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Thursday,02-July-2020

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RBI’s revised debt resolution rules likely post Lok Sabha election 2019

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RBI

The RBI’s revised stress assets resolution circular is likely to be out after the elections to clear the model code of conduct, and also the regulator may need time to have consultations with legal experts, industry and government before bringing the framework out, official sources said.

This would mean that the widely anticipated RBI circular would not be issued before June. The delay could also halt resolution of several stressed assets as lenders are looking for clear directions from the banking regulator before moving ahead to resolve accounts.

“After the court judgement, the RBI is extra careful to issue any other circular without proper consultation and vetting. This could result in some delays, but ultimately better regulations would flow,” said an official source.

The Supreme Court on April 2 struck down a February 12, 2018 circular of the RBI that asked banks to initiate insolvency process against companies even if there was a day’s delay in payment of dues.

As per the circular, banks were told to start the resolution process as soon as a borrower defaulted on a term loan and were given 180 days to cure it, failing which the account would have to be referred to the National Company Law Tribunal (NCLT).

While the new circular on debt resolution is still being discussed and debated, it is expected that RBI is likely to adopt a more accommodative approach towards resolution of stressed assets in the new circular.

Sources said the major contention in the controversial February 12, 2018, circular that got challenged in court leading to the quashing of the circular will be done away with in the new circular. Instead, banks will be given more time to identify and qualify an account as bad debt and also be given more time to resolve a case.

The RBI is likely to retain the main contours of its February 12, 2018 circular while making the referral to NCLT non-compulsory, sources told IANS.

It may, however, be guided by suggestions earlier given by Indian Banking Association (IBA) for debt resolution for classification of NPA and resolution of bad assets.

Bankers had suggested qualifying a loan as bad debt if the default was for a period of at least 90 days and not one day as was the case in the February 12 circular. A bank-led resolution should start only after that, according to bankers.

Moreover, it had suggested a 60-day incubation period post this time for identifying the default. After this, banks would resolve a case within 180 days and consider referring the case to NCLT post that period, if the majority of the lenders agreed.

The revised circular on NPAs, however, is unlikely to include the pre-IBC restructuring tools like Strategic Debt Restructuring (SDR), Corporate Debt Restructuring (CDR), Sustainable Structuring of Stressed Assets or S4A that were phased out by RBI earlier.

In the previous circular the RBI had withdrawn all existing debt restructuring schemes – S4A, CDR, JLF, and SDR – and asked banks to draw up resolution plans for all assets where the banking sector’s exposure was more than Rs 2,000 crore

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Business

Nokia phone maker acquires cybersecurity firm Valona Labs

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Nokia. (Photo: Twitter/@nokia)

HMD Global, the home of Nokia phones, on Thursday announced it has acquired assets of mobile, enterprise and cybersecurity software firm Valona Labs for an undisclosed amount.

The acquisition of new asset may further build upon the company’s reputation as a global leader in smartphone software updates and security.

“As a company that believes every phone should be built upon the foundations of security, reliability and dependability, we are proud to announce the acquisition of assets of Valona Labs – a renowned and trusted mobile software business,” Juho Sarvikas, Chief Product Officer, HMD Global, said in a statement.

The smartphone maker is also launching a brand-new Centre of Excellence in Tampere, Finland.

The new centre will specialise in software, security and services, propelling HMD Global’s transition from a purely hardware business, to a combined hardware and services company, diversifying its intellectual property and differentiating its unique go-to-market offering.

In March this year, HMD Global entered a new service category with the launch of its global data roaming service, HMD Connect, which enables people around the world to benefit from a hassle-free data SIM.

Over the coming months, the centre in Tampere will concentrate on developing this service further and begin work on other services such as remote device locking, enterprise mobility management, mobile device software security, secure network communication and black box testing.

The centre will create an immediate need to hire new technical talent in the region and will be led by the former award-winning Head of Unit for Valona Labs, Ari Heikkinen.

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Business

Bajaj Auto reports 31 % decline in June sales

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Bajaj Auto.

Two-wheeler and three-wheeler manufacturer Bajaj Auto on Thursday reported a fall of 31 per cent year-on-year in total sales, including exports, for June 2020.

The rate of fall on a sequential basis has narrowed down.

According to the company, its total sales during the month under review fell to 2,78,097 units from 4,04,624 units sold during the corresponding month of 2019.

Similarly, Bajaj Auto’s total domestic sales stood at 1,51,189 units — down 34 per cent — from 2,29,225 units sold in June last year.

The two- and three-wheeler manufacturer’s overall exports declined by 28 per cent to 1,26,908 units from 1,75,399 units shipped out during the like month of 2019.

In term of two-wheelers, the company’s total sales fell 27 per cent to 2,55, 122 units from 3,51,291 units sold in June last year.

The company’s commercial vehicles’ sales during the month under review declined by 57 per cent to 22,975 units from 53,333 units sold during the like period of last year.

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Business

Pause on petrol, diesel price hike for 3rd consecutive day

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Petrol

Fuel prices seems to have gone for a longer pause after rising in 22 of the past 26 days as oil marketing companies (OMC) kept the pump prices of petrol and diesel unchanged again on Thursday.

In the national capital, petrol price on Thursday stood at Rs 80.43 per litre and diesel at Rs 80.53 a litre, same level as Tuesday and Wednesday when the OMCs went for a pause and kept the prices unchanged.

Sources in public sector oil companies said that consumers could get relief from the regular price rise of the two petroleum products in the coming days as the pause for three days now could be replicated in several of the coming days due to softening of the global oil prices.

Also, the oil companies have covered most of the shortfall arising when for 82 continuous days (from March 14 to June 6) petrol and diesel prices remained unchanged while government substantially raised taxes on the products.

Starting from June 7, petrol price has increased by Rs 9.17 and diesel by Rs 11.14 in the national capital. In the other cities the magnitude of increase was similar. With global oil prices remaining around $ 40 a barrel, any fall in oil prices now may result in fuel consumers actually getting the benefit of a cut in the petrol and diesel prices.

But oil inventories in the US have fallen and that may again bump up the prices that could take crude closer to $ 45 a barrel mark. If this happens, and the price level is sustained for some time, fuel price could rise further in India.

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