Media reports say the parliamentary committee on estimates, headed by Murli Manohar Joshi, has invited former Reserve Bank of India (RBI) governor Raghuram Rajan to brief it on the mounting non-performing assets (NPAs) of Indian banks. The invitation follows former chief economic adviser Arvind Subramanian’s praise for Rajan’s role in identifying the problem and taking steps to address it, before the committee. It is seeking Rajan’s views on the “crisis” —how it has been created and how it should be tackled.
I have been pursuing Uday Kotak, 59, CEO and managing director of Kotak Mahindra Bank Ltd, India’s third most valued bank, for a meeting for months. Finally, we meet on 14 August at Mumbai’s Hemant Oberoi restaurant in the Bandra Kurla Complex for dinner, hours after his bank sent a notice to the stock exchanges, saying the Reserve Bank of India (RBI) had not accepted its promoter’s stake dilution plan. Early August, Kotak Mahindra Bank announced issuance of non-convertible perpetual non-cumulative preference shares to dilute the promoter holding from around 30% to 20%, leading to public debate on whether this is the right way of dilution in the promoter’s stake.
What Rajiv Kumar, secretary, department of financial services in finance ministry, said last week on India’s public sector banks (PSBs) should be music to the ears of investors. The recovery of bad loans at PSBs has gained momentum in the June quarter; their operating profits have risen and the overall asset quality has improved. Besides, the provision coverage ratio of these banks has gone up to 63.
Many employees of IDBI Bank Ltd across India, mostly from rural areas, are seeking advice from their seniors on how to cope with the fallout of the government ceding control of the lender. They fear that the prestige and job security of being part of a government-run organization will be lost. Some of them had even taken dowry by virtue of being a “government servant” and now dread facing their in-laws.
India’s capital market regulator has proposed that large corporations should raise 25% of their borrowings from the corporate bond market from the next fiscal year. A large corporation is one, according to the Securities and Exchange Board of India (Sebi), which has an outstanding long-term borrowing of at least ₹ 100 crore. The Reserve Bank of India (RBI) considers a company large if it has an aggregate sanctioned credit limit of ₹ 25,000 crore from the banking system (not how much it has taken) in fiscal year 2018.
As expected by most economists and analysts, the Reserve Bank of India (RBI) on Wednesday raised the repo rate by a quarter percentage point to 6.5%, the second such hike in two months. The move makes money more expensive in the world’s fastest growing major economy, but the Indian central bank’s monetary stance remains unchanged—neutral.