Public sector banks having fund exposure to the bankrupt real estate firm HDIL may have to classify the loans given to it as non-performing assets (NPA or bad loans) under the RBI norms, make provisions for them and report these to the exchanges, according to official sources here.
So far, the Reserve Bank of India (RBI) has not given any directions in this regard as fund exposure of individual banks are their autonomous commercial decisions even when an account has gone default and the promoter of the defaulting company is arrested.
The sources, however, said that RBI norms on NPA classifications and provisionin are clear and public sector banks (PSBs) must know when to implement these.
Though PSBs are yet to reveal their exposures in HDIL, the real estate firm’s annual report says it has a debt of Rs 1,500 crore and mentions Allahabad Bank, Andhra Bank, Bank of India, UCO Bank, Union Bank of India, Central Bank of India, LIC and IDBI Bank among its lenders.
Some private banks are also believed to have lent to HDIL and the loans were raised by the company on the personal guarantee of the Chairman and MD, who has been arrested.
Last week, Mumbai Police arrested HDIL directors, Rakesh Wadhawan and his son Sarang Wadhawan, in relation to the Rs 4,355-crore fraud at the Punjab and Maharashtra Cooperative (PMC) Bank .
The RBI guidelines on NPAs state mandates lenders to start the resolution process even if there was a one-day default.
HDIL is currently in default with various banks and Bank of India had taken the real estate firm to the National Company Law Tribunal (NCLT) for recovering dues of Rs 522 crore before the alleged role of HDIL in the Punjab and Maharashtra Cooperative Bank fradulent deals came to light. The case is currently under insolvency and Bankruptcy Code (IBC).
According to an official source, multiple investigative agencies probing the company also limits the recovery prospects for banks of their loans to HDIL as it limits their rights to the assets of the defaulting company.
On the impact of the concurrent processes of the NCLT and the Enforcement Directorate (ED) on banks recovering their loans, disputes practitioner and Partner at Khaitan and Company, Diwakar Maheshwari, said: “NCLT’s mandate under the insolvency law is to judicially determine the aspect of default on part of the debtor to its financial creditors. Any antecedent wrongdoing amounting to attracting any criminal proceedings is the exclusive domain of the respective agency, be it CBI, ED or SFIO or NCLT, does not seem to have much of a say in this aspect under the insolvency law”.
“It is imperative to have a high degree of coherence between the various independent investigating bodies and the judicial process under the insolvency law to obviate any inter se conflict of interest. This can largely be achieved either by legislative guidance or by judicial determination,” he added.
Regarding the duty of banks to provide details to exchanges on their amount of dues pending, Maheshwari said that “banks should completely adhere to all its reporting requirements mandated by law as breaching of the same has severe legal consequences”.
IBM sells its Watson healthcare assets to Francisco Partners
IBM has announced to sell healthcare data and analytics assets from the company (currently part of the IBM Watson Health business) to Francisco Partners, a leading global investment firm.
Although financial terms of the transaction were not disclosed but previous reports pegged the value at around $1 billion.
The assets acquired by Francisco Partners include extensive and diverse data sets and products, including Health Insights, MarketScan, Clinical Development, Social Program Management, Micromedex, and imaging software offerings.
The transaction is expected to close in the second quarter of this year, IBM said in a statement late on Friday.
“The agreement with Francisco Partners is a clear next step as IBM becomes even more focused on our platform-based hybrid cloud and AI strategy,” said Tom Rosamilia, Senior Vice President, IBM Software.
“IBM remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT.”
Watson was one of IBM’s highest-profile initiatives in recent years and a big bet on the growing healthcare sector.
IBM currently has a market value of $108 billion, way behind its Cloud-computing rivals like Amazon and Microsoft.
In its fourth quarter, cognitive applications revenue, which includes Watson Health, came to $1.5 billion, a decrease of 2 per cent year over year.
IBM Watson was one of the “strategic imperatives” under former CEO Ginni Rometty.
“We have followed IBM’s journey in healthcare data and analytics for a number of years and have a deep appreciation for its portfolio of innovative healthcare products,” said Ezra Perlman, Co-President at Francisco Partners.
Under the terms of the agreement, the current management team will continue in similar roles in the new standalone company, serving existing clients in life sciences, provider, imaging, payer and employer, and government health and human services sectors.
Confirm willingness to fund debt owned to lenders: FRL independent directors to Amazon
Future Retail’s independent directors have asked e-commerce giant Amazon if it is willing to fund Rs 3,500 crore to repay the retail company’s lenders.
Notably, the question to Amazon was posted after the e-commerce giant in an earlier letter to independent directors objected to the sale of Future Retail Ltd (FRL)’s small-format stores.
“FRL is in need for cash infusion urgently in order to repay its lenders. FRL is required to pay its lenders Rs 3,500 crore by January 29, failing which it will be classified as an NPA,” said the letter dated January 21.
“Since you are objecting to the sale of small-format sales, the proceeds of which were to be used to repay lenders and thereby avoid NPA classification, please confirm that you are willing to fund this amount by Monday through an unsecured, long-term loan, subordinated to FRL’s existing lenders or any other mutually suitable and legally acceptable structure.”
Besides, the letter to e-commerce giant said, “If you do so, FRL will use such funds in order to repay FRL’s existing lenders. Alternatively, you are also free to engage with the lenders so that we do not fall foul of our OTR process or obligations.”
Accordingly, the independent directors asked the e-commerce giant to provide the confirmations for such funds by January 22, 2022.
“Once you have provided these confirmations in writing and agree to infuse Rs 3,500 crore in order to repay FRL’s lenders by January 29, 2022, we would be happy to assess a detailed proposal and meet Amazon India Head Abhijeet Muzumdar.”
Furthermore, the letter asked Amazon, “Coming to the specific aspects of your proposal — we note that your letter refers to a potential transaction between Samara Capital and FRL as a ‘solution’.”
“In this regard, you are requested to confirm if Amazon can act on behalf of Samara Capital and has the authority to negotiate and finalise such transaction on its behalf.”
It asked Amazon to confirm the structure for the proposed transaction, and that the Manager of Samara Capital is owned-and-controlled by resident Indians.
“As you know, FRL is in the multi-brand retail sector and FDI in this sector is restricted. You are also aware that Amazon’s transaction in Future Coupons, has resulted in regulatory scrutiny, including by the Competition Commission of India, as well as enquiries by the Enforcement Directorate.”
“It is therefore critical that any investment being proposed is in compliance with all applicable laws, including FDI laws, CCI regulations and SEBI regulations, and that any such transaction should not raise further regulatory scrutiny.”
Vodafone Idea’s net losses widen YoY in Q3FY22, ARPU improves sequentially
Telecom service provider Vodafone Idea’s net losses widened year-on-year to Rs 7,230 crore during the Q3FY22.
In the same quarter last fiscal, it was Rs 4,532 crore. In Q2FY22, it was Rs 7,132 crore.
Revenue from operations during the quarter declined to Rs 9,717 from Rs 10,894 crore in the same period in the corresponding fiscal.
However, Average Revenue Per User during the quarter stood at Rs 115, as against Rs 109 in Q2FY22, an increase of 5.2 per cent quarter-on-quarter.
“We remain focused on executing our strategy to improve our competitive position and win in the marketplace. Separately, we have opted for upfront conversion of interest arising from deferment of spectrum and AGR dues into equity,” MD and CEO Ravinder Takkar said.
“Revenue for the quarter was Rs 97.2 billion, a quarter-on-quarter improvement of 3.3 per cent, aided by several tariff interventions including the recent tariff hikes taken by all operators in November 2021.”
The telecom company continued to invest in 4G to increase its coverage and capacity, it said in a statement.
“During the quarter, we added 4,000 4G FDD sites primarily through refarming of 2G/3G spectrum to expand our 4G coverage and capacity as well as continued to upgrade our core and transmission network,” the company said.
In late November 2021, Vofafone Idea, along with Bharti Airtel and Reliance Jio, raised tariffs on prepaid customers by around 20 per cent.
The upward revision in tariffs helped Vodafone Idea in increasing its ARPU by five per cent in Q3FY22, it said.
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