will be much lower than what the government had originally budgeted for. Against dividend payments of Rs 10,433 crore from banks, financial institutions and insurers in the budget estimates for 2015-16, the government has more than halved its projections to under Rs 5,100 crore in the revised estimates. Next fiscal, it expects a pickup with payout from these entities estimated to rise nearly 37% to Rs 6,974 crore.
Of this nearly a third or Rs 2,215 crore will come from LIC, followed by State Bank of India (Rs 1,143 crore) and Bank of Baroda (Rs 501 crore).
The next fiscal will be the second year in a row when nine banks would not be making an annual payout to its shareholders, led by the government. This year, over 32 government-owned banks, FIs and insurance companies are not going to pay dividends. All these entities, barring IIFCL and Bharatiya Mahila Bank, were budgeted to give hefty dividends during the current fiscal. The next fiscal will be the second year in a row when nine banks would not be making an annual payout to its shareholders, led by the government. This year, more than half of the PSBs, FIs and insurance companies are not going to pay dividends. All these entities, barring IIFCL and Bharatiya Mahila Bank, were budgeted to shell out hefty dividends during the current fiscal.
RBI's insistence on classifying several loans, where repayments have been irregular, has forced many PSBs including Bank of Baroda, Bank of India, IDBI Bank, Indian Overseas Bank and Oriental Bank of Commerce into losses. Others such as SBI and PNB have reported a sharp fall in profits as they set aside funds to cover for potential non-payment from several companies.
Analysts have argued that the government should seek lower dividends so that those earning profits can plough back a part of the funds to meet the capital requirements.
The rise in bad debt and regulatory requirements has forced the government to infuse more equity to public sector banks as the Centre has committed to maintain majority stake in these entities.
The amount of bad loans of public sector banks have increased by nearly Rs.1 lakh crore during the first nine months of the current fiscal, Finance Minister Arun Jaitley recently said. “The gross Non Performing Assets (NPAs) of the PSBs increased from 5.43 per cent as on March 2015 to 7.30 per cent as on December 2015,” he told Rajya Sabha. Gross NPAs of PSBs increased from Rs. 2,67,065 lakh crore in March 2015 to Rs. 3,61,731 lakh crore in December 2015. Thus, there is an increase of Rs. 94,666 crore over the nine months of the current fiscal 2015-16. He also said the government has taken specific measures to address issues in sectors such as infrastructure, steel and textiles incidence of NPAs is high.
Making of a NPA ?
ReplyDeleteA news report tells about NHA ( National Highway Authority ) planning a 13 Km long pod-based Personal Rapid Transit ( PRT ) network in Gurgaon , at a cost of Rs 850 Crores , which will be Built / Owned / Operated ( BOT ) , by a private contractor for a period of 25 years , during which , it will recover the cost ( and , make some profit ? )
SALIENT FEATURES :
* Pods will carry 5 passengers who will be picked up at Docking Stations
* A group can also " hire " an entire pod to take to desired destination ( 16 in all )
* Pods will be suspended from overhead rails, and run on a guide way at close intervals
* Pods are " automated " ( just touch destination icon on a screen ? )
MY TAKE :
* Dozens of Highways built under BOT system remain un-built or languish for want of sufficient paying traffic , resulting in contractors having suffered huge losses and now , NDA government trying to salvage these . Contractors are desperately trying to get out of their legal commitments
* With no contractor coming forward for new projects , BOT system is nearly ditched and Govt has decided that it will finance future road projects, on its own
* Contractors are unable to repay to banks , Rs 40,000 Crores worth loans ( I presume , in
case of PRT as well , private contractor will need a bank loan )
* As to the ticket-price to be charged , a dispute has been going on ( now pending in Court ) , between Govt of Maharashtra and Reliance , in case of Mumbai Metro , for 2 years
* Trans Harbor Link project ( in Mumbai ) was tendered and scrapped twice on the question of " Projected Traffic " and " Projected Revenue " and " Viability Gap Funding " , delaying the project by 10 years and consequent cost-escalation of 200 % !
* Has PRT compared its " Ticket Price per Km " with ,
* Private and State owned buses plying on Delhi / Gurgaon roads ?
* Delhi Metro ?
* Private taxis and auto-rickshaws ?
* Uber / Ola ?
* PRT can run only on a FIXED GUIDEWAY , and to DEFINED DESTINATIONs only , whereas private taxis can take a passenger ANYWHERE
This means , PRT cannot compete with the destination FLEXIBILITY of taxis !
That means , its pricing / timings would need to be better than Delhi Metro !
* Is it not highly " probable " that , much before PRT starts ( 2 years , at least ? ), private air-conditioned , Motorbike Taxis will arrive in Delhi , making PRT a " Non Starter " ?
I wonder if those bankers lending loan to PRT builder will search for answers to the above mentioned issues in DPR
Or , as is the current practice , they will write-off Rs 850 cr as NPA , when time comes !
I hope NDA government / RBI spend more time / effort / energy to lay down " loan approval criteria " which will prevent future NPAs , than on cleaning up the current NPAs !
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hemenparekh.in / blogs
21 March 2016