Is the two-section ordinance key to India’s bulging NPA crisis?

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By Vinod Kothari, (vinod@vinodkothari.com)
The much-awaited ordinance, expected to make a tangible impact on India’s crisis of piling non-performing assets (NPA), was signed into law by the President on 5 May 2017. The Ordinance, consisting of barely two sections, makes amendments to the regulatory framework of banking in India, the Banking Regulation Act. After reading the law, one is forced to ask if this is what was holding up the resolution of NPA crisis in the country. Did it actually have to take all this time?

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Majority Shareholders: New Dictators in a Democratic Institution by Parul Bansal

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In this era, where the country is going through immense economic growth, more and more investors are coming up with the intention to invest in the equity of the companies. Such investments lead to acquisition of interest and rights by the investors in the company. Intention of every investor varies from each other. Where one invests with the intention to earn short term profit by trading in the securities of the company, the other may invest with an intention of long term investment and enjoying the dividend ownership and / or controlling rights over the company. While each and every investor does not participate into the everyday affairs of the business, however, with the level of transparency being visualised, each investor, especially, the long term investors surely have a crucial role to play in the company. Read more →

Relaxing the quantitative criteria required by JLF for approving a restructuring plan by Nitu Poddar & Vallari Dubey

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RBI’s fast move in view of its latest powers granted through the Banking Ordinance

 

The Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP) work on the principle of indentifying the stress in a borrower entity and cure it at its nascent stage itself. The intent is to preserve the “economic value” of the underlying assets against the loan extended by financial creditor.

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RBI proposed draft regulations for Cross Border Mergers by Somesh Lund

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The Reserve Bank of India (RBI) on 28th April, 2017[1] proposed draft of Foreign Exchange Management (Cross border Merger) Regulations, 2017 under Foreign Exchange Management Act, 1999 in relation to cross border mergers and is accepting public comments till 9th May, 2017. These regulations cover merger, demerger, amalgamation or arrangements between Indian company (ies) and foreign company (ies).

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Accounting treatment of securitization transactions undertaken by financial entities in India

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By Vijaylakshmi Agarwal & Kanishka Jain, (finserv@vinodkothari.com) 

1.     Introduction

Presently, the accounting treatment for securitization transaction is unclear and ambiguous despite a clear convergence with IFRS. The accounting principle for securitization was contained in AS 30 (based on IAS 39). The ICAI had originally promulgated AS 30 (based on IAS 39) in the year 2009, but was kept in abeyance, and subsequently repealed[1], while IND AS 109 is applicable from the year 2018. Therefore currently, there is no standard as such dealing with securitization for such companies on which IFRS is not applicable. Therefore for the interim period i.e. from 2015 to 2018, there are no standards governing the accounting for securitization in existence. Read more →

A decade after the Global Financial Crisis – Indian Securitisation market poised for a leap forward, by Vinod Kothari & Abhirup Ghosh

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With the taxation issues resolved in the Budget 2016, and foreign portfolio investors allowed to invest in asset backed securities, Indian securitisation market is poised for a big leap forward. The indicative data available for the financial year 2016-17 mark a sharp 60% increase in the volume of pass-through securities (PTCs), signaling the much sharper growth to come.

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A Two-section Ordinance, holding the key to India’s NPA crisis By Vinod Kothari

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The much-awaited ordinance, expected to make a tangible impact on India’s crisis of piling non-performing loans, was signed into a law by the President on 5th May 2017. The Ordinance, consisting of barely two sections, makes amendments to the regulatory framework of banking in India, viz., the Banking Regulation Act. After reading the law, one is forced to think – if this is what was holding up the resolution of NPA crisis in the country, did it actually have to take all this time?

Read more →