creation of world-class infrastructure has been recognised as a key priority and a necessary condition for sustaining the growth momentum
More informationN S Vishwanathan: Issues in infrastructure financing in India
N S Vishwanathan: Issues in infrastructure financing in India Chief Guest's address by Mr N S Vishwanathan, Deputy Governor of the Reserve Bank of India, at the 6th National Summit organised by the Associated
More informationFarmers have significantly increased their debt levels
2010 Debt, Income and Farm Financial Stress By Brian C. Briggeman, Economist, Federal Reserve Bank of Kansas City Farmers have significantly increased their debt levels in recent years. Since 2004, real
More informationRef.No.: FIDC/ 136/ 0405 June 17, SUB:PRE-BUDGET MEMORANDUM ISSUES RELATING TO NON-BANKING FIN ANCIAL COMPANIES (NBFCs)
Ref.No.: FIDC/ 136/ 0405 June 17, 2004 To, Mr. P. Chidambaram, Finance Minister, Government of India, North Block, New Delhi - 110 001. Hon ble Finance Minister Sir, SUB:PRE-BUDGET MEMORANDUM 2004-05 -
More informationA Study on Impact of Bad Loans on Performance of Banks
IOSR Journal of Business and Management (IOSR-JBM) e-issn: 2278-487X, p-issn: 2319-7668 PP 37-41 www.iosrjournals.org A Study on Impact of Bad Loans on Performance of Banks karlapudi preethi karlapudipreethi58@gmail.com
More informationPAPER No. 16: Financial Markets and Institutions MODULE No. 18: Bank Credit: Working Capital & Bank Funds
Subject Paper No and Title Module No and Title Module Tag 16: Financial Markets and Institutions 18: Bank Credit: Working Capital & Bank Funds Com_P16_M18 TABLE OF CONTENTS 1) Learning Outcomes 2) Introduction-
More informationNon-performing assets: an Indian perspective
Non-performing assets: an Indian perspective Thought Paper www.infosys.com/finacle Universal Banking Solution Systems Integration Consulting Business Process Outsourcing Non-performing assets: an Indian
More informationRBI Financial Stability Report, June 2015: Some Key Observations
RBI Financial Stability Report, June 2015: Some Key Observations The Reserve Bank of India (RBI) came out with its Financial Stability Report in June 2015. The half yearly report can be seen as a detailed
More informationRESTRUCTURING & INSOLVENCY - THE INDIAN SCENARIO. `Extend a helping hand to an entity in distress
RESTRUCTURING & INSOLVENCY - THE INDIAN SCENARIO `Extend a helping hand to an entity in distress The global economic slowdown has already cast its shadow on the Indian industries also, which are also falling
More informationJapan s Nonperforming Loan Problem
Japan s Nonperforming Loan Problem Released on October 11, 1 Japan s Nonperforming Loan Problem 2 I. Summary Japan s nonperforming loan (NPL) problem should be regarded as being inextricably linked with
More informationRBI s revised framework for resolving stressed assets: Building transparency and accuracy
RBI s revised for resolving stressed assets: Building transparency and accuracy under the revised? Non-performing assets (NPAs) have become a major challenge for both public and private sector banks in
More informationMEASUREMENT OF CORRELATIONS (NPA AND ROA) OF DIFFERENT BANKS AND TREND ANALYSIS OF NPAS IN INDIAN BANKS
International Journal of Management (IJM) Volume 8, Issue 6, Nov Dec 2017, pp. 81 88, Article ID: IJM_08_06_010 Available online at http://www.iaeme.com/ijm/issues.asp?jtype=ijm&vtype=8&itype=6 Journal
More informationC A Y M A N I S L A N D S MONETARY AUTHORITY
Statement of Guidance Credit Risk Classification, Provisioning and Management Policy and Development Division Page 1 of 22 Table of Contents 1 Statement of Objectives... 3 2 Scope... 3 3 Terminology...
More informationPost-Financial Crisis Regulatory Reform Proposals -From Global One-Size-Fits-All to Locally-Specific Regulations-
Post-Financial Crisis Regulatory Reform Proposals -From Global One-Size-Fits-All to Locally-Specific Regulations- Research Group on the Financial System Strengthening international financial regulations
More informationExternal Account and Foreign Debt Management
The Lahore Journal of Economics Special Edition External Account and Foreign Debt Management Ashfaque H. Khan * Abstract The paper highlights strong gains in the macro area. The author also shows how total
More informationCorporate Debt Restructuring (CDR)
BP.BC. 15 /21.04.114/2000-01 Corporate Debt Restructuring (CDR) August 23, 2001 All commercial banks (excluding RRBs & LABs) Dear Sir, Corporate Debt Restructuring (CDR) As you are aware, the need for
More informationFIDC. Finance Industry Development Council
January 12, 2015 Shri Arun Jaitleyji Minister of Finance Government of India North Block New Delhi - 110 001. Hon'ble Finance Minister Sir, SUB: PRE-BUDGET MEMORANDUM - ISSUES RELATED TO NBFCs, SPECIALLY
More informationFOCUS NOTE. Even the most mature microfinance. Asset and Liability Management for Deposit-Taking Microfinance Institutions
FOCUS NOTE No. 55 June 2009 Karla Brom Asset and Liability Management for Deposit-Taking Microfinance Institutions Even the most mature microfinance institutions (MFIs) need to pay attention to their balance
More informationBANKING WORKING GROUP. Speech by the Banking Working Group at the Vietnam Business Forum Hanoi, 3 December 2012
BANKING WORKING GROUP Speech by the Banking Working Group at the Vietnam Business Forum Hanoi, 3 December 2012 Your Excellencies, Co-Chairs, Ladies & Gentlemen, Today at the VBF you will hear from four
More informationPrepared by Basanta K Pradhan & Sangeeta Chakravarty August 2010
Prepared by Basanta K Pradhan & Sangeeta Chakravarty August 21 Highlights Industrial growth cools down WPI inflation falls marginally. Rupee appreciates marginally The annual growth of Index of Industrial
More informationImpact of Financial Crisis on Emerging Economies
Impact of Financial Crisis on Emerging Economies PRINCY JAIN Assistant Professor in Economics Abstract: This paper talks about financial crisis of 2008 which had hit all the nations of the world. This
More informationECOWRAP MODERN DAY DAVID (NCLT) VS. GOLIATH (ACTIVE COMPANIES) SAGA SBI ECOWRAP
ECOWRAP MARCH 19, 2018 ISSUE NO: 79, FY18 MODERN DAY DAVID (NCLT) VS. GOLIATH (ACTIVE COMPANIES) SAGA The Central Government has constituted National Company Law Tribunal (NCLT) w.e.f. 01st June 2016.
More informationKorea s Experience with International Capital Flows
Korea s Experience with International Capital Flows 1. Trends in International Capital Flows Korea s financial liberalization concomitant with its market opening began in the early 1980s, but at that time,
More informationRS Official Gazette, No 69/2017
RS Official Gazette, No 69/2017 Based on Article 15, paragraph 1 of the Law on the National Bank of Serbia (RS Official Gazette, Nos 72/2003, 55/2004, 85/2005 other law, 44/2010, 76/2012, 106/2012, 14/2015
More informationGLOSSARY 158 GLOSSARY. Balance-sheet liquidity. The ability of an institution to meet its obligations in a corresponding volume and term structure.
158 GLOSSARY GLOSSARY Balance-sheet liquidity Balance-sheet recession Bank Lending Survey (BLS) The ability of an institution to meet its obligations in a corresponding volume and term structure. A situation
More informationA CLEAR UNDERSTANDING OF THE INDUSTRY
A CLEAR UNDERSTANDING OF THE INDUSTRY IS CFA INSTITUTE INVESTMENT FOUNDATIONS RIGHT FOR YOU? Investment Foundations is a certificate program designed to give you a clear understanding of the investment
More informationCHAPTER - 6. PA NPA ANALYSIS AND INTERPRETATION OF DATA OF SELECTED UCBS TEKAN TOGETHER 6.1 Introduction 131
CHAPTER - 6 PA NPA ANALYSIS AND INTERPRETATION OF DATA OF SELECTED UCBS TEKAN TOGETHER 6.1 Introduction 131 6.2 Concept Of NPA And Its Importance In Banking Sector 131 6.3 Common - Size Analysis Of The
More informationDeveloping Countries Chapter 22
Developing Countries Chapter 22 1. Growth 2. Borrowing and Debt 3. Money-financed deficits and crises 4. Other crises 5. Currency board 6. International financial architecture for the future 1 Growth 1.1
More informationKsenia Yudaeva: The policy of the Bank of Russia for ensuring financial stability in an environment of economic recovery
Ksenia Yudaeva: The policy of the Bank of Russia for ensuring financial stability in an environment of economic recovery Speech by Ms Ksenia Yudaeva, Deputy Governor of the Bank of Russia, at the Forum
More informationNEPAL. Management Performance Indicators for. Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB) (Fifth Semi-Annual Report)
Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Cleared by Kenichi Ohashi, Country Director for Nepal, SAR XXX, 2006 NEPAL Management
More informationRic Battellino: Recent financial developments
Ric Battellino: Recent financial developments Address by Mr Ric Battellino, Deputy Governor of the Reserve Bank of Australia, at the Annual Stockbrokers Conference, Sydney, 26 May 2011. * * * Introduction
More information1 of 5 5/29/2018, 12:06 PM
1 of 5 5/29/2018, 12:06 PM Deccan Chronicle Andhra Bhoomi Asian Age epaper epaper POWERED BY Search Last Updated:02:39:03 AM Tuesday May 29,2018 Home Politics,Plan & Policy Companies & Markets Brand Around
More informationMEMBERS' REFERENCE SERVICE LARRDIS LOK SABHA SECRETARIAT, NEW DELHI REFERENCE NOTE. No. 39/RN/Ref/October/2016
MEMBERS' REFERENCE SERVICE LARRDIS LOK SABHA SECRETARIAT, NEW DELHI REFERENCE NOTE No. 39/RN/Ref/October/2016 For the use of Members of Parliament NOT FOR PUBLICATION 1 NON PERFORMING ASSETS IN PUBLIC
More informationManagement of Non-Performing Assets: The Challenges Faced by Indian Banks
By: K. SIVA SANKAR G. RAMESH PANDI Management of Non-Performing Assets: The Challenges Faced by Indian Banks Non-performing assets are a drag on the profitability of any bank. It is important that banks
More informationEx post evaluation Turkey
Ex post evaluation Turkey Sector: Financial intermediaries in the formal sector (CRS code 24030) Project Support for small businesses, BMZ no.: 2005 65 192 (originally trustee funds), Co-financing promotional
More informationI. INTRODUCTION MEANING OF NPA
ISSN: 2349-7637 (Online) RESEARCH HUB International Multidisciplinary Research Journal (RHIMRJ) Research Paper Available online at: www.rhimrj.com A study on Recent Trend of Non-Performing Assets in Public
More informationRBI Q1 FY11 Monetary Policy Review
RBI Q1 FY11 Monetary Policy Review The Policy Measures In Brief In its First Quarter Review of the Annual Monetary Policy for 2010-11, the Reserve Bank of India increased its policy rates with immediate
More informationThe Financial Crisis and the Future of the J-REIT Market
The Financial Crisis and the Future of the J-REIT Market Yuta Seki Senior Analyst, Chief Representative, New York Representative Office of Nomura Institute of Capita Markets Research I. Refinancing risk
More informationBANKING SECTOR PERFORMANCE STUDY H1FY14
BANKING SECTOR PERFORMANCE STUDY H1FY14 Our study covers 39 banks 26 Public Sector Banks & 13 Private Sector Banks. Banking December 11, 2013 Foreword As per the Central Statistical Organization (CSO)
More informationEVALUATING THE PERFORMANCE OF COMMERCIAL BANKS IN INDIA. D. K. Malhotra 1 Philadelphia University, USA
EVALUATING THE PERFORMANCE OF COMMERCIAL BANKS IN INDIA D. K. Malhotra 1 Philadelphia University, USA Email: MalhotraD@philau.edu Raymond Poteau 2 Philadelphia University, USA Email: PoteauR@philau.edu
More informationThe U.S. Economy and Monetary Policy. Esther L. George President and Chief Executive Officer Federal Reserve Bank of Kansas City
The U.S. Economy and Monetary Policy Esther L. George President and Chief Executive Officer Federal Reserve Bank of Kansas City Central Exchange Kansas City, Missouri January 10, 2013 The views expressed
More informationStatement of Guidance
Statement of Guidance Credit Risk Classification, Provisioning and Management Policy and Development Division Page 1 of 20 Table of Contents 1. Statement of Objectives... 3 2. Scope... 3 3. Terminology...
More informationFINDINGS, RECOMMENDATIONS AND CONCLUSION
303 CHAPTER VII FINDINGS, RECOMMENDATIONS AND CONCLUSION 304 CONTENTS 7.1 Findings of the Study 7.2 Suggestions and Recommendations 7.3 Conclusion 305 CHAPTER 7 FINDINGS, RECOMMENDATIONS AND CONCLUSION
More informationINTERNATIONAL MONETARY FUND DOMINICA. Debt Sustainability Analysis. Prepared by the staff of the International Monetary Fund
INTERNATIONAL MONETARY FUND DOMINICA Debt Sustainability Analysis Prepared by the staff of the International Monetary Fund In consultation with World Bank Staff July 2, 27 This debt sustainability analysis
More informationImpact of Rupee- Dollar Fluctuations on Indian Economy: Challenges for Rbi & Indian Government
International Journal of Computer Science and Management Studies Vol. 13, Issue 06, August 2013 Impact of Rupee- Dollar Fluctuations on Indian Economy: Challenges for Rbi & Indian Government Anshu Grewal
More informationGuidelines on the application of the definition of default and RTS on the materiality threshold
Guidelines on the application of the definition of default and RTS on the materiality threshold European Banking Authority (EBA) www.managementsolutions.com Research and Development Management Solutions
More informationThe Problem of Widening Current Account Deficit of India
The Problem of Widening Current Account Deficit of India Article by Subho Mukherjee (2013) Source: http://www.economicsdiscussion.net/india/the-problem-of-widening-current-accountdeficit-of-india/10909
More informationThe Twin Balance Sheet Challenge, the 4Rs and Banking Reforms: Government s Response and Way Ahead Some quick and abbreviated reflections
The Twin Balance Sheet Challenge, the 4Rs and Banking Reforms: Government s Response and Way Ahead Some quick and abbreviated reflections Arvind Subramanian Chief Economic Adviser Speech delivered at Shri
More informationNON-PERFORMING ASSETS IN INDIAN BANKING AND THE ROLE OF ASSET RECONSTRUCTION COMPANIES
ABHIJIT SINHA: NON-PERFORMING ASSETS IN INDIAN RANKING AND THE ROLE OF ASSET RECONSTRUCTION COMPANIES DOI: 10.21917/ijms.2016.0032 NON-PERFORMING ASSETS IN INDIAN BANKING AND THE ROLE OF ASSET RECONSTRUCTION
More informationIDA15 IDA15 FINANCING FRAMEWORK. International Development Association Resource Mobilization (FRM)
IDA15 IDA15 FINANCING FRAMEWORK International Development Association Resource Mobilization (FRM) June 2007 ABBREVIATIONS AND ACRONYMS AfDF AsDF CFO FY GAAP HIPC IBRD IDA IFC MDRI SDR African Development
More informationThe RBI-12 cases under the IBC
The RBI-12 cases under the IBC Josh Felman, Varun Marwah and Anjali Sharma Presented at: IBBI-IGIDR Conference on Insolvency and bankruptcy reforms 3rd August, 2018 The RBI-12 cases under the IBC Context
More informationCopyright -The Institute of Chartered Accountants of India. The forward contract is sold before its due date, hence considered as speculative.
PAPER 1: FINANCIAL REPORTING Answer all questions. Working notes should form part of the answer. Wherever necessary, suitable assumptions may be made by the candidates. Question 1 (a) Mr. A bought a forward
More informationBANK FUNCTIONS AND RISK ASSESSMENT
BANK FUNCTIONS AND RISK ASSESSMENT Basic functions of bank in detail- Deposits Types of deposit accounts Account Types Demand Deposits Time Deposits Savings A/c Current A/C Fixed Deposit(FD) Recurring
More informationBattle Over Japan's Mortgage Market Raises Default Risks
Battle Over Japan's Mortgage Market Raises Default Risks Global Fixed Income Research Naoko Nemoto Managing Director Tokyo (81) 3 4550 8720 naoko_nemoto@ standardandpoors.com Standard & Poor's 55 Water
More informationChapter 7 Findings, Conclusions and Suggestions
Chapter 7 Findings, Conclusions and Suggestions This chapter explains the findings and conclusions of the research study. This chapter also includes the suggestions made by the researcher on the basis
More informationThe use of leverage in financial markets: regulatory issues and possible responses
Discussion Paper 2 The use of leverage in financial markets: regulatory issues and possible responses 1. Introduction 1.1. Recent events have focused attention on the use of leverage in speculative trading
More informationDETERMINANTS OF COMMERCIAL BANKS LENDING: EVIDENCE FROM INDIAN COMMERCIAL BANKS Rishika Bhojwani Lecturer at Merit Ambition Classes Mumbai, India
DETERMINANTS OF COMMERCIAL BANKS LENDING: EVIDENCE FROM INDIAN COMMERCIAL BANKS Rishika Bhojwani Lecturer at Merit Ambition Classes Mumbai, India ABSTRACT: - This study investigated the determinants of
More informationFUNDAMENTALS OF ACCOUNTING FOR DEBT MODIFICATIONS AND RESTRUCTURINGS
AUDIT FUNDAMENTALS OF ACCOUNTING FOR DEBT MODIFICATIONS AND RESTRUCTURINGS FUNDAMENTALS OF ACCOUNTING FOR DEBT MODIFICATIONS AND RESTRUCTURINGS Prepared by: Rick Day, National Director of Accounting, RSM
More informationFourth ICRIER-KAS Financial Sector Seminar on Financial Sector Developments, Issues, and the Way Forward,
Fourth ICRIER-KAS Financial Sector Seminar on Financial Sector Developments, Issues, and the Way Forward, December 14, 2011 Ashima Goyal 1 Structure of the Presentation Bank risks; GFC and relative ranking
More informationValuation. The Institute of Chartered Accountants of India
9 Valuation BASIC CONCEPTS CONCEPT OF VALUATION Valuation means measurement of value in monetary term. Different measurement bases are: (a) Historical cost. Assets are recorded at the amount of cash or
More informationAdequacy INTRODUCTION OBJECTIVES
Chapter 9 Capital Adequacy OBJECTIVES At the end of this chapter, you should be able to: 1. explain the relationship between the concept of capital adequacy and the liquidation risk of banks; 2. explain
More informationMEMORANDUM OF ECONOMIC AND FINANCIAL POLICIES
MEMORANDUM OF ECONOMIC AND FINANCIAL POLICIES The slowdown in the global economy, coupled with declining export prices and capital outflows, is placing Sri Lanka s recent economic and social progress under
More informationNon Performing Assets: A Comparative Study of Public, Private and Foreign Banks
Non Performing Assets: A Comparative Study of Public, Private and Foreign Banks Dinesh Tandon Assistant Professor A. S. College, Khanna, Punjab-India Dr. Harpreet Singh Prof. & Director A. S. Group of
More informationChi on China China s Debt Conundrum (II) The Local Government Debt Problem
For professional investors 26 October 2013 1 Chi on China China s Debt Conundrum (II) The Local Government Debt Problem SUMMARY China s local government debt (LGD) risk is rising, but it is not fatal.
More informationIRSG Opinion on Potential Harmonisation of Recovery and Resolution Frameworks for Insurers
IRSG OPINION ON DISCUSSION PAPER (EIOPA-CP-16-009) ON POTENTIAL HARMONISATION OF RECOVERY AND RESOLUTION FRAMEWORKS FOR INSURERS EIOPA-IRSG-17-03 28 February 2017 IRSG Opinion on Potential Harmonisation
More informationChapter 8 An Economic Analysis of Financial Structure
Chapter 8 An Economic Analysis of Financial Structure Multiple Choice 1) American businesses get their external funds primarily from (a) bank loans. (b) bonds and commercial paper issues. (c) stock issues.
More informationCrisis, Threats and Ways Out for the Greek Economy
Cyprus Economic Policy Review, Vol. 4, No. 1, pp. 89-96 (2010) 1450-4561 Crisis, Threats and Ways Out for the Greek Economy Nicos Christodoulakis Athens University of Economics and Business Abstract The
More informationThe zombie businesses phenomenon: An update
The zombie businesses phenomenon: An update Zombie: a) a dead human that s been reanimated to a state between life and death. ~ business b) a company only able to service interest on its debt but not the
More informationEconomics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 10 Banking and the Management of Financial Institutions
Economics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 10 Banking and the Management of Financial Institutions 10.1 The Bank Balance Sheet 1) Which of the following statements are true? A)
More informationPublic consultation. Draft guidance of the European Central Bank on leveraged transactions. Template for comments
Public consultation Draft guidance of the European Central Bank on leveraged transactions Template for comments Contact details (will not be published) Institution/Company UniCredit Contact person Mr Ms
More informationMacroeconomic Context and Budget Priorities Shankar Acharya * ICRIER KAS Seminar 2013, February 21, 2013
Macroeconomic Context and Budget Priorities 2013-14 by Shankar Acharya * ICRIER KAS Seminar 2013, February 21, 2013 * Honorary Professor, ICRIER (former Chief Economic Adviser to the Government of India,
More informationImproving Your Credit Score
Improving Your Credit Score From my experience working with many potential home buyers looking to improve their credit, they are frustrated! They are frustrated because they receive conflicting information
More informationFramework for Revival and Rehabilitation of Micro, Small and Medium Enterprises
Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises 1. Eligibility: The provisions made in this framework shall be applicable to MSMEs having loan limits up to Rs.25 crore,
More information14. What Use Can Be Made of the Specific FSIs?
14. What Use Can Be Made of the Specific FSIs? Introduction 14.1 The previous chapter explained the need for FSIs and how they fit into the wider concept of macroprudential analysis. This chapter considers
More informationAnalyst call on July 27, 2017: opening remarks. Our Board has today approved the financial results of ICICI Bank for the quarter ended June 30, 2017.
Analyst call on July 27, 2017: opening remarks Ms. Kochhar s opening remarks Good evening to all of you. Our Board has today approved the financial results of ICICI Bank for the quarter ended June 30,
More informationMohammed Laksaci: Banking sector reform and financial stability in Algeria
Mohammed Laksaci: Banking sector reform and financial stability in Algeria Communication by Mr Mohammed Laksaci, Governor of the Bank of Algeria, for the 38th meeting of the Board of Governors of Arab
More information1 NATURE, SIGNIFICANCE AND SCOPE OF FINANCIAL MANAGEMENT
1 NATURE, SIGNIFICANCE AND SCOPE OF FINANCIAL MANAGEMENT THIS CHAPTER INCLUDES! Introduction! N a t u r e, S i g n i f i c a n c e, Objectives and Scope (Traditional, Modern and Transitional Approach)!
More information1 NATURE, SIGNIFICANCE AND
1 NATURE, SIGNIFICANCE AND SCOPE OF FINANCIAL MANAGEMENT! Introduction! N a t u r e, S i g n i f i c a n c e, Objectives and Scope (Traditional, Modern and Transitional Approach)! Risk-Return and Value
More informationRole of recovery channels in managing Non-Performing Assets in Scheduled Commercial Banks
Role of recovery channels in managing Non-Performing Assets in Scheduled Commercial Banks Dr. KRISHNA BANANA 1 V RAMA KRISHNA RAO CHEPURI 2 1.Asst. Professor,Dept. Of Commerce & Bus. Admn., Acharya Nagajuna
More information[DC 2] ENTRUST SECURITIES PLC
[DC 2] ENTRUST SECURITIES PLC FINANCIAL STATEMENTS 31 MARCH 2014 [DC 2] FINANCIAL STATEMENTS - 31 MARCH 2014 CONTENT PAGE Independent auditor's report 1 Statement of financial position 2 Statement of comprehensive
More informationBalance-Sheet Adjustments and the Global Economy
November 16, 2009 Bank of Japan Balance-Sheet Adjustments and the Global Economy Speech at the Paris EUROPLACE Financial Forum in Tokyo Masaaki Shirakawa Governor of the Bank of Japan Introduction Thank
More informationResolution of Stressed Assets: Towards the Endgame. Urjit R. Patel
Resolution of Stressed Assets: Towards the Endgame Urjit R. Patel Inaugural Session of the National Conference on Insolvency and Bankruptcy: Changing Paradigm. Mumbai, August 19, 2017 1. Honourable Finance
More informationAsia s Debt Risks The risk of financial crises is limited, but attention should be paid to slowing domestic demand.
Mizuho Economic Outlook & Analysis November 15, 218 Asia s Debt Risks The risk of financial crises is limited, but attention should be paid to slowing domestic demand. < Summary > Expanding private debt
More informationInterview with Klaus Regling, Managing Director, ESM Published in Politis (Cyprus), 8 November 2015
Interview with Klaus Regling, Managing Director, ESM Published in Politis (Cyprus), 8 November 2015 Politis: The main goal of the programme is to restore confidence in Cyprus. Is this mission complete?
More informationHISTORY OF BANK INDONESIA : BANKING Period from
HISTORY OF BANK INDONESIA : BANKING Period from 1997-1999 Contents : Page 1. Highlights 2 2. Direction of Banking Policies 1997-1999 4 3. Strategic Steps 1997-1999 6 4. Supervision Authority 1997-1999
More informationBen S Bernanke: Modern risk management and banking supervision
Ben S Bernanke: Modern risk management and banking supervision Remarks by Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the Stonier Graduate School of Banking,
More informationThe Insensitive Sensex*
The Insensitive Sensex* C.P. Chandrasekhar and Jayati Ghosh This is by no means the best of times, even if as yet not the worst. Gloom pervades the world economy as Europe totters on the brink of another
More informationCARE Ratings Survey on the Indian Economy: FY16
July 16, 2015 Economics CARE Ratings Survey on the Indian Economy: FY16 Expectations ran high for the Indian economy since early 2014 on hopes that the domestic economy would be recharged and investments
More informationConsultative report. Committee on Payment and Settlement Systems. Board of the International Organization of Securities Commissions
Committee on Payment and Settlement Systems Board of the International Organization of Securities Commissions Consultative report Recovery of financial market infrastructures August 2013 This publication
More informationSpeech given by Thomas J. Jordan, Chairman of the Governing Board, at the General Meeting of Shareholders of the Swiss National Bank, 26 April 2013
Speech Embargo: 26 April 2013, 10 am Speech given by Thomas J. Jordan, Chairman of the Governing Board, at the General Meeting of Shareholders of the Swiss National Bank, 26 April 2013 Swiss National Bank
More information