Of bad loans and insolvency

7.2%

 

What is it? The projected growth rate of the Indian economy in current financial year 2017-18, according to International Monetary Fund (IMF).

Why is it important? This represents reversal in growth slowdown following demonetisation introduced in November- December last year. World’s sixth largest economy grew at 8% in 2015-16, before slowing down to 7.1% in 2016-17. IMF has attributed growth revival to revision in national income accounting and government spending.

Tell me more: Global economy is expected to grow at 3.5% this year, as compared to 3.2% in 2016.

 

 

1.24%

 

What is it? The gross non-performing assets of HDFC Bank, India’s largest private sector bank in market capitalisation, for the three months ended June 2017.

Why is it important? This is the highest in seven years, and bad loans increased by 23% in one quarter. And 60% of the increase was from farm loans portfolio. Slew of farm loan waivers announced by state governments like Uttar Pradesh and Maharashtra is likely to impact farm loan repayment, and increase bad loans for banks.

Tell me more: Banks have disclosed weakening of microfinance asset quality following demonetisation during January- March 2017. HDFC Bank says microfinance loans have not deteriorated further.

 

 

56

 

What is it? The number of applications filed by debtors to declare insolvency.

Why is it important? This is more than a third of cases approved by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 in the last one year. It also shows companies are seeing insolvency proceedings as a chance to reset their business in a time bound manner.

Tell me more: Under the new bankruptcy code, cases have to be resolved within 6 months, with an extension for another 3 months. Alternatively, NCLT appoints an interim administrator who will try to sell the assets of the company to a new owner within 18 months.

 

 

770 mm

 

What is it? Rainfall received at Mount Abu, a hill station in Rajasthan, in 24 hours.

Why is it important? This is the highest ever rainfall received by Mount Abu ever since rainfall data was collected. Extreme rainfall events like these in a desert state is attributed to increase in temperature and its impact on monsoon.

Tell me more: Mumbai received 944 mm of rainfall in July 26, 2005 that killed 1,094 people. In 2015, Chennai and two adjoining districts received 1,049 mm of rainfall.

 

 

24

 

What is it? The number of protected monuments that have disappeared due to encroachment.

Why is it important? Shows laxity in protecting the historical monuments. Archaeological Survey of India is empowered to issue show cause notice to encroachers, and can also direct district authorities to remove encroachments.

Tell me more: 11 out of 24 lost monuments were from Uttar Pradesh. Government has spent Rs 301.7 crore in protecting monuments in 2016-17.

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Banks’ capital crisis

Rs 95,000 crore

What is it? The external equity capital that 11 state-run/public sector unit (PSU) banks would need by March, 2019 to meet Basel III norms, according Moody’s Investor Services.

Why is it important? It is about four times more than the amount India’s government has pledged (Rs 20,000 crore) to support the PSU banks. The rest has to come from the market. However, with high NPAs and low valuations, it might be a stretch for most PSU banks to raise the amount, and they might need further infusion from the government.

Tell me more: The State Bank of India will be trying to raise Rs 15,000 crore equity capital by itself in FY18.

 

Rs 16,580 crore

What is it? The estimated amount of loan the Uttar Pradesh government is considering to take to fund developmental projects.

Why is it important? Saddled with a farm-loan waiver of Rs 36,359 crore, the UP government will need financing for roads such as the Purvanchal Expressway and bridges, and also development schemes including affordable houses.

Tell me more: The news coincides with farmer protests in other states such as Madhya Pradesh, Maharashtra and Tamil Nadu for financial aid from governments, primarily in the form of loan waivers. By the time of the 2019 general elections, a Bank of America Merrill Lynch report estimates loan waivers would cost states Rs 2.57 lakh-crore.

 

$2.8 billion

What is it? The increase in net worth of Alibaba Group Holding’s chief, Jack Ma, overnight.

Why is it important? The richest person in Asia, Ma’s wealth stands at $34 billion in real-time. The surge was triggered by better-than-expected forecast of 45-49% revenue growth of the e-commerce company, China’s largest.

Tell me more: But the growth of the group is not just from online shopping, but also cloud  computing and media streaming.

 

37

What is it? The number of underground mines that Coal India reportedly plans to shut by end of this year.

Why is it important? The move is facing resistance from the labour unions, but shutting down the unprofitable mines could help the mining company cut costs. Its profits came down by more than a third to Rs2,716 crore in the quarter ending March 2017.

Tell me more: Coal India is the world’s largest coal miner and operates 413 mines including 207 underground mines. It accounts of 80% of coal produced in India.

 

22 minutes

What is it? The time taken by an AI machine to finish a two hour Chinese university entrance exam.

Why is it important? While the robot, MATHS AI, finished the exam fast, its score was below average. It got 105 marks out of 150, against the average score of 109. About 9.4 million students took the test this year. The robot, which is about the size of a refrigerator, is aiming for a score of 130+ next year.

Tell me more: The machine was developed by Zhunxingyunxue Technology in 2014 in partnership with Tsinghua University.

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News in Numbers, August 16, 2016: Oyo’s raises over Rs 400 crore, likely seat increase at IITs…

Rs 413 crore

What is it? The amount budget hotel aggregator Oyo (owned by Oravel Stays) has raised from Japan’s SoftBank Group Corp.

Why is it important? This comes at a time when investors including SoftBank have slowed down their funding plans amidst concerns about valuations of startups. However, a couple of other startups in the budget accommodation space have raised funding in recent times- Stayzilla raised about Rs 87 crore in May, FabHotels raised around Rs 54 crore in June and Treebo Hotels raised Rs 112 crore in July.

Tell me more: Recently, Oyo has started offering holiday packages (besides its core operations of budget accommodation) and introduced Oyo Flagship, where it leases properties, which is different from its previous strategy of booking hotels’ inventories for its customers in advance.

 

Rs 1,193 crore

What is it? The combined net loss of listed public sector banks in the April-June quarter of 2016-17 compared to net profit of Rs 9,449 crore in the same period a year ago.

Why is it important? It’s down down from Rs 23,493 crore in the fourth quarter of 2015-16. Reserve Bank of India had directed the banks to recognise and provide for bad loans and clean up their balance sheets by March 2017. The reducing losses might make it easier for them to raise fresh capital.

Tell me more: Gross non-performing assets (NPAs) or bad loans have almost doubled from Rs 288,743 crore in the first quarter of 2015-16 to Rs 576,158 crore in the same period in the current fiscal. High NPAs have led to slow credit growth.

 

66

What is it? India’s ranking on the Global Innovation Index 2016, up 15 positions from the previous year.

Why is it important? This is a reversal of trend. India was slipping over the last few years: it was 66 in 2013, 76 in 2014 and 81 in 2015. India’s 2016 ranking is mainly due to its high score on tertiary education and research and development, the quality of its universities and scientific publications, its market sophistication and ICT (Information and Communication Technology) services exports where it ranks the first in the world. Among middle-income economies, India is in the second position on innovation quality, after having overtaken Brazil.

Tell me more: China has become the first middle-income country to break into the top 25 of the index. The index is by Cornell University, INSEAD and the World Intellectual Property Organization, and is being published for the last nine years.

 

1 lakh

What is it? The total number of seats at Indian Institutes of Technology (IITs) by 2020, according to a proposal to be considered next week.

Why is it important? If approved, this would be the biggest seat increase at the IITs since the Other Backward Class quota was implemented at the institutions between 2008-09 and 2010-11. As a consequence IITs may have to admit day scholars (they have an hostellers-only policy now). Currently, there are around 72,000 students in all the 23 IITs.

Tell me more: The IIT Council, the highest decision-making body of the premier organisations, would consider adding seats to their BTech, MTech and research programmes, of which the former is likely see an addition of nearly 3,500 seats.

 

86

What is it? The number of private medical colleges that were denied permission for enrolment and teaching by the Medical Council of India (MCI) after physical inspections.

Why is it important? The decision has been overturned for 26 of these colleges by the Supreme Court-appointed Lodha Committee, which allows these to admit students for the new session that begins on September 30. This raises questions about the Lodha Committee’s decision against the backdrop of the poor quality of medical education in India, which is plagued by fraud and unprofessional teaching practices. For instance, one out of every six of India’s medical schools has been accused of cheating, according to a Reuters analysis.

Tell me more: The enrolment allowed for the 26 colleges is conditional: the Lodha Committee has asked the colleges to submit an undertaking to assure that they would comply with all the rules before the new session begins and that it can withdraw its permission if it finds any of the colleges to be non-compliant.

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News in Numbers, July 8, 2016: Demand notices to 6 telecom firms, sale of bad loans in 2015-16…

Rs 12,488.93 crore

What is it? The amount in demand notices likely to be issued by the Department of Telecommunications to six telecom operators for having under-reported their adjusted gross revenues of Rs 46,045.75 crore between 2006-07 and 2009-10. This was pointed out by the Comptroller and Auditor General of India (CAG) in March.

Why is it important? The telecom industry is already reeling under debts of Rs 4 lakh crore (as of March 31) and the notices come ahead of the expensive spectrum auction scheduled for mid-July. The demand from DoT is unlikely to be resolved soon. The telecom companies had contested this earlier saying the definition of adjusted gross revenue for calculating license fee is under litigation in various courts, which calls for clearer rules and policies.

Tell me more: The CAG had pointed out various instances of under-reporting of revenue, which the telcos had contested and said those issues have either been settled or stayed by various courts.

 

2%

What is it? The percentage of Indian banks’ bad loans that were sold to asset reconstruction companies (ARCs) in 2015-16, according to a report. An ARC buys bad loans from banks, explores ways of making the asset attractive and then sells it.

Why is it important? Highlights the need for more tools for bad loans recovery. The percentage of non performing assets (NPAs) sold to ARCs decreased from 5% in 2014-15 to 2% in 2015-16 even as the NPAs pile up. Banks put up bad loans worth Rs 1.3 lakh crore for sale in 2015-16, of which only Rs 20,000 crore got sold.

Tell me more: Gross NPA increased from 4.6% of total advances in 2014-15 to 7.6% in 2015-16 (highest in 12 years) and could rise to 8.5% by March 2017.

 

2,900

What is it? The number of words reportedly copied by the Indian environment ministry from the 3,850-word Supplemental Environmental Projects Policy draft adopted by the US government.

Why is it important? Besides plagiarism, the proposal that those who go ahead with projects without prior clearance under the Environment Impact Assessment Notification must remediate the damage and provide compensation, has raised concerns. At present, starting an environmental project without the government consent is a crime and can lead to imprisonment under Indian laws. Experts say this is a misuse of executive powers to dilute laws made by the legislature.

Tell me more: In the US, environmental violations are civil offences. The joint secretary who issued the draft notification on May 10 (open for comments for two months) has denied copying the content from the US policy and has said that the idea has been borrowed.

 

53.39%

What is it? Uttarakhand’s score in the provisional ease of doing business rankings among states. The score and rankings could change based on more data that the states might submit till end of this month.

Why is it important? The state, which was ranked 23 last year, has jumped to the first position as of this morning. Gujarat, which was on top of the rankings last year, has fallen to the 11th position. Shows intense competition among states with some of the most industrialised ones such as Maharashtra and Karnataka dropping out of the top 10. Such competition might help India improve its ranking in the ease of doing business globally, which is at 130, according to the 2016 report.

Tell me more: The final rankings would be released by the Department of Industrial Policy and Promotion in August after verification of the submissions made by the states.

 

509

What is it? The number of people who have been shot and killed by the police in the US in 2016 so far, according to data compiled by the Washington Post.

Why is it important? Such police action – directed disproportionately at the blacks –  has come to global attention after two black men were killed by the police in Louisiana and Minnesota on Tuesday and Wednesday respectively. US President Barack Obama called for changes to the criminal justice system and said such incidents reflect racial biases in the criminal justice system and that African-Americans and Latinos are more likely to be questioned by the police than the whites.

Tell me more: The Post has collated the numbers based on news reports, public records, social media and other sources. At this rate, 2016 might equal or surpass the number of people killed by the policemen in 2015- 990.

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