One lakh e-auctions for banks’ NPA properties likely in 2013-14-Business Line
MUMBAI, APRIL 15:
There is likely to be a rise of over one lakh e-auction transactions of properties of non-performing assets in FY2013-14, according to NPAsource.com, an online portal that auctions stressed assets.
With the Ministry of Finance making it mandatory for all commercial banks to move from physical auctions to e-auction mode for all NPA cases under the Debt Recovery Tribunal, there will be a spurt in e-auctions in 2013-14, the portal said in a statement.
NPAsource.com expects residential and agricultural properties to account for the largest number to be sold through the e-auction route in terms of transactions.
As on March 31, 2013, the portal NPAsource.com had over 23,000 registered properties worth over Rs 21,000 crore.
The Ministry of Finance also wants that NPA under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFEISI) Act should gradually move to the e-auction mode.
Amid increasing pressure of rising bad loans, the focus of most banks now is on recovering dues from bad loans as it has started impacting their profitability and margins.
“As on March 31, 2012, net NPAs of 40 listed banks were Rs 61,558 crore, which rose to Rs 92,398 crore as on December 31, 2012,” the portal said.
DK Jain, CMD of Atishya Group, owner of NPAsource.com, said, “E-auctions offer advantages such as lower cost, greater participation, save time and allows better price realization for banks. Any interested party from India or even abroad can register themselves under the RBI regulations and participate in the e-auction.”
Get cracking on reducing bad loans, FinMin tells govt banks
Wants NPAs reduced to 1% of total advances by fiscal-end; suggests board-level monitoring of recovery
NEW DELHI, APRIL 14:
The Finance Ministry has asked all public sector banks to reduce their bad loans, or non-performing assets, to one per cent of their total advances by the end of the current financial year (March 31, 2014).
A senior Finance Ministry official hoped there will be “significant improvement” in the gross and net NPA position for fiscal 2012-13, which ended on March 31.
Talking especially about the nation’s biggest lender State Bank of India, the official said, it had managed to reduce its NPA by over 1 per cent in March alone.
That still leaves SBI with a fair bit to do to achieve its new NPA target. As of end-December 2012, SBI’s bad loans were at over 6 per cent (gross NPAs) of its advances.
The final figure will emerge when the bank announces its annual financial result for 2012-13.
With the economy registering the lowest growth in a decade, public sector banks have seen their NPAs go up significantly.
According to data collected for a meeting between Finance Ministry and public sector bank officials last month, bad loans with respect to the priority sector, which include agriculture and medium and small enterprises, had gone up during the quarter ended December 31 vis-à-vis the previous quarter.
Interestingly, however, the NPA position in relation to retail and real estate loans improved during the period.
Another highlight is that the top 30 non-performing accounts made up close to half (around 44 per cent) the bad loans of the 19 nationalised banks. While for the SBI group, this was around 19.3 per cent, for public sector banks as a whole they were around 34 per cent.
MULTI-PRONGED PLAN
Banks have been advised to adopt a multi-pronged strategy for loan recovery.
This includes constitution of a board-level committee for monitoring recovery, review of NPA accounts of Rs 1 crore and above by the board of directors, and the top 300 NPA accounts by the management committee of the boards, and guidelines for NPA management as part of an early-warning system.
Apart from restructuring, banks have been advised to initiate penal measures against wilful defaulters.
These include not granting them additional facilities and debarring the entrepreneurs/promoters of defaulting companies from getting institutional finance for floating new ventures for a period of five years.
FORMAL COMPLAINT
Banks have also been asked to lodge a formal complaint against the auditors of the borrowers with the Institute of Chartered Accountants of India, if it is observed that there was negligence or deficiency in the conduct of audit
Banks to recall Rs 1,000 crore Birla Surya loan
UBI has recently issued a public notice, that the company, even after repeated reminders, have not liquidated the liabilities of the bank (Business Standard )
Banks are likely to recall loan from Birla Surya Ltd – a part of Yash Birla Group – which has defaulted around Rs 1000 crore loan. The loans -- which has been classified as non-performing by the lenders -- were taken few years back to funds the company’s new project in the infrastructure sector.
One of the lenders to Birla Surya, United Bank of India (UBI) – a Kolkata-based public sector lender, has recently issued a public notice, that the company, even after repeated reminders, have not liquidated the liabilities of the bank and the bank reserves the right to initiate legal actions to recover its dues. UBI has Rs 70 crore exposure to the company.
Following the recall notice is given to a borrower, banks can start the recovery process, Sarfaesi (Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest) Act and DRT (Debt Recovery Tribunal) are two routes that lenders can resort to for recovering bad loans.
In early 2011, Birla Surya had announced that it will invest Rs 5,400 crore, over the next five years, to set up an integrated unit for fabrication of multi-crystalline silicon wafers and manufacturing solar photovoltaic cells.
The company had said that it would invest Rs 1,493 crore in the first phase to set up a manufacturing unit with 60 megawatt capacity for multi crystalline silicon wafers and a fabrication unit of capacity 125 mw. The company had borrowed about Rs 1,000 crore from 11 lenders for the first phase of the project. The loan has tenure of 10 years, with an average interest rate of 14.5%.
The multi crore solar photovoltaic project at Rajewadi village, in Satara district of Maharashtra was facing delays as the financial closure of the is not completed as a as major portion of the equity was not tied up. The project is also yet to receive Pollution Control Board (PCB) certificate.
Following rise in non-performing assets, amid a slowing economy, state-run banks have beefed up their recovery efforts. The move comes after Finance Minister P Chidambaram asked banks to act tough on corporate defaulter in a meeting with public sector bank chiefs earlier this month. “We cannot have an affluent promoter and a sick company,” the finance minister had said last month after a meeting with chief executive of public sector banks.
Public sector banks have been asked to frame a board approved recovery policy and to constitute a board level committee for monitoring of recovery. The top 300 NPA accounts are reviewed by the management committee of the board. (End)
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