India

The Reserve Bank of India relaxed guidelines on Monday for lenders restructuring large stressed loans, in a move that could allow banks to more effectively manage bad loans, Reuters reported. Indian banks are grappling with about $120 billion in stressed loans, or 11.5 percent of the total, and RBI Governor Raghuram Rajan has set a deadline of March 2017 for them to clean up the bad loans on their balance sheets. The central bank said late on Monday that lenders would be allowed to carve up stressed loan accounts into two categories.

Indian Prime Minister Narendra Modi took on critics who accuse him of failing to pursue “big bang” liberalization measures to revamp his country’s economy, saying he has set a path for accelerated growth that India’s states now need to help navigate. In an interview in his residence compound Wednesday, on the eve of his second anniversary in office, Mr. Modi said he had opened up more of the economy to foreign investment and made changes to curb corruption, fill gaps in rural infrastructure and make it easier to do business. “I have actually undertaken the maximum reforms,” Mr. Modi said.

India’s Parliament has passed a bankruptcy law that promises to make it easier to wind up a failing business and recover debts in Asia’s third-largest economy, The Wall Street Journal The Short Answer blog reported. The country’s banks are currently struggling with bad loans after the crash in commodity prices and slowdown in infrastructure projects affected corporates’ balance sheets and their capacity to settle debt.

India's upper house of parliament passed a new bankruptcy code on Wednesday, as the opposition swung behind measures to take tougher action against corporate defaulters and help banks recover over $120 billion in troubled loans. Prime Minister Narendra Modi, who completes two years in office this month, had promised to introduce the code to address bank debts and improve ease of doing business in Asia's third largest economy.

India's JSW Steel Ltd has bid for the British operations of Tata Steel Ltd, two sources with direct knowledge of the matter confirmed on Tuesday, prompting concerns about its debt levels and putting pressure on its shares, Reuters reported. JSW Steel said in a statement it was evaluating UK steel assets but did not name any specific target. "As part of the company's growth strategy, the company evaluates several opportunities including the current opportunity of UK steel facilities," JSW said.

With the Insolvency and Bankruptcy Code inching towards reality, early redress of almost 75,000 cases involving debt of an estimated ₹3.5-lakh crore is what the government and stakeholders expect, The Hindu Business Line reported. While the Debt Recovery Tribunals (DRT) will resolve individual bankruptcy cases, the National Company Law Tribunal will work on corporate insolvency. The reasons for the pile-up of cases varied from legal lacunae to insufficient technical expertise in dealing with such cases. Labour and infrastructure issues also played a big role in hindering resolution.

India's lower house of parliament on Thursday backed a new bankruptcy code, a crucial step towards establishing a debt resolution regime to strengthen the hands of banks seeking to recover $120 billion in troubled loans, Reuters reported. The Insolvency and Bankruptcy Code 2016, passed by a voice vote, is expected to be approved by the upper house next week as the main opposition Congress party has pledged its support. The government will repeal an ineffectual, century-old insolvency law and amend 11 laws now dealing with defaulters.

India said on Thursday it had asked Britain to deport Vijay Mallya, the liquor tycoon who flew to London last month as bankers pressed him to repay about $1.4 billion owed by his defunct Kingfisher Airlines, Reuters reported. The Ministry of External Affairs has written to the British High Commission seeking Mallya's return so that "his presence can be secured for investigations against him" under India's anti-moneylaundering law, spokesman Vikas Swarup told reporters.

In view of mounting bad loans eating into banks' profits, RBI has allowed them to exclude from provisioning stressed loans of certain companies in the fourth quarter numbers, The Economic Times reported. This will help ease burden on banks to some extent and support their bottomline. About two dozen companies which have been trying to repay loans by selling their assets or some of their subsidiaries have been excluded from defaulters list. "After reviewing accounts which were under asset quality review, RBI felt some of the accounts can be standardised.

China and India are both grappling with escalating bad debt challenges lurking in their banking systems. Yet the two Asian economic giants are embracing markedly different strategies to clean up the mess, Bloomberg News reported. Impaired loans have reached a decade high in China and are at their most in 14 years in India, posing a threat to two economies that increasingly have fueled global growth. Troubled banking systems hurt economies by curbing new lending for corporate investment.