Skip to main content

PRIVATE BANKS ARE AWAY FROM ARC's

Even as the public sector banks have made a beeline to dispose of their bad loans to the asset reconstruction companies (ARCs) in the March quarter, private banks are not only unenthused in adopting this route, but have virtually shunned this.
State-run banks, which are sitting on a mountain of bad loans, have sold as much as over Rs 10,000 crore to ARCs in the March quarter, led by State Bank's close to Rs 4,000 crore asset sale, a first for the nation's largest lender in its over 200-year history. In the December quarter, SBI had reported a gross NPA of 5.3 per cent or Rs 67,800 crore.
As against this, its largest private sector counterpart ICICI Bank had a gross NPA ratio of 3.03 per cent in the three months to March, but sold not a single penny to ARCs, its managing director and chief executive Chanda Kochhar said.
HDFC Bank deputy managing director Paresh Sukthankar said the bank's sale to ARCs was around Rs 6 crore, which is "nothing meaningful", while Yes Bank sold Rs 12 crore. For Axis Bank, the third largest private sector lender, the sale to ARCs during the March period, which generally witnesses such sales, was minimal, according to its management. In stark contrast, the state-run lenders have reportedly sold over Rs 10,000 crore of assets to the ARCs in March alone, due to a variety of reasons, including a push by their majority owners.
This may be partly due to the higher proportion of non-performing loans which the state-run banks carry. According to rating agency Icra, the gross NPAs ratio for the country's 40 listed banks stood at 4.1 per cent as of December 2013.
As per RBI estimates, the same for the entire system as a whole had stood at 4.2 per cent as of September 2013 and it expected the same to go up to 4.6 per cent by September 2014 and then improve a bit to 4.4 per cent by March 2015. Within that, the RBI said the state-run banks will be the worst affected. The public sector banks' NPAs will be at 4.9 per cent by March 2015 while the same for the private sector is projected at 2.7 per cent. Meanwhile, some experts also question if the quality of the securities which the banks carry against a loan have a role to play in this trend. Generally it is assumed that private banks are much more diligent while granting a loan and insist on better quality collaterals before disbursing, which a public sector lender may lack.

Comments

Popular posts from this blog

JIO TARIFF CICK FOR TELECOM STOCKS

Telecom stocks today surged up to 8 per cent after the recent increase in Reliance Jio tariffs, which is largely seen as positive for the sector. Shares of Bharti Airtel jumped 4.99 per cent to close at Rs 497.50 on BSE. Bharti Airtel was the biggest gainer among the 30-share index components. The scrip of Idea Cellular soared 7.74 per cent to end at Rs 98.15 and Reliance Communications zoomed 7.60 per cent to Rs 17.70. Reliance Jio made its service dearer by about 15 per cent for its popular 84-day plan at Rs 459 from October 19, under which subscribers get 1GB 4G data at high speed per day. The company restructured its various schemes by reducing their validity period. The recent increase in Reliance Jio tariffs will increase its average revenue per user by up to 20 per cent and is a positive for the telecom sector, which is seeing a rapid consolidation, says a Philip Capital report. Established telecom sector players have seen huge reduction in their margins. Idea Cellular and Reli…

STOCK MARKET WELCOME NEW YEAR WITH LOSS

Sensex drops 244 pts
A late sell-off in auto, banking and IT shares pulled back the benchmark BSE Sensex from record high level to close down by 244 points, its biggest single loss in past one month, on the first trading day of 2018. Investors preferred to book profits at record highs amid concerns over fiscal slippages and rising crude oil prices and absence of cues from global markets which were closed for the New Year holiday. The benchmark Sensex touched a low of 33,766.15 before settling lower by 244.08 points, or 0.72 per cent, at 33,812.75. This is the biggest single-day fall since December 1 when the index had lost 316.41. The 30-share index had closed at an all-time high of 34,056.83 in the last session of 2017 on Friday. Also, the 50-share Nifty cracked below the 10,500-mark to hit a low of 10,423.10 before settling 95.15 points, or 0.90 per cent down at 10,435.55. Stocks opened on a weak note and remained range-bound for the better part of the day but an intense sell-off in…

NIFTY EARNINGS FLAT IN 2018

UBS Cautious Note

Projecting zero returns from the Nifty, Swiss brokerage UBS has projected a 10 per cent cut in its index target at 10,500 for calendar 2018, even as it remains positive over the long-term. "Top-down, we forecast Nifty earnings growth will recover from 9 per cent in fiscal 2018 to 13 per cent in 2019, but driven largely by financials," the brokerage said in a report. "However, earnings growth is likely to disappoint against consensus forecast of 22 per cent growth for fiscal 2019, implying a 10 per cent cut," it added. Accordingly, the brokerage estimates "no returns from the Nifty in 2018" and has set the index target at 10,500 for this December. The report noted that a sharp earnings recovery, with continued robust macro stability appears priced in by the markets. "A sharp earnings recovery appears priced in. The markets are already close to our 2018 target, given optimistic fiscal 2019 consensus earnings expectations, which build …