Despite recent improvements in India’s economic stability, the hangover from India’s credit fueled boom isn’t over yet. Estimates of the percentage of bank loans that are “impaired” — where repayment of the loan is classified as doubtful — run as high as 9%. Following the global financial crisis in 2008 and 2009, India joined countries around the world in rapidly pumping money into the financial system to prevent a prolonged global recession. The strategy of cheaper and more available money, much of it flowing through India’s banks, succeeded and resulted in the country’s growth. However, overreliance on interest-rate sensitive bank loans, slowing global GDP growth rates, and uncertain domestic economic policies exposed the vulnerabilities of India’s banks. Bad debts and missed loan repayments started to pile up quickly. The consequences of shortcomings in the insolvency process are … [Read more...] about Revamping India’s Bankruptcy Laws: A Way Out of India’s Bad Debt Problem
Dealing with bad debts
Apart from the above big lacunae, there were a number of short comings too. The dues of work men against a company, the State dues, and the dues of other non secured creditors all got enmeshed before the Debt Recovery Tribunals. As if these were not sufficient, there was clash of jurisdiction between the Official Liquidators appointed by the High Courts and the Recovery Officers of the Debts Recovery Tribunals. The Official Liquidator, an appointee of a superior authority, took into his possession all the properties, which actually belonged to secured creditors who before the Debts Recovery Tribunal. The High Courts also took umbrage on the activities of the Recovery Officers who away the entire amounts and paid off to the banks leaving nothing for the other claimants, including the work men. All these and other issues lead to drastic amendments to the Recovery of Debts Due to Banks and Financial Institutions Act by means of an amending notification in the year 2000. … [Read more...] about Debt Recovery Tribunal: A Non-Performing Asset
In banking practice, the bad debts are absorbed in the form of a ‘One Time Settlement (OTS)’ process. Later, huge amounts are legally written off in the process of restructuring of companies under the Sick Industrial Companies Act, 1985 and Corporate Debt Restructuring (CDR). In company restructuring parlance, such writing off is called ‘the sacrifice, a magnanimous gesture at the cost of public money. Such writing off has now attained a glorified and legalized status under the IBC regime with a corporate nomenclature of ‘hair-cuts’.The IBC sets an ambitious objective of resolving the NPA crisis and of creating an efficient distressed assets market.But does it make any provision for bringing accountability to the mismanagement of funds? … [Read more...] about Insolvency Proceedings – Safe Passage for Defaulters?
The president has said he may declare an emergency and use money from other parts of the budget to fund a wall. Such a move would likely be challenged in court, and Pelosi could force votes in Congress on whether to disapprove the emergency declaration. McConnell, who has urged Trump to avoid declaring an emergency, has sought to protect his senators from a vote on it. … [Read more...] about Trump Undecided on Tentative Border Deal in Congress
The total (Tax bill), with interest, had grown to almost $30 million. The state had doggedly pursued the matter through two of the casinos’ bankruptcy cases and even accused the company led by Mr. Trump of filing false reports with state casino regulators about the amount of taxes it had paid. … [Read more...] about Report: Gov. Christie’s State Gave Trump Sweet Deal to Ease His $30 Million Casino Tax Debt