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Asset deterioration a challenge for Indian banks: Moody’s

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Chennai, January 9: Global Credit rating Agency Moody’s on Monday said asset deterioration is a challenge for Indian banks over the medium-term.

Moody’s Investor’s Service and its Indian affiliate ICRA Ltd said in a statement the prospect for Indian banks were subdued.

Asset quality will remain a negative driver of the credit profiles of most rated Indian banks and the stock of impaired loans. Non-performing loans (NPLs) and standard restructured loans will still rise during the horizon of our outlook,” Moody’s Vice President and Senior Analyst Alka Anbarasu said.

“We expect the pace of deterioration in asset quality over the next 12-18 months should be lower than what was seen over the last five years, and especially compared to FY2016, even as we consider those remaining problem loans which have not been recognised as such in several large accounts,” Anbarasu added.

According to Moody’s, Indian banks would increase their focus on resolving some of the large problem loan accounts.

Anbarasu said there will be increased pace of debt restructuring under various schemes designed by Reserve Bank of India (RBI). But the weak reserving and pressure on profitability would limit bank’s ability to go for bad loan account resolution under RBI schemes.

From ICRA’s viewpoint, a muted level of credit off-take — on the back of weak demand, increasing competition and greater disintermediation — will continue to exert downward pressure on lending rates.

“Such a development will be partly offset by the fall in the cost of funds, but stubbornly high operating expense levels and elevated credit costs will continue to dent profitability matrices for the banks,” said Karthik Srinivasan, an ICRA Senior Vice President.

IANS

India

‘Ex-HAL chief’s statements on Rafale factually incorrect’

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Rafale deal scam

New Delhi, Sep 20 : Government sources on Thursday dismissed as “factually incorrect” media reports of former Hindustan Aeronautics Limited (HAL) chief T.S. Raju claiming that the defence undertaking had signed a work-share contract with French company Dassault Aviation — the manufacturer of Rafale fighter jets.

“In the news item published (Thursday) ex Chairman and Managing Director, (CMD) HAL has been quoted as stating that an agreed work-share with Dassault Aviation (DA) was submitted to government. The same news item also referred to the cost of the aircraft, life cycle cost issues, etc. The statement attributed to ex CMD, HAL is factually incorrect,” said the sources.

The sources said that Raju was a member of the Contract Negotiations Committee of the Ministry of Defence (MOD) and “there were many major areas of disagreement between HAL and DA”.

They said that the HAL, in a letter on Oct 10, 2012 to the MOD, “brought out these disagreements pertaining to the work-share between them”.

“Subsequently in July 2014, HAL in its letter to MOD has also highlighted one major unresolved issue regarding responsibility sharing between DA and HAL for licence manufacture of the aircraft.

“Further, the man hours required for manufacture of various components of the aircraft in HAL was also a point of disagreement between DA and HAL. There is, therefore, a contradiction in the claims attributed to Raju,” they said.

The sources also said that the since the work-share between DA and HAL was “never agreed upon”, the statement claiming lower life cycle cost is “completely presumptive”.

They said that because of these reasons, the proposal for 126 Medium Multi-Role Combat Aircraft (MMRCA) could not be progressed further.

In an interview to a national daily, Raju who retired from the HAL on Sep 1, asserted that HAL “could have built Rafale fighters in India had the government managed to close the original negotiations with Dassault”.

Riding on Raju’s statements, the Congress led by its president Rahul Gandhi demanded Defence Minister Nirmala Sitharaman’s resignation accusing her of “lying”.

The party claimed that Raju’s remarks “nailed Sitharaman’s lie” that HAL didn’t have the capability to build the Rafale.

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India

Modi, Hasina jointly inaugurate oil pipeline, railway projects

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Narendra Modi Sheikh Hasina

New Delhi/Dhaka, Sep 18 : Indian Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina on Tuesday jointly e-inaugurated the construction work of a cross-border oil pipeline and a railway project, with the former describing the two countries as members of the same family.

Hasina and Modi joined the event in the evening via video-conferencing from Dhaka and New Delhi, respectively.

The 129 km India-Bangladesh Friendship Pipeline connecting Siliguri in India with Parbatipur in Bangladesh will transport petroleum products from Numaligarh Refinery in Assam. Of the total length, 124 km will be constructed in Bangladesh and 5 km in India.

“Geographically we may be neighbours, but emotionally we are members of the same family,” Modi said while addressing the programme.

“Our mutual cooperation in the last few years has shown the world that when two neighbouring countries strive to work together, what all can be achieved,” he said.

“Whether it be a decades-old border problem or development aid cooperation project, we have made unprecedented progress on all issues.”

At the same event, the ground-breaking ceremony of a rail project to improve Dhaka’s connectivity with Tongi and Joydebpur, two towns on the outskirts of the capital city, was also held.

Officials said 48.80 km of the two new dual gauge rail lines would be constructed on the Dhaka-Tongi route and a 12.28 km new dual gauge railway double line on the Tongi-Joydebpur route.

Tuesday’s inauguration of the two projects came a little over a week after both the Prime Ministers inaugurated two railway projects and an electricity project on September 10.

Stating that the pipeline will further boost bilateral cooperation, Modi said that energy was the cornerstone of any country’s development.

“The pipeline will help in the development of the northern Bangladesh. Though it is being done with grant-financing from India, the project will be dedicated to the people and government of Bangladesh once completed,” he said.

Modi said the railway project will not only bring relief to road traffic in Dhaka, but also boost freight revenues.

Speaking from Dhaka, Hasina said that ever since she formed her government in Bangladesh in 2009, she has been working relentlessly to deepen ties with India.

She thanked Modi for the new projects which she said will help in Bangladesh’s development.

External Affairs Minister Sushma Swaraj and Petroleum Minister Dharmendra Pradhan joined the video conference from Delhi and Bangladeshi Foreign Minister Abul Hassan Mahmood Ali from Dhaka.

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Business

No relief in sight from rising oil prices

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Dharmendra Pradhan

New Delhi, Sep 12 : There is no relief in sight from the rising petrol, diesel and gas prices which are burning a hole in the consumers’ pockets.

The government on Wednesday eluded questions on the subject at an official media briefing here, with Petroleum Minister Dharmendra Pradhan asserting that he would not answer questions outside of the day’s Cabinet decisions.

“We will confine ourselves to the Cabinet decisions only,” Pradhan told IANS when asked if a relief was in the offing from soaring oil prices.

The Minister also chose to keep mum when asked if the Union Cabinet discussed the issue on Wednesday.

On Monday, Pradhan had an hour-long meeting with BJP President Amit Shah after the opposition organised a Bharat bandh on the issue.

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