India

India's central bank said on Tuesday it has identified 12 of the largest loan defaulters and will order lenders to start bankruptcy proceedings against them to start unclogging the $150 billion in bad debt plaguing Asia's third-largest economy, Reuters reported. The move comes about a month after the Indian government gave the central bank greater power to deal with bad loans, including directing banks to initiate an insolvency resolution process in the case of a default under the bankruptcy code.

India is bracing for a dramatic but risky overhaul of the country’s tax system that authorities hope will draw millions of businesses into their tax net and boost the economy, The Wall Street Journal reported. The initiative, set to kick off on July 1, aims to streamline India’s cumbersome network of state and federal levies and ease commerce across state borders. It is a big part of a larger effort, including the cancellation of large-denominated currencies last year, to improve tax collection from companies that make up India’s huge informal economy.

Finance minister Arun Jaitley said the Reserve Bank of India (RBI) is drawing up a list of debtors with bad loans that need to be resolved under the insolvency law, The Economic Times reported. “Under the new ordinance issued, the RBI is at a fairly advanced stage of preparing a list of those debtors where a resolution is required through the Insolvency and Bankruptcy Code (IBC) process,” he said after reviewing the quarterly performance of state-run lenders and financial institutions.

Essar Steel India Ltd., the mill controlled by billionaire brothers Shashi and Ravi Ruia, expects lenders to decide on its debt restructuring plans by the end of this month as the company’s prospects brighten on increased output and an improved domestic demand outlook, Bloomberg News reported. “We are in discussions with lenders and the entire restructuring package should be done by June-end,” Shivramkrishnan Hariharan, the director commercial at the closely held Mumbai-based steelmaker, said in an interview Wednesday.

Prices on three of Reliance Communication Ltd.’s loans totaling $2.33 billion have been indicated in the mid- to low-70 cents on the dollar level, as the Indian telecommunications company’s bond and stock prices tumble while it scrambles to sell its tower business to repay debt, Bloomberg News reported. Two term loans for $1.33 billion and $925.2 million, plus a $75 million capital spending facility were indicated at this level, according to people familiar with the matter, adding that there have been no trades or offers on this bank debt recently.

Reliance Communications Ltd.’s lenders have agreed to a seven-month moratorium on the debt payments of Indian billionaire Anil Ambani’s wireless business, which had its credit rating slashed in the past month, Bloomberg News reported. Creditors have given Reliance Communications, or Rcom, time until December to sell its towers to Canadian asset manager Brookfield Infrastructure Group and merge the wireless business with Aircel Ltd., Chairman Ambani said at a press conference in Mumbai on Friday. These transactions will help the company reduce debt by 60 percent, he said.

Shares in Reliance Communications are down again in the wake of the telco’s credit rating being downgraded. On Tuesday, Moody’s Investors Services cut RCom’s corporate rating to Caa1, indicating high credit risk, the Financial Times reported. That followed a move by Care Ratings, India’s second-largest rating agency, cutting all types of the company’s debt to “default”, the lowest level. The downgrades come hot on the heels of a media report that RCom had missed interest repayments to more than 10 Indian banks.

Brutal competition and 457 billion rupees ($7 billion) of borrowings have finally caught up with billionaire Anil Ambani’s Reliance Communications Ltd. The Indian wireless operator rattled investors with its first full-year net loss amid signs it’s struggling to repay debt, Bloomberg News reported. Its $300 million junk-rated note due in 2020 declined as much as 13.9 cents on the dollar to 70.1 cents on Monday and the stock sank to a record low.

In India, the vultures are circling. These vultures are investors looking for opportunities in distressed assets and bad debts. For years they had avoided investing in India, put off by a creakingly slow legal system and a labyrinthine bureaucracy. But a new bankruptcy law and a move this month to give India’s central bank expansive powers to tackle bad debt have excited investors both here and abroad who think investing in India’s distressed market could produce double-digit returns, the International New York Times reported.

Indian central bank Deputy Governor Viral Acharya said injecting new funds into lenders won’t resolve the nation’s stressed asset plight until companies take steps to reduce debt, Bloomberg News reported. The Reserve Bank of India is seeking to strengthen the banking system through measures including merging weaker banks and pushing to privatize some state-run lenders as it ramps up efforts to resolve the world’s highest stressed-asset ratios. Banks would be happy to lend but there is no demand from corporates as they are heavily indebted, he said in a speech in Kolkata on Friday.