Tag: finance ministry

To spur lending, finance ministry pushes to ease fears of bankers, BFSI News, ET BFSI

Banking & Finance

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To protect the people taking bona fide business decisions, the finance ministry issued a uniform staff accountability framework for NPA accounts up to Rs 50 crore.

These guidelines shall be implemented with effect from April 1, 2022, for accounts turning non-performing assets (NPAs) beginning next financial year.

The Department of Financial Services (DFS), under the finance ministry, “vide its order dated October 29 advised broad guidelines to be adopted by all public sector banks (PSBs) on ‘Staff Accountability Framework for NPA Accounts up to Rs 50 crore’ (Other than Fraud Cases)”, the Indian Banks’ Association (IBA) said in a statement.

Banks have been advised to revise their staff accountability policies based on these broad guidelines and frame the procedures with approval of the respective boards, it said.

The IBA, being a key stakeholder of the framework, was involved in the process right from the beginning.

These guidelines will help quell apprehension that bankers could be hauled up for their bonafide commercial decision to go wrong. It will also help bankers to take credit decisions faster and help support the economy.

Stressing that the new guidelines will surely boost the morale of the PSBs employees immensely, it said banks will have to complete staff accountability exercises within six months from the date of classification of the account as NPA.

Further, it said that depending on the business size of the banks, threshold limits have been advised for scrutiny of the accountability by the chief vigilance officer (CVO).

Past track record

Past track record of the officials in appraisal or sanction/ monitoring will also be given due weightage, it added.

“At present, different banks are following different procedures for conducting staff accountability exercises. Also, staff accountability exercise is being carried out in respect of all accounts which turn into NPA. This approach not only adversely affects staff morale but also puts a huge strain on the bank’s resources,” it said.

Punitive measures

While punitive action needs to be taken against the officers having malafide intent/involvement, it is essential to ensure that bonafide mistakes are dealt with compassion, IBA said.

It added that there is a need to protect the people taking bonafide business decisions in this competitive environment.

Moreover, IBA said that at a time when the country is in need of an economic boost, slow credit delivery to industries due to the fear of implication is a matter of concern and needs urgent attention.

Banks with the approval of their board may decide on a threshold of Rs 10 lakh or Rs 20 lakh depending on their business size for the need of examining the aspect of staff accountability, it said.



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IBA welcomes proposed staff accountability norms

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Our Bureau The Finance ministry’s decision to ask Public Sector Banks (PSBs) to complete staff accountability exercise within six months from the date of classification of an account as a non-performing asset (NPA), will boost the morale of employees, according to the Indian Banks’ Association (IBA).

PSBs have been asked to implement the directives with effect from April 1, 2022 for accounts turning NPA on or after this date. Banks have been advised to revise their Staff Accountability Policies based on these broad guidelines and frame the procedures with approval of the respective boards. At present, different Banks are following different procedures for conducting staff accountability exercise. Also, staff accountability exercise is being carried out in respect of all accounts which turn NPA.

‘Strain on resources’

“This approach not only adversely affects staff morale but also puts a huge strain on the bank’s resources. While punitive action need to be taken against the officers having malafide intent/involvement, it is essential to ensure that bonafide mistakes are dealt with compassion,” per the IBA statement. The Association noted that at a time when the country is in need of an economic boost, slow credit delivery to industries due to the fear of implication, is a matter of concern and needs urgent address.

It emphasised that there is a need to protect people taking bonafide business decisions in this competitive environment.

‘Protect bonafide action’

Banks with the approval of their Board may decide on threshold of ₹10 lakh or ₹20 lakh depending on their business size for the need of examining the aspect of staff accountability, IBA said.

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Finance ministry approves 8.5% return on PF deposits for FY21, BFSI News, ET BFSI

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The finance ministry has given its go ahead to 8.5% rate of interest on provident fund deposit for 2020-21 paving way for the Employees’ Provident Fund Organisation to credit the interest in accounts of over 60 million beneficiaries.

The move is expected to bring some cheer a week ahead of Diwali. Labour secretary Sunil Barthwal confirmed the development to ET. “Approval was received from the finance ministry today. It will be notified as soon as possible,” he said.

The labour ministry has to notify the interest rate for the year before EPFO starts crediting it into the beneficiary account.

The move is expected to leave EPFO with a surplus of Rs 300 crore compared to the preceding financial year when it had a surplus of Rs 1000 crore.

The central board of trustees of EPFO, headed by the labour minister, had in March this year approved the interest rate of 8.5% for 2020-21, same as the previous year. However, the labour ministry has to mandatorily seek approval from the finance ministry on the proposed rate. The process was fast tracked after top officials of the labour ministry met finance ministry officials earlier this month to address their queries and asked them to expedite the process.

The finance ministry has over the past few years questioned the higher rate of interest declared by EPFO year after year when the rate of interest for other government schemes including public provident fund or small saving schemes was much lower.

EPFO had pegged an income of around Rs 70,300 crore in the previous fiscal including around Rs 4,000 crore from selling a portion of its equity investments and Rs 65,000 crore from debt.

Based on this, its central board of trustees, headed by the labour minister, had recommended the interest rate of 8.5% for FY21. EPFO had retained the interest rate on PF deposits for 2020-21 same as 2019-20 despite the huge amount of Covid withdrawals from the retirement fund kitty since the scheme was announced last year.

EPFO has an active subscriber base of more than 60 million and every year it invests 15% of its annual accruals in equity and rest in debt instruments. However, since the outbreak of Covid millions of salaried class workers have lost jobs or have been working on reduced wages prompting them to withdraw from their retirement fund kitty under the Covid withdrawal scheme.



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Banks dole out over Rs 11,000 crore loans under govt’s credit outreach programme, BFSI News, ET BFSI

Banking & Finance

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State-owned banks and private banks have so far sanctioned loans worth over Rs 11,000 crore under the credit outreach programme. “As part of the government’s nationwide credit outreach programme that commenced on Oct 16, all PSU banks and private banks have sanctioned more than 193,000 loans totalling 111.68 bln rupees,” Finance Minister Nirmala Sitharaman‘s office tweeted.

Lenders sanctioned loans through 924 camps held in 405 districts from October 16-20.

The loan mela

Over 1 lakh borrowers availed business loans of about Rs 6,268 crore, followed by 62,616 borrowers availing agriculture loans of about Rs 1,874 crore.

Earlier this month, the finance ministry has asked PSU banks to start a nationwide loan outreach programme ahead of the festive season, and later.

Banks were asked to set targets of loans to be sanctioned during the district-wise outreach programme. They were also told to tie up with FinTech firms and non-banking financial companies to disburse loans to even small borrowers.

The banking system is bloated with liquidity, which has jumped from Rs 4.5 lakh crore in 2019 to over Rs 7.5 lakh crore currently, mainly due to weak credit demand.

The finance ministry feels that various sectors need credit support and asked banks to hold talks with exporters and various associations to support their loan needs.

FM announcement

Finance Minister Nirmala Sitharaman had announced a district-wise outreach to be undertaken by banks to help credit growth from October.

A push to credit growth from such outreach efforts will also help the momentum set by the stimulus packages, which have been extended by the government since the onset of the pandemic.

In late 2019, banks had conducted the “loan melas” in 400 districts to push up sagging credit growth. Even now, the credit growth is stuttering at around 6 per cent.

“I think it is too early to conclude whether there is a lack of demand… I don’t think it is time yet to conclude that there is no credit pick-up. Even without awaiting indications, we have taken steps to ramp up credit,” Sitharaman had said.

She noted that over Rs 4.94 lakh crore was disbursed by banks between October 2019 and March 2021 through the outreach initiatives.

Gross NPAs may rise

Gross non-performing assets (NPAs) of banks are expected to increase to 8-9 per cent in the current financial year, credit rating agency Crisil said in a report.

This will be well below the peak of 11.2 per cent seen at the end of fiscal 2018.

According to the agency, the COVID-19 relief measures such as the restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) will help limit the rise in banks gross NPAs.

With around 2 per cent of bank credit expected under restructuring by the end of this fiscal, stressed assets comprising gross NPAs and loan book under restructuring should touch 10-11 per cent this fiscal, it said.

“The retail and MSME segments, which together form close to 40 per cent of bank credit, are expected to see higher accretion of NPAs and stressed assets this time around,” the agency’s senior director and deputy chief ratings officer Krishnan Sitaraman said in the report.

Stressed assets in these two segments are seen rising to 4-5 per cent and 17-18 per cent, respectively, by this fiscal end, he said.

The agency said the operationalisation of the National Asset Reconstruction Company Ltd (NARCL) by the end of this fiscal and the expected first-round sale of Rs 90,000 crore NPAs could lead to lower reported gross NPAs.

The report expects the corporate segment to be far more resilient. A large part of the stress in the corporate portfolio had already been recognised during the asset quality review initiated five years ago.



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China to speed up local bond issuance to support slowing economy, BFSI News, ET BFSI

Personal Finance

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BEIJING, – China intends to accelerate the pace of local government special bond issuance to bolster investment and economic growth, the finance ministry said on Friday, striving to complete the annual quota by the end of November.

Policymakers are seeking to support a faltering recovery, as economic growth in the third quarter was the slowest this year, due partly to power shortages and wobbles in the property sector.

China’s local governments issued a net 2.22 trillion yuan ($346.97 billion) in special bonds in the first nine months of 2021, accounting for 61% of the annual quota, Li Dawei, an official at the finance ministry, told a briefing.

“The pace of issuance has quickened significantly since August,” Li said.

“We will strive to complete the 2021 special bond quota by the end of November to continue to promote the positive role of special bonds in local economic and social development,” he said.

China has set an annual quota of 3.65 trillion yuan for local government special bonds, which mainly fund infrastructure projects, this year.

The figures suggest that local governments could issue a monthly average of 717 billion yuan in special bonds in October and November, a sharp increase from the first nine months.

About half of the funds raised from the special bonds in January-September went to transport, urban infrastructure and industrial parks, with the rest going to affordable housing, education and health care sectors, Li said.

China’s fiscal revenue fell 2.1% in September from a year earlier due to slowing economic growth and statistical base effects, Liu Jinyun, a second ministry official, told the briefing.

“Fiscal revenue growth is likely to show a downward trend in the next few months,” Liu said, adding that the government remains on track to achieve its planned revenue this year, and the budgeted spending will be guaranteed, Liu said. Fiscal revenue grew 16.3% in the first nine months from a year earlier to 16.4 trillion yuan, while fiscal spending rose 2.3% from a year earlier to 17.9 trillion yuan, Liu said. ($1 = 6.3982 Chinese yuan renminbi) (Reporting by Kevin Yao; Editing by Simon Cameron-Moore)



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Meet festive demand, lend liberally, PSBs told

Banking & Finance

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The finance ministry believes that various sectors of the economy – including exports and the sunrise ones – need credit support and banks need to satiate this appetite

The finance ministry has advised state-run banks to start a nationwide loan outreach programme soon and take advantage of a potential rise in credit demand in the build-up to Diwali and thereafter, as the economy is on a path of “sustained recovery”, sources told FE.

The banks have been asked to set targets of loans to be sanctioned during the district-wise outreach programme and join hands with fintech firms and non-banking financial companies to step up disbursement to even small borrowers.

The move follows finance minister Nirmala Sitharaman’s instruction in August to state-run lenders to initiate the outreach programme, as the government sought to stir economic growth through sustained credit push, amid fears that bankers were increasingly turning risk-averse. Lenders had disbursed loans of as much as Rs 4.94 lakh crore through a similar outreach programme in various districts between October 2019 and March 2021, the minister had said.

Having remained muted for months together, non-food loan flow witnessed an uptick of late. Growth in non-food bank credit improved to 6.7% in August from 5.5% a year earlier. Loans to industry grew 2.3% from 0.4% but still remained low. That’s despite the fact that daily surplus liquidity in the banking system averaged as much as Rs 6 lakh crore in July and August, according to CARE Ratings.

The finance ministry has also asked ministries of agriculture, labour, housing, health and rural development to help bolster the number of beneficiaries for insurance as well as pension outreach as well.

The finance ministry believes that various sectors of the economy – including exports and the sunrise ones – need credit support and banks need to satiate this appetite. State-run banks have been asked to hold talks with exporters and various associations to support their loan requirements. This is also expected to provide a leg-up to the one-district-one-product export theme mooted by the Prime Minister.

The weekly average (net) liquidity surplus in the banking system, prevalent since June 2019, has jumped from Rs 4.5 lakh crore as of end-June 2021 to over Rs 7.5 lakh crore by October 5, according to CARE Ratings. “The increase in surplus can primarily be put down to the sustained lower credit disbursement from banks due to weak demand for credit as well as wariness of banks to lend,” it said in a report last week.

Similarly, public-sector banks (PSBs) were directed by the minister to firm up specific plans for each of the north-eastern states to boost credit flow there. Some of the eastern states, such as Odisha, Bihar, Jharkhand and even West Bengal, account for a sizeable chunk of PSBs’ CASA deposits but credit expansion for businesses development there remains muted. This needs to be addressed, the minister said.

State-run banks have turned the corner, with profits of Rs 31,820 crore in FY21, the highest in five years. The net bad loans of state-run banks dropped to 3.1% in FY21 from as much as 7.97% three years earlier, and their capital adequacy (CRAR) was about 14%, against the requirement of 10.875%. The improved financials have improved their ability to lend adequately, the finance ministry believes.

Already, to boost credit flow to Covid-hit businesses and professionals, the government last year introduced the Emergency Credit Line Guarantee Scheme (ECLGS). As of September 24, loans sanctioned under various avatars of the scheme (ECLGS 1.0, 2.0 and 3.0) stood at Rs 2.86 lakh crore.

Similarly, its Rs 7,500-crore credit guarantee scheme, announced on June 28, to facilitate concessional loans to an estimated 25 lakh small borrowers through micro-finance institutions was fully utilised within 75 days.

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Report, BFSI News, ET BFSI

Personal Finance

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NEW DELHI: Indians are outpacing the rest of the world when it comes to cryptocurrency adoption even as investors are still awaiting the official verdict on cryptocurrency exchanges in the country.

A study conducted by the portal BrokerChoose’s annual crypto proliferation index reveals that at over 10 crore, India has the largest number of crypto owners in the world followed by the US and Russia.

As a percentage of the population, India has the fifth-highest rate of crypto owners at 7.3%. This index is topped by Ukraine at 12.73% of the population, followed by Russia at 11.91%, Kenya at 8.52% and the US at 8.31%.

The study also evaluated internet searches in various countries to assess the interest in cryptocurrencies.

In the past twelve months, India had the second-highest number (nearly 36 lakh) of total crypto searches, while the US saw the highest number of crypto searches at 69 lakh.

In fact, India ranked second out of 154 countries on the 2021 Global Crypto Adoption Index by Chainalysis in August this year.

India’s market grew 641% over the past year, the report showed, using a metric that estimates the total cryptocurrency received by a country.

“Large institutional-sized transfers above $10 million worth of cryptocurrency represent 42 per cent of transactions sent from India-based addresses,” said the report, adding that the numbers suggest that India’s cryptocurrency investors are part of larger, more sophisticated organisations.

Point to note: The world’s biggest cryptocurrency, bitcoin, has already gained more than 50% since the start of the year. The one-year gain stands at around 400%, which is promoting more and more Indians to opt for crypto exchanges.

A survey conducted by consulting firm Kantar shows that 19% of urban Indians intend to invest in virtual tokens in the next six months. And when it comes to crypto ownership, Bitcoin rules the roost with a preference of 75 per cent, followed by Ethereum at 40 percent, Binance coin at 23 per cent, and XRP at 18 per cent.

One major attraction is the chance to earn high profits by investing in small amounts. WazirX allows investments into bitcoin with as little as Rs100-500.

Indians who own cryptocurrency are mostly in the age bracket of 21 to 35 and live in metro cities. The owners have a “higher risk appetite”, the survey said, as they are preferring crypto, mutual fund over the fixed deposits and life insurance.

So a spurt in the popularity of crypto exchanges and platforms in recent months like CoinSwitch Kuber (CSK), WazirX, CoinDCX, ZebPay, Unocoin and BuyUcoin etc is not surprising.

Crypto exchange Zerodha has over seven million users against 11 million at CoinSwitch Kuber. There are 8.3 million at WazirX.

Unocoin has even launched deposits via UPI wallets in the Indian currency for a faster top-up to buy and sell Bitcoins and other cryptocurrencies on the platform despite the uncertainty among the prospective users regarding the usage of cryptocurrency in comparison to real money.

Last week, CoinSwitch Kuber raised over $260 million in Series C funding round from a clutch of investors, valuing the company at $1.9 billion.

A survey conducted by consulting firm Kantar shows that 19% of urban Indians intend to invest in virtual tokens in the next six months. And when it comes to crypto ownership, Bitcoin rules the roost with a preference of 75 per cent, followed by Ethereum at 40 per cent, Binance coin at 23 per cent, and XRP at 18 per cent.

Indian start-ups in the crypto space have received 73% more funding in the first six months of calendar 2021 compared to the whole of 2020, shows data from Tracxn. Another NASSCOM report titled ‘Crypto Industry in India’, said that more than 60% of states in India are emerging as crypto tech adopters, with the industry set to reach 241 million dollars by 2030 in India.

But cryptocurrencies are yet to be accepted as legal tender and lack legal framework and regulatory norms in the country.

The ball is currently in the court of the finance ministry and the Reserve Bank of India (RBI).

A cryptocurrency bill is expected in the winter session. The finance ministry has also reportedly formed a new committee to find out if income made by crypto-trading could be taxed.
Meanwhile, RBI is also looking to launch its first official digital currency as a regulated “central bank digital currency (CBDC)” by the end of 2021. Much of the scepticism stems from the fact that a worldwide boom in cryptocurrency has bred the ground for fake trading platforms.

But with larger investors warming to crypto and other digital assets, the total amount of funding for global blockchain companies hit a record $6.586 billion in the September quarter, almost double of that raised in 2020, according to market intelligence platform Blockdata.

On Monday, cryptocurrency analytics firm Elliptic raised $60 million from investors including SoftBank and Wells Fargo Strategic Capital.

The company tracks the movement of cryptocurrencies on blockchain to help financial crime compliance.

Earlier in May, a Brazilian money management firm focused on cryptocurrencies raised about $26 million from investors including SoftBank Group Corp and in July the SoftBank Latin America fund invested $200 million in the Series B funding of 2TM Group, the digital asset group that owns cryptocurrency exchange Mercado Bitcoin.



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Here’s a recap of key managerial announcements in top public sector banks so far, BFSI News, ET BFSI

Banking & Finance

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Public sector banks have been witnessing many changes in their top management, be it extension of tenure or appointment of new key managerial personnel.

The finance ministry had in July asked the Department of Personnel and Training (DoPT) to extend the tenure of a number of managing directors and executive directors to ensure stability and continuity at state-owned lenders.

The Appointments Committee of the Cabinet (ACC), headed by Prime Minister Narendra Modi, has extended the tenure for three managing directors and chief executive officers, and 10 executive directors of public sector banks.

Only one bank, Indian Bank, has appointed its new MD and CEO so far..

Here’s a quick recap of all the noteworthy movements, recommendations and tenure extensions of top PSB officials:

Indian Bank

Shanti Lal Jain was appointed the Managing Director and Chief Executive Officer of Indian Bank for a period of three years. His tenure started from September 1, 2021, and is extendable for two years or until attaining the age of retirement, whichever is earlier.

He replaced Padmaja Chunduru, whose term with the bank ended on August 31. Jain was previously working as the Executive Director of Bank of Baroda.

Meanwhile, the ACC extended the term of Shenoy Vishwanath Vittal, executive director, till the age of superannuation.

PNB

BBB last month recommended Atul Kumar Goel as the MD & CEO of Punjab National Bank, after interviewing 11 candidates.

Apart from this, BBB has kept Ajay Kumar Shrivastava on the reserve list for the post.

Currently, Goel is serving as the MD & CEO of Kolkata-based UCO Bank. He is also on the boards of Star Union Dai-ichi Life Insurance and The New India Assurance.

The government in August extended the term of S S Mallikarjuna Rao, the existing MD & CEO of PNB chief till January 31, 2022. Rao’s term was supposed to end on September 18, 2021.

Further, terms of Sanjay Kumar and Vijay Dube, executive directors, have been extended until their age of superannuation.

UCO Bank

The government may appoint Soma Sankara Prasad, currently the deputy managing director of State Bank of India, as managing director of UCO Bank.

According to PTI, since Prasad was in the reserve list for the post of managing director at Indian Bank, he has been recommended to head UCO Bank. The final decision will be taken by the ACC.

The government had extended the tenure of Atul Kumar Goel for two years. His term was scheduled to end on November 1, 2021.

Bank of Maharashtra

The government extended the tenure of AS Rajeev, MD and CEO of Bank of Maharashtra, for a two years beyond the notified term, expiring on December 1, 2021.

Bank of Baroda

The tenure of Ajay Khurana as executive director has been extended by two years. He is also on the reserve list for PNB’s MD and CEO post. Meanwhile, the tenure of Vikramaditya Singh Khichi, another ED, has been extended until his age of superannuation.

Canara Bank

The tenure of A Manimekhalai, executive director, has been extended by two years.

Bank of India

The tenure of P R Rajagopal, executive director, has been extended by two years. .

Union Bank of India

The government has extended the terms of Gopal Singh Gusain and Manas Ranjan Biswal as executive directors until their age of retirement.

Central Bank of India

The tenure of Alok Srivastava has been extended until his age of superannuation.



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IBC poised for a new set of changes, weeks after rap by parliamentary panel, BFSI News, ET BFSI

Banking & Finance

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The government is working on a new set of amendments to strengthen the Insolvency and Bankruptcy Code, which has come under criticism after over 90 per cent haircuts suffered by lenders in some hi-profile resolutions.

The amendments are being worked on by the finance ministry and IBBI officials to plug any loopholes in the system, according to a report.

finance and corporate affairs minister Nirmala Sitharaman had given directions to officials at the Financial Stability and Development Council meeting last month to finalise changes that would be required to strengthen the IBC.

A meeting of officials was held on September 21 and 28 over the issue, according to a report.

The Reserve Bank of India and Securities and Investment Board of India wants issues over IBC settled.

Rising haircuts

Almost half of the closed cases by lenders under IBC in FY21 ended in liquidation, according to IBBI, while only 13 per cent were resolved. In most of the cases under IBC, by the time they are resolved, their asset value depreciates leading to 90% haircuts, according to IBBI

In August, the parliamentary standing committee on finance cautioned that the IBC may have strayed from its original objectives, highlighting inordinate delays and large haircuts for lenders.

“Liquidation should not be a benchmark. And that is why we have to think carefully about what should be the benchmarks and a resolution process particularly for secured financial creditors,” Jayant Sinha, chairman of the parliamentary standing committee on Finance had said.

Panel suggestions

Sinha had suggested three steps to reduce litigation.

Firstly, fill the vacancies at NCLT as quickly as possible because then there is more time to adjudicate a case well and come up with a good resolution.

If judges don’t have enough time and rush through cases, they won’t give good judgments, and then things will end up in litigation. Therefore, adding capacity as soon as possible is one way in which we can deal with these endless litigation type issues.

Secondly, improve the quality of NCLT members. The parliamentary committee has recommended that the NCLT should at least have high court judges so that we can benefit from their experience and their wisdom. That’s another way to prevent litigation.

The third way of preventing litigation is to ensure when people submit the resolution plan as per the deadline, they do not have an opportunity to come in with another resolution plan after that. Because not doing so, will again rest in litigation, and a lot of contentions back and forth.

“So these are three very concrete steps that we have suggested to reduce litigation as it is one of the reasons a lot of these timelines are being extended,” he said.



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FinMin extends Uday Kotak’s term as IL&FS Chairman by six months

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The Finance Ministry has now paved the way for Uday Kotak, Managing Director & CEO of Kotak Mahindra Bank to remain chairman of the Board of Infrastructure Leasing and Financial Services Ltd (IL&FS) for six more months.

The Department of financial services (DFS) in the Finance Ministry has now extended by six months (from October 3, 2021 to April 2 next year) the existing exemption accorded to Kotak Mahindra Bank regarding its MD& CEO Kotak serving as a non-executive director in IL&FS. This finance ministry move comes on the recommendation of the Reserve Bank of India.

This is the fifth time such an extension is being given to Kotak Mahindra Bank under the Banking Regulation Act 1949.

It may be recalled that the RBI had, on December 14, 2020, approved a three-year tenure extension to Kotak as CEO of Kotak Mahindra Bank till December 31, 2023.

Exemptions to norm

The Banking Regulation Act 1949 prohibits a bank from being managed by a person who is a director of any other company (other than a subsidiary of a banking company or a non-profit company registered under Companies Act 1956). It, however, allows the central government to provide exemptions to this norm for a specified period based on the recommendation of the RBI.

The government had in 2018 appointed Kotak to the Board of IL&FS to help the crisis-ridden IL&FS, which had seen a blowout, come out of its mess.

The finance ministry had first granted a three-month extension under the Banking Regulation Act, followed by nine months extension and two more extensions of one year each. Kotak’s term as Chairman of the Board of IL&FS was due to end on October 2 this year.

Complex web

The Kotak-led Board at IL&FS had discovered a complex web of over 250 companies forming part of the IL&FS group, which had an outstanding of over ₹ 94,000 crore to lenders.

On Tuesday, in the context of the Evergrande development– which roiled the global capital markets– Kotak had tweeted that the Indian government had acted swiftly on the IL&FS matter and that the Government-appointed board estimates 61 per cent recovery at IL& FS.

Kotak’s tweet on the Evergrande development said, “Evergrande seems like China’s Lehman moment. Reminds us of IL&FS. Indian government acted swiftly. Provided calm to financial markets. The Government appointed Board estimates 61 per cent recovery at IL&FS. Evergrande bonds in China trading ~25 cents to a dollar”.

Meanwhile, commenting on Kotak’s extension as Non-Executive Chairman of IL&FS, C S Rajan, Managing Director, IL&FS, said, “IL&FS is privileged to enjoy the continued leadership of Kotak for another six months. I am confident that under his guidance the IL& FS would accomplish the resolution targets set”.

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