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Govt-owned NABARD gives clean chit to Reliance Commercial Finance

Action of Indian Bank and Federal Bank is despite the Delhi High Court staying such action by the lead bank Bank of Baroda on 14th August, 2020.

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Anil Ambani

New Delhi: Government owned National Bank for Agriculture and Rural Development (NABARD), the second largest lender to Reliance Commercial Finance Limited (RCF) with over Rs 1,100 crore of secured loan exposure has given clean chit to RCF and has removed its red flag.

NABARD is a part of the consortium of lenders and is signatory to an Inter Creditor Agreement (ICA) executed between the lenders of RCF under June 7, 2019 circular of RBI on resolution of stressed assets.

NABARD had classified the account of RCF as Red Flag on February 25, 2020. Thereafter lenders conducted a detailed forensic audit by Grant Thornton (GT).

At a meeting of the Consortium of Lenders led by Bank of Baroda, held on Friday September 25, 2020, NABARD informed the consortium of lenders that having examined the GT forensic report, it found no element of fraud and has therefore removed the red flag.

Earlier, Delhi High Court on August 14 had stayed a move by Bank of Baroda, the leader of Consortium of Bank, to classify the accounts as fraud, restraining banks from taking any other coercive action till the next hearing. Similar action of Punjab National Bank was also stayed by Delhi High Court on 11th August, 2020.

As per information reported on Central Repository of Information on Large Credits (CRILC), Indian Bank and Federal Bank have classified their exposure to Reliance Home Finance Ltd (RHFL) as a fraud account.

Indian Bank having an exposure of only Rs. 120 crore, made such classification on 29th August, 2020. The exposure of Federal Bank to RHFL is 100 crore — out of the total RHFL debt of over Rs 10,000 crore.

Action of Indian Bank and Federal Bank is despite the Delhi High Court staying such action by the lead bank Bank of Baroda on 14th August, 2020.

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“How To Destroy An Economy”: Rahul Gandhi’s Latest Swipe At Government

Kaushik Basu, who served as Chief Economic Adviser to the Finance Ministry, tweeted a warning to the centre: “Don’t be in data denial… take corrective action…”

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Rahul Gandhi Farmers

New Delhi: Congress MP Rahul Gandhi this afternoon cited figures collated by renowned economist Kaushik Basu – which project India’s GDP as contracting the most among a selection of 11 Asian nations, including China – to take yet another swipe at the government.

“How to completely destroy an economy and infect the maximum number of people really quickly,” Mr Gandhi tweeted, with a data table showing projected GDP growth (for 2020) for 11 Asian countries and the number of coronavirus-related deaths (per million) for each.

India, with a projected GDP contraction of 10.3 per cent (according to a IMF report released ealier last week) and 83 Covid-related deaths per million, is at the bottom of a list that includes China, Bangladesh, Pakistan, Nepal and Sri Lanka.

The International Monetary Fund (IMF), in a report released last Tuesday, said it expected India’s economy to shrink by 10.3 per cent – a huge downward revision from its June prediction for a government under pressure over its handling of the pandemic and the economic fallout.

Kaushik Basu, who served as Chief Economic Adviser to the Finance Ministry, tweeted another warning today: “Don’t be in data denial. Mistakes happen-admit & take corrective action…”

In August the government said India’s GDP had contracted by 23.9 per cent – much worse than expected – in April-June, as the pandemic brought key industries to a halt and left millions jobless.

Mr Gandhi tore into that revelation, accusing the government of ignoring repeated warnings from experts on the extent to which the coronavirus pandemic had affected the economy

The government has since claimed a recovery of sorts – on both fronts.

Earlier this month the Finance Ministry said “demand resurgence is palpable in many sectors” and yesterday a government-appointed committee said the country had crossed the coronavirus peak.

One of the points claimed by the committee was that the early lockdown, which triggered the economic problems – had significantly helped reduce the number of deaths due to the virus.

Meanwhile, apart from highlighting a potentially difficult 2020 for India’s GDP (something several economists and reports have already flagged), the IMF report triggered another row when it suggested that India’s per capita GDP is set to drop below that of Bangladesh.

Rahul Gandhi pounced on that as well, tweeting: “Solid achievement of 6 years of BJP’s hate-filled cultural nationalism. Bangladesh set to overtake India”.

Shortly after that government sources issued a clarification, claiming that in terms of purchasing power parity – a measure of GDP that accounts for relative differences between countries – India’s per capita GDP in 2019 was actually 11 times higher than that of Bangladesh.

China, which according to the data sheet shared first by Mr Basu and then Mr Gandhi, is projected to record positive GDP growth – 1.9 per cent – this year.

Bangladesh, meanwhile, is to record an impressive 3.8 per cent GDP growth for 2020.

This afternoon China released its July-September GDP figures and said its economy had grown by 4.9 per cent – the same as last year and only marginally below the expected 5.2 per cent.

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Adani, Piramal among bidders for bankrupt DHFL

In November last year, the Reserve Bank of India referred DHFL for bankruptcy under the Insolvency and Bankruptcy Code at the National Company Law Tribunal (NCLT).

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Mumbai, Oct 18 : Adani Group, Piramal Enterprises, US-based Oaktree and Hong Kong-headquartered SC Lowy have submitted their bids for the insolvent Dewan Housing Finance Corporation Ltd (DHFL), sources said.

The deadline to submit bids for DHFL ended on Saturday.

According to sources, Adani Group has bid for the wholesale and slum rehabilitation authority portfolio. Piramal Enterprises, on the other hand, has bid for its retail business.

Further, Oaktree has submitted a resolution proposal for the entire company with a bid value of Rs 20,000 crore.

The admitted debt of the insolvent NBFC is over Rs 90,000 crore.

In November last year, the Reserve Bank of India referred DHFL for bankruptcy under the Insolvency and Bankruptcy Code at the National Company Law Tribunal (NCLT). Its resolution is now underway at the Mumbai bench of NCLT.

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Weak institutional participation leading to consolidation of equity markets

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rupee dollar

Mumbai, Oct 18 : Weak institutional investment from domestic institutional investors (DII) and foreign portfolio investors (FPI) since September have led the Indian equity markets into a consolidation phase, according to a report by ICICI Securities.

The report noted that the sharp bounce back by the market after the lows in March was in anticipation of normalising economic activity, which has shown up in terms of high frequency data in September including PMI, GST collection, electricity demand, improving exports, wholesale auto sales.

“Institutional flows both from DIIs and FPI’s have turned weak since Sep as sharp upside in stocks since March lows turns equity valuations expensive. Weak institutional participation is resulting in a consolidation phase for equity markets currently,” it said.

It noted that current market behaviour of muted flows by institutional investors and the resultant consolidation in stock prices imply economic activity may plateau going forward after normalising to pre-Covid levels.

Expecting economic activity to rise beyond pre-Covid level without large fiscal and monetary stimulus would be erroneous as aggregate demand in the economy was already weak before the impact of the pandemic, it said.

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