
SBI to park ₹20,000 crore NPAs in bad bank
The country’s biggest lender will transfer the accounts in phases by the end of FY22.
The country’s biggest lender will transfer the accounts in phases by the end of FY22.
The new guarantee to all Security Receipt holders that in the event of a shortfall it is the government who will step in and pay from the public exchequer is a problematic development.
Aided by strong demand recovery, credit ratio rebounds to 1.33 in H2FY21, from 0.54 in H1FY21. GDP could grow at 11% in FY22, but the resurgence in Covid-19 cases is a key downside risk, says CRISIL.
Asset reconstruction companies (ARCs) were set up in India to solve the NPA problem. India's 29 ARCs are a reflection of the success of the ecosystem in alleviating the stressed asset challenges.
While Indian banks' improved financial metrics do not fully reflect the impact of the Covid-19 pandemic, the under–capitalised PSBs are likely to remain risk averse and lose market share.
Apart from recapitalisation, public sector banks get a shot in the arm in the form of ARC and AMC mechanisms to clean up their books.
There is a need to make the insolvency system more robust, and the revival mechanism swifter and more efficient. The Budget 2021 may provide a way forward.
An extract from the forthcoming book ‘Pandemonium: The Great Indian Banking Tragedy’ gives a behind-the-scenes glimpse of how the Modi government’s ambitious bank merger plans unfolded.
No respite for controversy-hit YES Bank after the RBI finds the private sector lender guilty of under-reporting bad loans, again, casting a shadow on the bank’s asset quality and profitability in Q3.
Worst quarterly performance in 20 quarters; net profit plunges to ₹113.8 crore from ₹1,260.36 crore a year ago due to higher provisioning.