Tag: sitharaman

Videocon, Reliance Naval among first lot of assets to be sold to NARCL, BFSI News, ET BFSI

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Companies that have had a shot at debt resolution under the Insolvency and Bankruptcy Code, including Videocon Oil Ventures and Reliance Naval, are among the first tranche of 22 non-performing accounts that are being sold to the National Asset Reconstruction Company (NARCL) by various lenders, according to a report.

State Bank of India (SBI) is planning to sell Videocon Oil Ventures’ bad loans of Rs 22,532 crore, while Union Bank of India plans to offload the Rs 9,000-crore Amtek Auto debt, the report said.

IDBI Bank is selling Reliance Naval and Engineering’s loans of Rs 8,934 crore while Union Bank is looking to sell the Rs 1,400 crore debt of Lavasa Corporation.

A consortium led by Mumbai-based industrialist Nikhil Merchant was leading the race to acquire the debt-laden Reliance Naval and Engineering Ltd, originally known as Pipavav Shipyard, with Rs 2,100 crore offer while another bid was of Rs 400 crore from the Naveen Jindal group.

In the case of Lavasa Corporation, the lenders are still undecided over the two offers received from Dhir Hotels and Resorts and Darwin Platform Infrastructure, with the last date of finalising a resolution being November 25. Lavasa Corporation has got bids worth Rs 700 crore for loan claims of over Rs 8,000 crore at NCLT.

Though banks have made 100% provision for the assets to be transferred to the bad bank, experts do not expect more than 20-25 per cent recovery from these legacy accounts.

The assets

Banks had identified Rs 82,496 crore worth of bad loans that could be transferred to the NARCL, which names like Videocon’s VOVL (Rs 22,532 crore total exposure), Reliance Naval and Engineering Ltd (Rs 8,934 crore), Amtek Auto (Rs 9,014 crore), Jaypee Infratech (Rs 7,950 crore, Castex Technologies (Rs 6,337 crore), GTL Ltd (Rs 4,866 crore), Visa Steel (Rs 3,394 crore), Wind World India Ltd (Rs 3,161 crore), Lavasa Corporation (Rs 1,424 crore), Consolidated Construction Consortium Ltd (Rs 1,353 crore), among others.

Several assets such as Videocon have seen realisable value close to liquidation value in NCLT proceedings. Many big-ticket resolutions at IBC have seen haircuts over 90%. With most of the NPAs proposed to be transferred to the bad bank being old legacy NPAs, there has been an erosion in value, making them more likely to head to liquidation.

The bad bank

Finance Minister Nirmala Sitharaman in Budget 2021-22 announced the setting up of a bad bank as part of the resolution of bad loans worth about Rs 2 lakh crore.

The bad bank or NARCL will pay up to 15 per cent of the agreed value for the loans in cash and the remaining 85 per cent would be government-guaranteed security receipts (SRs). The government guarantee would be invoked if there is a loss against the threshold value.

This sovereign guarantee would be for a period of five years and NARCL would have to pay a fee for this.

“The SRs are getting the backstop through government funding only in as much as to pay the gap between the realised value (resolution/liquidation) and the face value of SRs and this will hold good for five years,” Sitharaman had said.

The fee for the guarantee would be initially 0.25 per cent, which would progressively increase to 0.5 per cent in case of delay in resolution of bad loans.



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Subhash Garg, former Finance secretary, BFSI News, ET BFSI

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Subhash Chandra Garg, Former Finance Secretary, gives his view on the govt’s new monetisation pipeline. Edited excerpts from his interview with ET Now’s Tamanna Inamdar:

Tamanna Inamdar: How do you view the govt’s new asset monetisation plan in light of past experiences?
Subhash Chandra Garg: Monetisation has two clearly stated objectives which are very worthwhile.

One, you have invested some money in road or airport or rail or whatever, and now you need more money to invest. Therefore, the asset which has been created is passed on to private entrepreneurs to operate it, and then take that capital back to invest into something new.

Two, better operation of an asset. A toll road operated by NHAI or an airport operated by AAI or an electricity distribution company run by a state entity gets better operated if it is operated by private entity.

There is immense sense in monetising operating assets. There is lot of confusion and unnecessary misinformation that monetisation is sale of assets, which it is not. And sale of asset is not a bad thing. I do not think the government should be defensive about it.

There is no need to be defensive about selling banks, insurance companies, BPCL etc. That is a different route which should be taken to its logical course. What can get appropriately sold should be sold and monetised. There is nothing wrong about it. It is a perfectly justifiable thing to do.

One concern is over who gets these assets. Can it create monopolies with these going into the hands of a few, like people fear?
In India, operating of important assets is too much decentralised. There are actually too many operators. There is a necessity for large efficient players to run road assets or airport assets.

For example, buses and trucks in many states have single owners. They cannot invest, they cannot maintain those assets. Same is the case with the government. The Airport Authority of India has over 130 airports, but it cannot maintain them well.

There are 5 to 10 good operators in the country and three or four very good airport operators. Only about 20 airports are at best going to or have gone into private hands. So I think this concern over monopolies is completely misplaced.

India is a very large country with a huge number of entrepreneurs. We should only actually consolidate. Take example of telecom. There are three operators. Does it serve the country’s interest badly? Should there be 20-25 telecom operators?

The same thing applies to roads or rail. If we have 5, 10 or 20 strong players, I think we will be better off. This concern is overblown. I do not think it is in national interest to be worried about potential monopolies.

Similar plans in the past haven’t had roaring success. What is your take on this particular plan?
That is where the main challenges lie. The government did very well in monetisation of six airports in 2019, but thereafter there hasn’t even been a single transaction.

In roads also, we have struggled. There have been only five packages so far of ToT. Two of them did not take off at all in last five years; we have only done three. There is not much success anywhere else.

Now, this particular plan which talks of Rs 6 lakh crore over four years — that is Rs 1,50,000 crore a year — is simply too ambitious. I do not think there is any likelihood of it getting done. The institutional mechanisms which we have created are also not at all conducive for this to happen.

I honestly think that the government will not be able to deliver on it. If it does even 20% of what it is saying, I would be very happy.

When the government comes up with these mega pipelines — infrastructure pipeline earlier, monetisation pipeline now — the numbers are staggering, very big. There is absolutely no capacity, no clarity of structure. The sheer inability and the record of the government in carrying out such transactions makes me very suspicious.

As I said, I do not see more than 20% of it being met. My estimate is that the government, in four years, will end up with only 10% of this pipeline being achieved.

That would be 60,000 crore. Not more than that.



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Finance minister, BFSI News, ET BFSI

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MUMBAI: Union finance minister Nirmala Sitharaman on Wednesday said it is too early to say if there is a lack of demand for credit and 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.

It can be noted that 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 told reporters here.

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

“This year too sometime in October, there will be a credit outreach in every district of the country,” she said.

Sitharaman added that the government had announced that credit up to Rs 1.5 lakh will be given to borrowers through NBFC-MFIs.

“In order to keep up the momentum of stimulus that we are periodically giving, we have also asked banks to go out and give credit,” she said.

Meanwhile, Sitharaman said there is a need to ramp up credit growth in the eastern pockets of the country in states like Jharkhand, West Bengal, and Odisha, where the populations are displaying a higher propensity to deposit money in current and savings accounts.

Banks have also been asked to create state-wise plans for northeastern states to help the logistics sector and exporters.

Apart from that, Sitharaman, who took a review meeting with the chiefs of all the 12 state-run lenders, said banks have been asked to reach out to exporters at the district level to help push the “one district, one export” message of Prime Minister Narendra Modi.

Besides, the finance minister said banks have also been asked to look into the demands of the fintech sector.



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Sitharaman to meet CEOs of public sector banks today, BFSI News, ET BFSI

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New Delhi: Union finance minister Nirmala Sitharaman will meet heads of public sector banks (PSBs) on Wednesday to review the financial performance of the lenders and progress made by them in supporting the pandemic-hit economy, sources said.

The meeting with MD and CEOs of PSBs assumes significance given the importance of the banking sector in generating demand and boosting consumption. Recently, the finance minister had said the government is ready to do everything required to revive and support economic growth hit by the Covid-19 pandemic.

The meeting is expected to take stock of the banking sector and progress on the restructuring 2.0 scheme announced by the Reserve Bank of India (RBI), the sources said, adding that banks may be nudged to push loan growth in productive sectors.

The revamped 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) would also be reviewed during the meeting likely to be held in Mumbai, the sources said.

Besides, the finance minister is expected to take stock of the bad loans or non-performing assets (NPAs) situation, and discuss various recovery measures by banks, they said.

As a result of the government’s strategy of recognition, resolution, recapitalisation and reforms, NPAs have shown a declining trend, from 7,39,541 crore on March 31, 2019 to 6,78,317 crore on March 31, 2020 and further to 6,16,616 crore as on March 31, 2021 (provisional data).

At the same time, comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover 5,01,479 crore over the last six financial years, the government informed Parliament recently.

Besides, Sitharaman is expected to declare the results of Ease 3.0 Index for 2020-21, they said, adding that PSBs would be rated on various indexes for the year. PTI



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Government will do ‘everything’ to revive growth, says finance minister, BFSI News, ET BFSI

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NEW DELHI: The government is committed to doing everything that is required to revive the economy, finance minister Nirmala Sitharaman said on Thursday as she assured industry about the Centre’s commitment to reforms and urged India Inc to come out in a big way and show its risk taking abilities.

Addressing the annual session of the Confederation of Indian Industry (CII), Sitharaman also said the government and the RBI will both push growth and take all necessary steps to keep inflation contained.

“Government’s commitment to recovery is shown in so many different ways and we are going to continue doing that because recovery and its sustainability is something which the PM is very keenly invested in,” said Sitharaman.

“I am not looking at growth versus inflation. We shall attend to inflation and keep it contained, take all the necessary steps but never forget the fact that growth is that will make all the difference to the economy’s revival, growth will eventually remove poverty and bring in a level-playing field for all Indian citizens,” FM said, adding that both the Centre and RBI are working as partners to address issues linked to the economy.

She said the messages and the indications that are coming in are very clear that the economy is revving to come out. The FM said the financing needs of the growing economy have been successfully met by the over Rs 5 lakh crore of capital, which was put in the hands of various stakeholders through the credit outreach programmes of the government.

Sitharaman also said the economy has not reached a level where the liquidity which was pumped in during the pandemic can be pulled back.

“I don’t think we have reached that level and I am glad that RBI has been voicing that understanding that too quick a retrieval or sucking out of the liquidity from the economy may not do the necessary stimulus, which is required. I am glad that RBI has kept that understanding and they have not given any indication about wanting to suck out the liquidity which is available there,” the FM said.

Sitharaman cited the passage of crucial bills in Parliament in the just concluded monsoon session as the government’s commitment to push ahead with reforms. The FM made it clear that the government will push through stake sales in all the companies such as Air India, BPCL this year as well as proceed with the asset monetisation plan. “Policy-driven disinvestment and privatisation will continue with the same fervour,” said Sitharaman, adding that “necessary rigorous work is going on and the government is committed to the disinvestments announced in the budget.

The FM urged the industry to venture into new areas and take decisions to expand.

“I thank the Indian industry for being very level headed to face the challenge of the first and even face the challenge of the second wave of Covid-19 when many countries are still wondering how they would face their economy and pick the economy from where it is left behind,” said Sitharaman.

“Indian industry is moving into totally new areas. It is time for the Indian Industry to come around in a big way and it is time to show its risk-taking capacity”, said Sitharaman, adding that the stock market was showing the way. “Please do follow it,” said the FM.



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Sitharaman lays foundation stone for Khadi workers’ shed in Andhra village, BFSI News, ET BFSI

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Ponduru, Union Finance Minister Nirmala Sitharaman on Saturday laid the foundation stone for a mass shed for Khadi workers at Ponduru village in Andhra Pradesh’s Srikakulam district.

She also handed over a cheque for Rs 18 lakh to the Andhra Fine Khadi Karimikabhivrudhi (AFKK) Sangham, Ponduru, said a statement issued by her office.

Sitharaman handed over the contract document for the new building to the khadi workers association coinciding with the National Handloom Day.

The Finance Minister is on a two-day visit to the southern state and attended a programme organized by AFKK.

During her visit, Sitharaman garlanded a statue of Mahatma Gandhi.

Ponduru’s location has an interesting connection with Gandhi, considering his halt at Dusi railway station which is just 10 km away from the village during his Dandi March as part of India’s freedom struggle.

“On his Dandi March, Gandhiji had stopped at Dusi railway station, just 10 km away from Ponduru, to inspect the khadi work done there, which is renowned across the country,” said the statement.

Mahatma Gandhi also sent his son Devdas to the village to study khadi work.

“After staying for a week, he conveyed to Gandhiji how the women in the region spun on the single spindle chakra, a tradition that is still being followed in the area, one of the few areas to do so,” said the statement.

Meanwhile, multiple delegations, including Crafts Council of Andhra Pradesh, Laghu Udyog Bharti, Federation of Andhra Pradesh State Weavers Association and General Insurance Pensioners Association called on Sitharaman.

Bharatiya Janata Party Rajya Sabha MP G.V.L. Narasimha Rao and state Finance Minister Buggana Rajendranath Reddy were also present with her.

Federal Finance Minister Nirmala Sitharaman was speaking to reporters after the meeting with the Goods and Services Tax Council, which she chairs and includes all state finance ministers of the country.



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LS okays amendment in General Insurance Business (Nationalisation) Act

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The Lok Sabha on Monday approved amendments to General Insurance Business (Nationalisation) Act, 1972. This will help the government shed its shareholding in public sector general insurance companies.

Meanwhile, Finance Minister Nirmala Sitharaman has assured that the amended Bill will not take away the rights of anybody. This remark is in response to the allegation that the government is privatising insurance companies that will be against the interest of employees and policyholders.

Also read: Govt moves to shed stake in a general insurance co

“All these allegations are baseless. The government is not taking away rights of anyone. Private sector insurance companies are raising money from public and with the help of that, providing insurance products at lower premium,” she said while responding to allegations on the Bill from the opposition bench. Later the Bill got passed with voice vote.

Earlier on July 30, while introducing the Bill, Sitharaman had categorically said that apprehensions mentioned by the members are not well-founded at all. “What we are trying to in this is not to privatise. We are bringing some enabling provision so that the government can bring in public participation, Indian citizens, the common people’s participation in the general insurance companies,” she had said.

The amendment is a follow-up to the Budget announcement in which Sitharaman proposed ‘privatisation’ of one general Insurance company in the current financial year. On July 30, she said a public-private participation in general insurance industry will help get more resources which will bring in better technology infusion and also enable faster growth of such companies.

Three amendments

The Bill proposes three amendments. First one aims “to omit the proviso to section 10B of the Act so as to remove the requirement that the Central Government holds not less than 51 per cent. of the equity capital in a specified insurer”. The second one will insert a new section 24B “providing for cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it.”

And the third one will insert “a new section 31A providing for liability of a director of specified insurer, who is not a whole-time director, in respect of such acts of omission or commission of the specified insurer which has been committed with his knowledge and with his consent.”

“With a view to providing for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policy holders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act,” statement of objects and reasons of the Bill said.

As on date, there are four general insurance companies in the public sector – National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, Besides these, there is one re-insurer, General Insurance Corporation and one specialised one for agriculture insurance.

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Nirmala Sitharaman urges G20 nations for aligning recovery strategies with climate concerns, BFSI News, ET BFSI

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Finance Minister Nirmala Sitharaman on Saturday urged G20 nations for aligning economic recovery strategies with climate concerns.

Participating virtually in the Third G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting under the Italian Presidency, Sitharaman shared recent policy responses of Government of India to strengthen the health system and economy, including the efficient application of CoWIN Platform to scale-up vaccination in India.

She highlighted the need for international coordination and cooperation in view of the emerging CoVID-19 variants.

Sitharaman added that this platform has been made freely available to all countries as humanitarian needs outweigh commercial considerations in this extraordinary crisis.

As the co-chair of Framework Working Group of the G20, India along with UK, views digitalization as an agenda that will continue to play a key role in bolstering economic growth, she said.

Regarding the ‘Statement on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy’, released by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS-IF) on July 1, the G20 Finance Ministers called on the OECD/G20 BEPS-IF to swiftly address the remaining issues.

Sitharaman suggested that further work needs to be done to ensure a fairer, sustainable and inclusive tax system which results in meaningful revenue for developing countries, the Finance Ministry said in a statement.

Earlier this month, India along with other nations joined OECD-G20 framework for global minimum tax. Total 130 countries agreed to an overhaul of global tax norms to ensure that multinational firms pay taxes wherever they operate and at a minimum 15 per cent rate.

Some significant issues including share of profit allocation and scope of subject to tax rules, remain open and need to be addressed. Further, the technical details of the proposal will be worked out in the coming months and a consensus agreement is expected by October.

Speaking on the need for aligning recovery strategies with climate concerns, the Finance Minister called for climate action strategies to be based on the principles of the Paris Agreement and noted the criticality of timely fulfilment of international commitments on climate finance and technology transfer.

The Finance Minister joined other G20 members in welcoming the Report of the G20 High-Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response and emphasized on the urgent need to strengthen multilateralism for global health.

The G20 Finance Ministers and Central Bank Governors reaffirmed their resolve to use all available policy tools for as long as required to address the adverse consequences of COVID-19.

Sitharaman appreciated the Italian G20 Presidency for identifying three catalysts of resilient economic recovery from the pandemic as being Digitalization, Climate Action and Sustainable Infrastructure and shared the Indian experience of integrating technology with inclusive service delivery during the pandemic.

The two-day deliberation held on July 9-10 saw discussions on a wide range of issues including global economic risks and health challenges, policies for recovery from the CoVID-19 pandemic, international taxation, sustainable finance and financial sector issues.



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Finance Minister Nirmala Sitharaman offers CoWIN platform to other nations for free, BFSI News, ET BFSI

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Finance Minister Nirmala Sitharaman on Saturday offered to share CoWIN platform with other nations for free, saying that humanitarian needs outweigh commercial benefits.

Participating on the second day of the ongoing G20 Finance Ministers and Central Bank Governors Meeting, Sitharaman shared India’s successful experience in integrating technology with inclusive service delivery during the pandemic, the Finance Ministry said in a series of tweets.

“FM Smt. @nsitharaman shared how #CoWIN application has efficiently supported scale and scope of our vaccination & #India has made this platform freely available to all countries given our firm belief that humanitarian needs outweigh commercial benefits,” a tweet said.

During the meeting, discussions of finance ministers were focused on policies for economic recovery, sustainable finance and International Taxation.

“In policies for recovery session, FM discussed 3 catalysts of economic recovery- #Digitalization #ClimateAction & #SustainableInfrastructure; shared India’s successful experience in integrating technology with inclusive service delivery during the pandemic,” another tweet said.



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Goa Min claims facing NPA risk, writes to PM, FM, BFSI News, ET BFSI

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Panaji, Goa‘s Ports Minister Michael Lobo on Thursday said that he had written to Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman urging them to provide relief from paying loan EMIs for businesses impacted by the second wave of Covid-19.

A cabinet minister in the BJP-led coalition government led by Chief Minister Pramod Sawant, Lobo is also a hotelier himself.

He told a press conference here, that he was forced to write to the Centre after a bank manager informed the Minister that his own account was in the danger of being declared as a non-performing asset (NPA).

“I am also a businessman. I am getting calls from banks from which I have taken loans. A manager of a bank told me yesterday (Wednesday) that if I do not pay my loan instalment by tomorrow (Thursday), it will be declared NPA.” Lobo said.

“If a bank manager can call me and inform me that my account will be declared as an NPA, what about the common man? What about people who live hand-to-mouth and run small businesses? How will they pay instalments. This is an issue which is plaguing people in Goa as well as the rest of India.” Lobo said.

In his letter to Modi and Sitharaman, Lobo has also urged the top ruling duo to urge the Reserve Bank of India to issue a circular directing all nationalised banks to not declare accounts impacted by the second wave of the Covid pandemic, as NPAs.

“There is a need for a decision on this. The Finance Minister should take a decision and instruct all banks.” Lobo said.

The cabinet minister also said that the central government should also replicate the moratorium on loan EMIs provided to businesses during the first Covid wave last year.



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