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Tightening of norms may increase NBFCs’ headline NPAs: Ind-Ra

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Tightening of norms may increase non-banking finance companies’ (NBFCs) headline non-performing advances (NPA) by around one third, India Ratings and Research (Ind-Ra) said.

“The Reserve Bank of India’s (RBI) clarification on NPA accounting is likely to increase NPAs by around one third for non-banking finance companies (NBFCs),” the ratings agency said.

“However, the impact on provisioning could be modest, given NBFCs are using ‘IND-As’ and generally for higher rated NBFCs, provision policy is more conservative than ‘IRAC’ requirements.”

Besides, the agency pointed out that NBFCs would have to invest in systems and processes to comply with daily stamping requirements.

“Ind-Ra understands that NBFCs have presented to the RBI for providing a transition period on this requirement.”

On the other aspects of RBI clarification, the agency said that NBFCs generally classify an account as stage 3 when there is a payment overdue for more than 90 days. Typically for monthly payments, this would be when there are 3 or more instalments overdue on any account.

“However, when the borrower makes part payment such that the total overdue is less than three instalments, the account is removed from NPA classification and classified as a standard asset, although it remains in the overdue category in case not all overdues are cleared.”

“The RBI clarification would allow stage 3 assets to become standard only when all the overdues or arrears (including interest) are cleared.”

Furthermore, the agency pointed out that NBFC borrowers are generally a weak class of borrowers and have volatile cash flows which could mean that once an account has been classified as NPA, “it could remain there for a considerable period as the ability to clear all dues may be constrained”.

In terms of the provisioning trend, NBFCs have transitioned to the ‘Ind-As’ regime and the provision created on any account is based on the historical data on “roll backs and roll forwards” and the credit loss experienced on accounts in different overdue buckets.

“This is different from the provisioning created on the accounts as per the standard IRAC norms. The NPA provisioning under Ind-As depends on the asset class and the riskiness of the account.”

“During Covid times, NBFCs have increased their provisioning cover for standard as well as NPA accounts. The new norms would restrict the movement from stage 3 to standard category unless all the overdues are cleared. So, accounts which have paid some part of the overdues would remain in NPA category and have to be provided accordingly.”

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New multi-tracking projects to boost rail infrastructure across 4 states: PM Modi

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New Delhi, Aug 19: Prime Minister Narendra Modi said on Wednesday that four multi-tracking projects that have been approved by the Cabinet will provide a major boost to railway infrastructure and connectivity across Andhra Pradesh, Odisha, Tamil Nadu and West Bengal.

These projects will have many benefits, like strengthening passenger and freight movement, reducing congestion and greater logistics efficiency. The better connectivity will also facilitate commerce and tourism in these states, PM Modi said in a post on X.

The multi-tracking projects will add important capacity to the Indian Railways network and benefit lakhs of people, he added.

The projects, which entail a total investment of Rs 9,450 crore, will be completed by 2030-31.

The projects include the Kharagpur – Bhadrak (Ranital) 4th Line across a stretch of 173 km covering West Bengal and Odisha; the second project is a 4th line from Bhadrak to Haridaspur across 75 km in Odisha, while the third is the Gummidipundi – Gudur 3rd and 4th line extending across a distance of 90 km in Andhra Pradesh and Tamil Nadu. The fourth project is the Cuttack to Paradeep (Badabandha) 3rd and 4th lines to cover a 72 km route in Odisha.

The projects are in line with the Prime Minister’s vision of a New India, which will make people of the region “Atmanirbhar” by way of comprehensive development in the area, which will enhance employment opportunities, a statement said.

The projects are planned on the PM-Gati Shakti National Master Plan with a focus on enhancing multi-modal connectivity and logistics efficiency through integrated planning and stakeholder consultations. These projects will provide seamless connectivity for movement of people, goods and services.

The four projects covering eight districts across West Bengal, Odisha, Tamil Nadu and Andhra Pradesh will increase the existing network of Indian Railways by about 410 kms. The proposed multi-tracking projects will enhance connectivity to approximately 6,448 villages with a population of about 60 lakhs.

The proposed capacity enhancement will improve rail connectivity to several prominent tourist destinations across the country, including Kuldiha Wildlife Sanctuary, Bhitarkanika National Park, Maa Bhadrakali temple, Maa Dhamarai temple, Panchalingeswar Temple, Talsari–Udaypur and Chandipur Beach, Pulicat Lake, Nelapattu Bird Sanctuary, Lord Veeraraghava Perumal Temple, Gada Kujanga Jagannath Temple, Sarala Temple, Dhabaleswar Temple and Lalitgiri, a Buddhist site.

The proposed projects are essential routes for transportation of commodities such as coal, iron ore, cement, iron and steel, containers, automobiles and food grains.

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Cabinet okays key Bihar road project for Rs 3,590 crore to boost connectivity, cut congestion

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New Delhi, Aug 19: In a bid to expand Bihar’s National Highway network and facilitate faster movement of goods and passengers, the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved the upgradation of an 82.578 km length of the Muzaffarpur-Sitamarhi-Sonbarsa Section of NH-22 to four-lane, at a total capital cost of Rs 3,590.73 crore.

The project acts as a key feeder corridor connecting the India–Nepal border at Sonbarsa with economic centres like Muzaffarpur at NH-27 (East–West Corridor).

According to the Cabinet, this will significantly reduce congestion in densely populated areas of Muzaffarpur, Muksudpur, Runni Saidpur, Thumma, Dumra, Bhutahi, and Sonbarsa.

“The Muzaffarpur–Sitamarhi–Sonbarsa stretch of NH-22 holds significant strategic and economic relevance, ensuring seamless linkage to the national freight grid,” a Cabinet communique said.

It not only enhances connectivity to industrial zones like Barauni and riverine logistics hubs but also strengthens cross-border passenger and cargo movement via the nearby Land Port at Bhithamore.

Additionally, the upgraded corridor will enhance connectivity to five PM Gati-Shakti Economic Nodes (four Industrial Estates and one Mega Food Park), four Social Nodes (Baba Garibnath Temple, Mata Janki Temple, Punaura Dham, Muzaffarpur and Sitamarhi aspirational Districts), and two Logistic Nodes (Muzaffarpur and Sitamarhi Railway Stations).

Improved connectivity will facilitate efficient movement of goods and agricultural supply chains, support regional economic growth, and provide better access to important cultural and religious destinations such as the Buddhist Circuit and historic Janaki Punaura Dham Temple, Sitamarhi.

According to the Cabinet, the project has been designed for a speed of 100 kmph with an average speed of 80 kmph, having no at-grade median openings, ensuring fast and safe travel.

Moreover, the project has provision for seven major bridges (including a 340-metre-long major bridge over the perennial Bagmati River), three Railway Over Bridges (ROBs), and two flyovers to maintain cross movement of the traffic and ensure safe, high-speed travel.

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Cabinet okays 4 railway projects worth Rs 9,450 crore

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New Delhi, Aug 19: The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Wednesday approved four multi-tracking railway projects with a total investment of Rs 9,450 crore, which will be completed by 2030-31.

The projects include the Kharagpur-Bhadrak (Ranital) 4th Line across a stretch of 173 km covering West Bengal and Odisha; the second project is a 4th line from Bhadrak to Haridaspur across 75 km in Odisha, while the third is the Gummidipundi-Gudur 3rd and 4th line extending across a distance of 90 km in Andhra Pradesh and Tamil Nadu, a Cabinet communique said.

The fourth project is the Cuttack to Paradeep (Badabandha) 3rd and 4th lines to cover a 72 km route in Odisha.

The increased line capacity will significantly enhance mobility, resulting in improved operational efficiency and service reliability for Indian Railways. These multi-tracking proposals are poised to streamline operations and alleviate congestion. The projects are in line with the Prime Minister’s vision of a New India, which will make people of the region “Atmanirbhar” by way of comprehensive development in the area, which will enhance employment opportunities, the statement said.

The projects are planned on the PM-Gati Shakti National Master Plan with a focus on enhancing multi-modal connectivity and logistics efficiency through integrated planning and stakeholder consultations. These projects will provide seamless connectivity for movement of people, goods, and services.

The four projects covering eight districts across West Bengal, Odisha, Tamil Nadu and Andhra Pradesh will increase the existing network of Indian Railways by about 410 km. The proposed multi-tracking projects will enhance connectivity to approximately 6,448 villages with a population of about 60 lakh, the statement said.

The proposed capacity enhancement will improve rail connectivity to several prominent tourist destinations across the country, including the Kuldiha Wildlife Sanctuary, Bhitarkanika National Park, Maa Bhadrakali temple, Maa Dhamarai temple, Panchalingeswar Temple, Talsari–Udaypur and Chandipur Beach, Pulicat Lake, Nelapattu Bird Sanctuary, Lord Veeraraghava Perumal Temple, Gada Kujanga Jagannath Temple, Sarala Temple, Dhabaleswar Temple and Lalitgiri, a Buddhist site.

The proposed projects are essential routes for transportation of commodities such as coal, iron ore, cement, iron and steel, containers, automobiles, food grains, etc. The capacity augmentation works will result in additional freight traffic of magnitude 76 MTPA (Million Tonnes Per Annum). The Railways, being an environment-friendly and energy-efficient mode of transportation, will help both in achieving climate goals and minimising logistics cost of the country, reduce oil import ( around 13 crore litres) and lower CO2 emissions (around 65 crore kg), which is equivalent to the plantation of 2.60 crore trees, the statement added.

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