Snatch-and-grab is the new hallmark of Indian finance. As a banker friend in Mumbai put it to me only half-jokingly, a unit of "grabbed" cash collateral in hand is worth more than two units of hypothetical receivables, a Bloomberg View reported. Yet this is no laughing matter. Not only is opportunistic behavior going to worsen India’s $200 billion-plus bad loan crisis, but now that everyone from the government’s sleuths to the courts are joining the melee, the ensuing chaos will limit the recovery for lenders and threaten depositors.
The resolution plans of debt-laden shadow lender Dewan Housing Finance Corporation Ltd (DHFL) have hit a roadblock after the custodian of DHFL bonds said on Thursday it is taking the firm to bankruptcy court on behalf of certain debenture holders, Reuters reported. The application was filed on Oct 16 in the Mumbai Debts Recovery Tribunal to claim 268.61 billion rupees ($3.8 billion), it said. The claim is: “for recovery of the amount of debentures outstanding, along with interest, for and on behalf of all debenture holders under all the three public issues,” the custodian said.
Federal prosecutors in Manhattan charged Turkish state-owned lender Halkbank with a multibillion-dollar scheme to evade U.S. sanctions on Iran, ramping up pressure on Turkey’s President Recep Tayyip Erdogan as he conducts a military offensive on Syria, The Wall Street Journal reported. Prosecutors say some Turkish and Iranian government officials received payouts of tens of millions of dollars in exchange for promoting and helping to conceal the alleged scheme, which occurred between 2012 and 2016.
For years, the Essar Group, an Indian business empire built by brothers Shashi and Ravi Ruia, happily racked up debt, the Financial Times reported in a commentary. That changed more than two years ago when the government of prime minister Narendra Modi introduced a new bankruptcy regime that favoured banks over borrowers — however powerful the latter may have been. The Ruia family lost control of Essar in July 2017 when the country’s central bank ordered the bankruptcy code to be used against defaulters, including Essar Steel. Essar Oil was sold to a Rosneft-led group in 2017.
An Indian irrigation firm has been cut to “selective default” by S&P Global Ratings, as more cracks emerge in India’s offshore junk bond market, Bloomberg News reported. Jain Irrigation Systems Ltd. missed certain principal payments under its working capital facilities and S&P sees a “high likelihood” that the company would be classified as a nonperforming asset by its bankers. A selective default means S&P believes a firm has defaulted on a specific issue but will meet its other obligations.
The World Bank cut India’s economic growth forecast by the most among South Asian nations on Sunday, below the outlook pegged by the nation’s central bank for this year, mainly because of a deceleration in domestic demand, Bloomberg News reported. India’s gross domestic product growth is projected at 6% in the fiscal year started on April 1, compared with 7.5% forecast in April and 6.8% recorded a year earlier, the bank said in its latest South Asia Economic Focus report. Growth is expected to gradually recover to 6.9% in 2020-21 and to 7.2% in the following year, it said.
All around HDFC Bank Ltd., India’s biggest lender by market value, the news seems to be bad and getting worse: economic growth is slowing, loan losses are rising and shadow banks are mired in crisis, Bloomberg News reported. And yet investors keep piling into HDFC Bank’s stock, convinced it will emerge a winner from India’s financial woes. The company’s market value has surged by $21 billion over the past year, more than any other bank worldwide. Among the 25 biggest lenders globally, no other stock commands a higher price relative to earnings or net assets.
India’s financial fraud agency said on Saturday assets worth 40.25 billion rupees ($567.60 million) of Bhushan Power & Steel Limited were connected with a money-laundering probe, a move that could scupper the debt-ridden firm’s sale to JSW Steel Ltd, Reuters reported. The Enforcement Directorate said on Twitter that Bhushan Power’s land, building, plant and machinery were among the assets now associated with an ongoing banking fraud investigation into the firm’s former owners.
The Colombian Synergy Group, the sole entity interested in Jet Airways, has sought time till November 30 to complete its due diligence and put in a formal bid for the grounded airline, sources said. The committee of creditors (CoC) for Jet Airways may give the group time till the end of October, The Financial Express reported. The resolution of the airline will consequently get delayed further. “The Synergy Group has not yet found an Indian partner. They are also taking time to complete due diligence and prepare a business plan.