Page 11 - BANKING FINANCE JANUARY 2016 ONLINE
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RBI CORNER
Revived Re 1 selling for Banks' balance sheets to be cleared by March 2017:
approx Rs. 1,000 each on
net Rajan
One can get Reserve Bank Governor Raghuram NPAs and restructured loans) amount
the crisp Re 1 Rajan has said banks which are saddled to Rs 7,50,000 crore. "They would be
note, which with huge non-performing assets would able to bring this (stressed assets)
the RBI started be able to clean up their balance down, not just by provisioning but also
printing 2015 sheets by March 2017. by putting some of these back on track
after two de- so that they can be elevated back to
cades, for just "The first part of the process was to performing assets," Rajan said.
Re 1 from banks, but it's being sold give more powers and flexibility to deal
for a fortune on the internet. with it. The idea is to put "This is what's under
the real assets back on way. It's for both public
One seller on eBay is offering 10 track with whatever sector and private
bundles (each with 100 notes) of Re needs to be done. The banks. More of the
1 printed in 2015 for Rs 9,499, even first step was with things problem is with public
as there's no clarity on whether cur- like 5/25 and SDR with sector banks because
rency notes in circulation can be sold bringing in new promoters… a whole they were into infrastructure invest-
like this. range of steps have been taken. Given ment." "We hope that over the span
that banks have more powers, we can of next year, say by March 2017 as
While one seller is offering it at a be a little more careful about recogni- when we hope that a clean-up will have
thousand times the face value, oth- tion, and the first step of that was to been done by banks," he said. "We are
ers are more conservative in their do away with the forbearance starting in constant dialogue with banks on a
pricing. Earlier in 2015, RBI re- April 1, 2015," he said. number of issues, including the assets
launched the Re 1 note by spending on their balance sheets and we are
Rs1.14 on printing each note. The As many as 37 banks reported a 26.8 talking to them about what is being
RBI said it would print 150 million per cent rise in non-performing assets done under the 5:25 scheme, and oth-
notes over the next few years. (NPAs) to Rs 336,685 crore in the 12 ers. We have given a number of facili-
month-period ended September 2015 ties to banks to improve their asset
While some bankers have raised as compared to a growth of 16.9 per quality," he said.
doubts over the legality of these cent a year ago. Stressed assets (gross
online sales, people who know how
currency works have said the RBI RBI says looking into debt-for-equity swap provision for
may not be able to do anything if a
person is willing to pay any amount lenders
for it.
The Reserve Bank of India (RBI) is looking into a provision it introduced in June
A senior bank official, seeking ano- 2015 to help lenders managed stressed assets, RBI's deputy governor S.S. Mundra
nymity, said, "I don't think selling of said, arguing it was too soon to write off the debt-for-equity swap tool as a
currency notes, per se, is allowed. It failure. Strategic Debt Restructuring (SDR) aims to allow banks to take majority
has never been done with new notes ownership of troubled firms and look for new owners. It allows banks to classify
in the past. Numismatists have col- the debt in question as "standard", rather than bad, during the 18 month
lected old notes and coins which process. To date, SDR has been invoked in 9 cases but none has yet sold assets
have assumed the value of a collect- or significantly reduced debt. "It is a work in progress. You will hear...more from
ible. So whether or not there is a law us on this soon," Mundra told reporters in New Delhi. "We are looking into it."
is not clear."
RBI leaves rates unchanged
The RBI has left the bench mark lending rate unchanged at 6.75 per cent. But
home and car loan borrowers can look forward to a lower interest burden with
Governor Raghuram Rajan saying that the central bank would issue guidelines
to banks soon to fix their base rate according to a new methodology.
BANKING FINANCE | JANUARY | 2016 | 11
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