India

India’s banks, staggering under the world’s highest bad-asset ratio, may be pushed to wind up or combine with rivals if their capital levels fall below set ratios under new guidelines issued by the country’s central bank, Bloomberg News reported. The new framework would apply to all banks operating in India, including foreign lenders, according to a document posted Thursday on the Reserve Bank of India’s website.

With the government recently notifying the cross-border insolvency provisions under the insolvency and bankruptcy law, claims of foreign creditors, as well as those of Indian creditors on foreign assets of the company going insolvent, could be satisfied by courts. However, experts believe that notifying the rules is not enough and New Delhi will have to sign agreements with governments of other countries in this regard, the Business Standard reported. Before this, creditors, particularly foreign ones, had been raising this issue.

The Centre is confident that the newly established institutional framework to implement the Insolvency and Bankruptcy Code (IBC) will help improve the country’s ranking in the World Bank’s ease of doing business index, The Hindu BusinessLine reported. “Yes, it is going to help us improve our ranking in ease of doing business,” Arjun Ram Meghwal, Minister of State for Finance, told BusinessLine here. As a regulator for overseeing insolvency proceedings and insolvency related entities, the Insolvency and Bankruptcy Board of India (IBBI) was established in October 2016.

Eighteen foreign banks, including Standard Chartered Plc., Barclays Plc. and Deutsche Bank AG, have agreed to restructure loans to the tune of $550 million given to Jindal Steel and Power Ltd (JSPL), two people aware of the development said, Livemint reported. The lenders agreed to a moratorium of between three and five years on repayments after meeting JSPL chairperson Naveen Jindal earlier this month, the people cited above said on condition of anonymity. Last year, JSPL failed to meet the repayment schedule for the April-June quarter due to stressed cash flows.

Nagpur-based Gupta Coal India has filed for insolvency at the National Company Law Tribunal. The petition says there are liabilities of Rs2,580 crore towards eight major banks, the Business Standard reported. A source told this newspaper, “Allahabad Bank, ICICI Bank, Indian Overseas Bank, Union Bank of India, Vijaya Bank, IDBI Bank, Punjab National Bank and Bank of India are lenders.” Gupta Coal supplied to power generating companies, including Monnet Ispat Energy. This is one of the biggest amounts in question in a petition fied since the Insolvency and Bankruptcy Code took effect.

The reflation trade is carving out refuges in some curious places, case in point: emerging Asian debt. Credit-default swaps on the bonds of every Asian emerging market except for South Korea have tumbled this year, outperforming debt risk for the U.K. and for France, which has jumped amid the presidential election campaign, Bloomberg News reported. Inflows into developing Asian bond markets have also swelled in 2017 as investors bet the world’s fastest-growing region will be able to better withstand the volatility and outflows unleashed by a tightening Federal Reserve.

Prime Minister Narendra Modi has reason to be wary of ambitious reforms to India’s economy, given the fraught rollout of his plan to ban 500- and 1,000-rupee notes overnight, a Bloomberg View reported. For his country to reach its true economic potential, however, he will need to do something about India’s ailing state banks. These institutions, which account for more than 70 percent of lending in India, are in no immediate danger of collapse. But they’ve become a huge drag on the economy.

Tata Steel UK on Tuesday said it would close its final salary pension scheme to accruals from March 31 as a step towards resolving the future of its British operations, Reuters reported. The fate of Tata's British businesses, including the nation's largest steelworks at Port Talbot, has been in the air since Tata Steel said a year ago it planned to divest its British assets following heavy losses.

Tata Steel Ltd is still in talks with Germany's ThyssenKrupp AG about a potential merger of their European steel assets, the Indian company said on Monday. The statement was in response to reports in the British media on Sunday that India's largest steel company might be in the process of calling off a potential deal with the Germans, the International New York Times reported on a Reuters story. The company is in "constructive discussions" with ThyssenKrupp, said Tata Steel.

If you owe a bank a hundred dollars, it is your problem. If you owe a hundred million, it is the bank’s problem. If you are one of many tycoons borrowing billions to finance dud firms, it is the government’s problem, The Economist reported. That is roughly the situation India finds itself in today. Its state-owned banks extended credit to companies that are now unable to repay. Like the firms they have injudiciously lent to, many banks are barely solvent. Almost 17% of all loans are estimated to be non-performing; state-controlled banks are trading at a steep discount to book value.