Asia

India’s top court extended the easing of rules over the classification of non-performing loans until further notice, delaying the disclosure of how much bad debt banks hold, Bloomberg News reported. The three-judge bench headed by Justice Ashok Bhushan on Thursday gave the government two weeks to come up with relief measures for virus-hit businesses and said such a decision had to be put before the court for consideration. It also reiterated that banks must not classify any loans as bad if they were performing at the end of August until further order.

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AirAsia Group Bhd. is seeking to raise as much as 2.5 billion ringgit ($600 million) by the end of the year as it tries to survive a business slump exacerbated by the coronavirus pandemic, Bloomberg News reported. The Subang, Malaysia-based budget carrier may borrow up to 1.5 billion ringgit from banks and another 1 billion ringgit from investors, a spokeswoman said Tuesday.

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Lenders will have to consider financial parameters such as liquidity and debt-servicing ratios while preparing a restructuring plan for loan accounts that have turned bad due to the coronavirus pandemic, the Reserve Bank of India said following the recommendations of an external panel, Bloomberg News reported. The central bank identified 26 sectors affected by the pandemic such as auto, aviation and tourism, which can be offered a resolution subject to criteria including debt-coverage ratio, outstanding liabilities and net worth at pre-Covid levels.

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The poor, small Southeast Asian country of Laos is set to cede majority control of its electric grid to a Chinese company, as it struggles to stave off a potential debt default, people with direct knowledge of the agreement said, Reuters reported. The deal comes at a time when critics accuse Beijing of “debt trap diplomacy” to gain strategic advantage in countries struggling to repay loans taken out under President Xi Jinping’s global “Belt and Road” infrastructure initiative.

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After more than three centuries in business, the Onuma department store in northern Japanese city of Yamagata began bankruptcy proceedings this year - one of many distinguished department stores across the country in dire straits, Reuters reported. Known for fancy food halls, luxury items, impeccable service and, in their heyday, rooftop attractions to entertain families, Japan’s department stores have been in a long slow decline as shopping habits change. Now the coronavirus pandemic, just as it has forced U.S.

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Chinese developers are facing the biggest liquidity test in more than four years, exacerbating challenges brought on by stringent funding restrictions and a prolonged profitability drop, Bloomberg News reported. Cash reserves of the nation’s 50 largest-listed home builders were just enough to cover short-term debt as of June 30, the least since 2016 when China began deleveraging its economy, according to recent earnings data compiled by Bloomberg. That metric fell below 0.5 for eight companies, the most in four years, signaling greater risk.

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Finance minister Nirmala Sitharaman on Thursday asked banks and NBFCs to roll out loan restructuring scheme for COVID-19 related stress by September 15, and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts, The Times of India reported. The minister urged lenders to immediately put in place a board-approved policy for resolution at the review meeting with heads of scheduled commercial banks and NBFCs through video conferencing.

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Fraudulent transactions worth Rs 17,394 crore happened at debt-ridden mortgage firm DHFL during FY07 to FY19, according to transaction auditor Grant Thornton, Business Today reported. Earlier this year, the administrator of Dewan Housing Finance Corporation Limited (DHFL), appointed under the Insolvency and Bankruptcy Code (IBC), obtained assistance from Grant Thornton to conduct investigation into the affairs of the mortgage firm. Last year, the Mumbai bench of the National Company Law Tribunal (NCLT) had admitted the company for insolvency resolution.

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Hospitality firms sitting on large debt piles are now looking to go for a one-time restructuring, with the moratorium period now over, Business Standard reported. On account of being highly leveraged, 15 per cent of the total 160,000 rooms —nearly 24,000 — are facing the risk of permanent closure, show industry estimates. The hospitality sector, by nature, has a high fixed cost structure and the lockdown led to significant erosion in revenues and margins. The industry now has its eyes set on the recommendations of the KV Kamath Committee.

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The Securities and Exchange Board of India (Sebi) Wednesday allowed mutual funds to side pocket debt in cases where borrowers have approached the Asset Management Company (AMC) for debt restructuring, Mint reported. Earlier, SEBI rules only permitted debt downgraded below investment grade (rating below BBB-) or defaulted debt to be restructured. The new circular, which will be in effect till 31st December will allow even higher rates debt to be side pocketed. The date on which the restructuring proposal is received by the AMC is to be treated as the trigger date for side pocketing.

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