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View: The intruder that undermines India's central bank

View: The intruder that undermines India's central bank

Finance
by Andy MukherjeeBankruptcy proceedings usually involve protecting a firm’s assets from creditors. An Indian tribunal has turned the concept on its head by offering protection to the lenders. The National Company Law Appellate Tribunal ordered that no lender can declare its exposure to embattled IL&FS Group as nonperforming without its permission – even if there is a default. The ruling by the bankruptcy court, which is overseeing the government-sponsored $ 12.8 billion insolvency of the infrastructure financier-operator, undermines the Reserve Bank of India’s powers to make banks and nonbank finance firms present a truthful account of their financial position at all times. Already India has lost two RBI governors because, among other things, they dared to ask banks t...
India's shadow banking sector likely to face shake-up after default

India's shadow banking sector likely to face shake-up after default

Finance
By Krishna N. Das and Neha DasguptaIndia's burgeoning shadow finance sector is likely to face a shake-up after defaults at one major lender battered the nation's financial markets in the past week and reinforced worries about credit risk. Industry officials and experts say they expect Indian regulators to cancel the licences of as many as 1,500 smaller non-banking finance companies because they don't have adequate capital, and to also make it more difficult for new applicants to get approval. The Reserve Bank of India (RBI), which has been tightening rules for non-banking financial companies (NBFCs), did not respond to requests for comment. Better capitalised and more conservatively run finance firms are likely to swallow up an increasing number of smaller rivals, the experts said. That co...
India's massive state banks are in trouble. That's great news for some

India's massive state banks are in trouble. That's great news for some

Finance
India's banking sector crisis has left most state lenders hamstrung with mounting levels of bad loans, investigations into fraud and restricted growth opportunities. Amid that storm, private banks are set to emerge as winners. India's public-sector financial institutions control about 70 percent of all banking assets in the country, but they have the highest exposure to soured loans amounting to as much as $ 150 billion. In fact, the 21 state-owned banks had stressed loans of about 8.26 trillion rupees ($ 120 billion) as of Dec. 31, Reuters reported. Private sector lenders, meanwhile, reportedly had a bad loan pile of just ab...
Why does India's air look different from space?

Why does India's air look different from space?

Science
There is something very distinct about the air over India and the surrounding countries in South Asia. It is the presence of formaldehyde - a colourless gas that is naturally released by vegetation but also from a number of polluting activities. The elevated concentrations have been observed by Europe's new Sentinel-5P satellite, which was launched last October to track air quality worldwide. It is information that will inform policies to clean up the atmosphere. Compared to the major constituents like nitrogen and oxygen, the formaldehyde signal is actually very small; in every billion air molecules just a few will be CH₂O. But it can be a signifier of more general pollution problems, says Isabelle De Smedt from the Royal ...
View: India's banking system requires stronger watchdog

View: India's banking system requires stronger watchdog

Finance
By Ila PatnaikTo many economists, the solution to India’s bad-loan crisis appears as obvious as the problem: Privatize state-owned banks, which have racked up billions more in soured loans and performed much worse than their private-sector counterparts. Yet, unless the government first strengthens its ability to supervise all banks, public and private, selling some of them off will be slim guarantee against another crisis. One can understand the urge to privatize. A long-mooted bankruptcy law finally passed last year allows any single creditor to initiate the bankruptcy process. This has disrupted the earlier cozy system, whereby banks hid the full extent of their soured loans and the Reserve Bank of India, which oversees the sector, looked the other way. As bad loans tumbled out of the cl