India

India's government on Wednesday published long-awaited proposals to overhaul an outdated and overburdened bankruptcy process, calling for public comment on what could become the country's first unified bankruptcy code. The proposed bill aims to dramatically speed up decisions on whether to save or liquidate ailing companies, in a move to curb asset stripping and ensure higher recovery rates for creditors - both key to fostering a modern credit market and increased investment in India.

After its bond payment default, Amtek Auto is likely to find it difficult to get more funding from lenders, the Business Standard reported. Loans given earlier to the Delhi-based automobile components maker are now classified as Special Mention Account-2, where interest and/or principal are due since 60 days. A loan is classified as non-performing if not serviced for at least 90 days.

Bhushan Steel Ltd (BSL) has received lenders' approval for long-term restructuring of about Rs 30,000 crore loans under a scheme of Reserve Bank of India. The Joint Lenders Forum (JLF) has agreed to extend the loans of BSL for a tenure of 25 years under the RBI's scheme for long-term structuring of loans in line with cash flows. "About 70 per cent of the lenders have approved the scheme and by the end of this month it should get closed", Bhushan Steel Chief Finance Officer (CFO) Nittin Johari told the Press Trust of India.

Welcome to what is likely India’s largest ghost city, which extends across five expansive parcels of land along the highway adjacent to the racetrack. What was meant to be the crowning achievement of Jaypee Group and Jay Prakash Gaur, its 85-year-old patriarch, has become a monument instead to unrealistic aspirations and poor execution on the one hand and a shortfall in growth, the high cost of capital and an uncertain political landscape on the other, the Financial Times reported. The scale of Jaypee’s ghost city rivals that of some of China’s famous unoccupied cities.

The Reserve Bank of India has provided banks, which are struggling to cope with a mountain of bad debt, new ammunition to deal with defaulting companies, The Economic Times reported. On Monday, the banking regulator issued new norms for Strategic Debt Conversion (SDR) which will give lenders the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package. Allowing loan conversion will now be a precondition for all debt restructuring deals.

Facing calls to explain why banks had largely failed to pass on to consumers and businesses two policy rate cuts this year, Raghuram Rajan, the normally easy-going governor of the Reserve Bank of India, launched a rare attack. “Banks are sitting on money,” he said after the RBI’s latest interest rate meeting. “Their marginal cost of funding has fallen.

The state of Jammu Kashmir is heading towards insolvency as its treasury is empty, The Tribune reported. About 50 per cent of the government employees, pensioners, daily wagers and casual labourers have not received salaries. “It is a grim situation and there are no chances of the money coming anytime soon,” said a source in the government. Sources confirmed that Rs 1,400 crore was released in March but that was exhausted to meet bills that were pending for months.

India's largest bank will hold a record online auction this weekend to sell repossessed flats, warehouses and offices worth a total of nearly $200 million as the state lender seeks to chip away at its $10 billion mountain of bad debt, Reuters reported. The State Bank of India auction will be the biggest nationwide online sale to date and is a rare public move to turn distressed loans into ready cash.

India’s legion of heavily indebted companies took heart last week as shares in Suzlon Energy soared nearly a third on news that the ailing wind-turbine manufacturer had sold a 23 per cent stake to Dilip Shanghvi, the billionaire pharmaceutical tycoon, for Rs18bn ($290m), the Financial Times reported. The investment drew attention partly because of its buyer. Mr Shanghvi, India’s second-richest man, boasts a reputation as a canny entrepreneur.

India’s prime minister Narendra Modi this month unveiled plans to sell down government holdings in public sector banks, potentially injecting Rs1.6tn ($26bn) of capital into the banking system. But many analysts remain doubtful over the viability of the recapitalisation and how much it could raise, the Financial Times reported. Few disagree that banks in Asia’s second-largest economy need funds. Earlier this year, India admitted it needed to find an extra Rs2.4tn, with a particular focus on struggling state-backed lenders, which control around three-quarters of assets.