India

India's capital markets regulator yesterday approved rules for the creation of real estate investment trusts and infrastructure-investment trusts in the country, the Wall Street Journal reported today. The step comes a month after Finance Minister Arun Jaitley said that these trusts would be given a tax pass-through status, meaning that they wouldn't have to pay any federal taxes as long as they pass most of their income to shareholders in the form of a dividend.

The Reserve Bank of India (RBI) left its benchmark lending rate unchanged Tuesday, but acknowledged progress in its fight to rid Asia's third-largest economy from the plight of high inflation and pledged to cut rates as soon as possible, the Wall Street Journal reported today. The Indian central bank kept its overnight lending rate steady at 8 percent for its third policy meeting in a row. The RBI also reduced the minimum government bondholding rule—the statutory liquidity ratio—for banks by 0.50 percentage point to 22 percent with effect from the two weeks starting on Saturday.

India’s new Prime Minister Narendra Modi didn’t waste much time: Among his first acts on his first day in office was to make it a priority to recover billions of dollars stashed overseas to avoid taxes, Bloomberg News reported. Within 24 hours of his May 26 inauguration, Modi created an investigative team of former judges and current regulators to find the concealed assets, known as black money, and bring them back. At stake is what’s estimated to be as much as $2 trillion, more than India’s annual gross domestic product.

India has proposed a framework for the bankruptcy of financial institutions that will align the country with international standards, Reuters reported. Analysts suggested, however, that the regulation will increase the cost of senior funding for Indian banks if it is implemented according to the draft submitted to the market for comments. The proposals from a working group of the Reserve Bank of India call for depositors to have preference over senior creditors.

Suzlon Energy Ltd, the world’s fifth largest wind turbine maker, announced on Saturday a cash-less restructuring of its existing foreign currency convertible bonds (FCCBs) worth $485 million for five years, after nearly two years of complex negotiations with bondholders, Livemint.com reported. The Pune-based company has four different series of FCCBs issued to investors. Suzlon had failed to repay $209 million of debt on 11 October 2012 after bondholders rejected its request for a four-month extension. The default was the biggest on convertible bonds by an Indian firm.

A 22-member lenders' consortium led by ICICI Bank has failed to agree on a proposal from ABG Shipyard to recast its Rs 11,500-crore loan, a majority of which turned into dud assets on their books, sources said here today, the Economic Times reported. "There was no consensus on the terms of the loan restructuring proposal from ABG Shipyard at the corporate debt restructuring cell meeting held last Friday," a senior official of a state-run bank told PTI today, adding that banks are not sure about the promoter's ability to bring in fresh equity contribution of around Rs 300 crore.

Indian PV manufacturer Indosolar has asked to have its debt restructured because it says low equipment prices mean it is unable to make a profit, PV-Tech reported. In a stock exchange filing last week, the Indian company said one of its plants, a 160MW plant in Greater Noida, Uttar Pradesh, had been idled because the high cost of production against the low prices for PV cells “did not yield margins”.

Sree Metaliks, a maker of sponge iron in Odisha, could well be the second company where promoters may end up relinquishing management control over loan default. Agarwals, the founders of the company, face the prospect of losing the company as its key lender, IFCI, plans to sell its convertible debentures to any bidder to recover its dues, the Economic Times reported. The move to change management of a defaulting company is rare and comes within a month of the Reserve Bank of India and finance ministry prodding lenders to chase away defaulting borrowers.

Indian firms are selling their assets to raise cash, as banks are tightening the screws on loan repayments to help stem rising bad debt, The Wall Street Journal reported. Several companies sold pieces of their business last year, and bankers say more are likely to do so in the coming year, as the Indian economy continues to be sluggish and interest rates remain high. Indian companies had borrowed heavily in the late 2000s, when interest rates were low and India's economy was growing between 8% and 9%.

The Bombay high court on Thursday continued an order of interim protection granted earlier to a company against the State Bank of India. The HC restrained the Bank from publishing, photographs, names and addresses of the Petitioners as wilful defaulters in any newspaper or other media, The Times of India reported. The Bank had issued notice on December 21, 2013 to Icaro Machines India Private Limited and others. The company challenged the notice in the HC. On January 2, the matter was heard by vacation judge Justice Gautam Patel.