Government red cards bad bank idea, benches ARC plan
The government has rejected the idea of a bad bank and is at best lukewarm to an asset reconstruction company (ARC) that will take over state-run banks’ toxic loans as it’s not keen on diverting more of taxpayers’ money toward their resolution in this manner. The resolution process under the Insolvency and Bankruptcy Code (IBC) can tackle the bigger bad loans and there are multiple ARCs already functioning in the country, a top government official told ET. “Big cases of loan defaults are already in the process of resolution under the IBC,” said the official. “It won’t make much sense to have a bad bank for smaller nonperforming assets (NPAs) as not much value can be derived from them.”
India notifies rules for income tax computation for foreign firms
The government has notified rules for computation of income tax for foreign companies if they have place of effective management in the country. According to tax experts, it brings clarity on various aspects of the new place of effective management (POEM) regime. Central Board of Direct Taxes (CBDT) has notified a mechanism for calculation of written-down value, and computation of brought-forward loss and unabsorbed depreciation. It has said a company would continue to be treated as a foreign company even after it becomes resident in India.
Fortis Healthcare initiates recovery of funds from Singh brothers
A probe ordered by Fortis Healthcare has found systemic lapses with respect to loans granted to entities related to former promoters, resulting in doubtful recovery, widening of loss, and litigation. The hospital chain posted a net loss of Rs 9.32 billion in the fourth quarter (Q4) of 2017-18, against a loss of Rs 680 million in the same quarter last fiscal year. The loss widened due to exceptional items of Rs 8.33 billion, including Rs 5.8 billion being the provision for inter-corporate deposits (ICDs), among others. The financial result was not reviewed by Deloitte, the company’s auditor.
One-day rule: Defaults jump, hit Rs 1.2 lakh crore
More than 4,000 borrowers with outstanding loans of Rs 1.2 lakh crore have defaulted under the Reserve Bank of India’s (RBI) one-day default norms as on April 30. An RBI circular of February 12 required banks to classify borrowers as defaulters if their repayments are late even by a day. These relate to exposures of Rs 5 crore or more and would not be bad loans; they would be classified as Special Mention Accounts (SMAs). However, if payments are not regularized within 90 days, they would turn bad and be added the existing `10.2 lakh crore pool of non-performing assets.
NCLAT stays NCLT order in 63 Moons case
The National Company Law Appellate Tribunal (NCLAT) on Wednesday stayed the June 4 order of the Chennai bench of the National Company Law Tribunal (NCLT) in the 63 Moons Technologies (formerly Financial Technologies India) matter. With this stay order, no government nominee can be appointed as a director on the board of 63 Moons. There is also a stay on the disqualification of certain past directors of the company. As an interim arrangement, the committee appointed by NCLT in its June 2016 order has been restored, which will now look into matters related to funding of subsidiaries and management of treasury operations.
NCLAT refuses to stay Electro steel delisting
The National Company Law Appellate Tribunal (NCLAT) on Wednesday refused to stay the delisting of Electro steel Steels shares by its new promoter Vedanta. Renaissance Steel, whose bid was rejected by the committee of creditors (CoC), had earlier moved a fresh plea in the appellate tribunal seeking to halt the process. Renaissance has already moved a petition challenging Vedanta’s eligibility to bid for Electro steel. The NCLAT’s two-member bench, headed by Chairman Justice SJ Mukhopadhaya, however, said that all decisions being taken by Vedanta over Electro steel would be subject to the outcome of its final decision on the petition filed by Renaissance.
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