India

Car sales in India tumbled more than 40 per cent in August as the worst industry slowdown in recent memory deepened, intensifying concern that months of steep declines could spark a full-blown crisis, the Financial Times reported. Passenger car sales for the month came in at 115,000, down 41 per cent from a year earlier, according to the Society of Indian Automobile Manufacturers. That marked the fifth month of double-digit losses, the sizes of which have beaten anything recorded since the turn of the millennium.

A prolonged shadow-banking crisis and hurdles in bankruptcy rules are set to keep India atop the world’s worst bad-debt pile, even as Italy, which held the title previously, quickens the clean-up of its lenders, Bloomberg News reported. Moody’s Investors Service to Credit Suisse Group AG. warned that more loans may sour in the Asian nation’s banking system. More than 2.4% of total loans in India’s banking system may be under stress on top of the 9.6% bad debt ratio as of June, the highest among major economies, Credit Suisse estimates shows.

An Indian court on Thursday cleared JSW Steel Ltd’s takeover plan for debt-ridden Bhushan Power and Steel, bringing an end to a bankruptcy case that has dragged on over two years, Reuters reported. The move paves the way for JSW Steel, which has the biggest steel capacity in India, to take control of a steel asset in the east of the country where rival Tata Steel Ltd and Steel Authority of India Ltd have long dominated. The National Company Law Tribunal (NCLT) in New Delhi said it approved the debt resolution plan of JSW Steel, according to a copy of the judgment.

Reliance Naval & Engineering Ltd., controlled by Indian tycoon Anil Ambani, said it is facing an acute cash-flow crunch after orders dried up amid efforts to restructure a pile of debt, Bloomberg News reported. The disclosure in the company’s annual report came just before a court pushed hearing on whether to put the debt-laden company under insolvency proceedings to Oct. 3, people familiar with the matter said, asking not to be named as they are not authorized to speak to media. His wireless carrier slipped into bankruptcy earlier this year.

Creditors of India’s bankrupt Jet Airways are likely to recover less than 10% of the carrier’s total outstanding dues in a liquidation scenario if no suitor succeeds in buying the airline, two sources told Reuters. The airline’s financial and operational creditors, who are owed nearly 300 billion Indian rupees ($4.20 billion) are likely to recover only $300-$400 million from the sale of Jet’s assets, the sources, who have direct knowledge of the matter, said, Reuters reported.

India’s shadow banks are getting increasingly squeezed by a crisis of confidence at home, forcing them to cough up more for funds overseas. And that’s just for the lucky ones, Bloomberg News reported. The non-bank financing companies have struggled to raise as much abroad this year, as defaults in India’s credit market spread after a shock failure by major shadow lender IL&FS Group last year. They’ve signed $1.5 billion of foreign-currency loans so far in 2019, down from $2 billion in the same period last year, according to data compiled by Bloomberg that excludes state-run lenders.

The shipyard controlled by embattled Indian tycoon Anil Ambani is facing the prospect of bankruptcy after failing to get creditors’ approval for restructuring 70 billion rupees ($970 million) of debt, people familiar with the matter said, Bloomberg News reported. India’s bankruptcy tribunal will consider putting Reliance Naval & Engineering Ltd. in bankruptcy on Wednesday as no new repayment plan was submitted after lenders led by IDBI Bank Ltd. rejected an earlier offer in July, the people said, asking not to be named as the information is not public.

India’s biggest bank overhaul in decades may hurt the nation’s bad loan clean-up and slow the lending approvals needed to reverse its economic slump, Bloomberg News reported. Prime Minister Narendra Modi’s government late Friday surprised observers by announcing several state bank mergers, a move it said would create larger, healthier lenders. While that may be true in the long term, analysts predict that the efforts may be hurt by a near-term shift in management attention to aligning resources such as personnel, technology and branch networks.

The National Company Law Tribunal (NCLT) has ordered start of insolvency proceedings against NCR-based realty firm Three C Projects Ltd and also appointed an Interim Resolution Professional (IRP) to take over the management of the debt-ridden company, The Economic Times reported. A two-member principal bench, headed by President Justice M M Kumar, admitted a plea filed by five flat buyers who had booked homes in the company's Lotus Zing project in Noida, Uttar Pradesh.

Mutual funds continue to shun Indian shadow lenders’ debt despite a liquidity boost from the nation’s central bank and measures from the government to quell investor wariness toward them, Bloomberg News reported. Debt mutual funds spooked by a string of defaults and credit rating downgrades of the non-bank lenders slashed investments in notes from shadow banks to 14% of their total assets in July, the lowest in nearly two years, data from markets regulator show. The funds invested 7.1% of their assets in commercial papers from shadow lenders and 6.9% in bonds last month, the data showed.