Status of e Auction of Properties by Indian Banks in India

Status of e Auctions of properties by Indian Banks as on 04/11/2013

Ministry of Finance making it mandatory for all commercial banks to move from physical auctions to e-auction mode for all NPA cases under the Debt Recovery Tribunal (DRT).

During the meeting of General managers (Recovery/Legal) of all Public Sector Banks (PSBs) held on November 1, 2012, PSBs were advised that all auctions of the immovable properties under ‘The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002’ be done through e-Auction with a view to conduct free, fair and transparent auctions.
In line with the instructions from the Government, the PSBs have already finalised the service provider for e-auctions and many banks have started conducting e-auctions of the immovable properties under SARFAESI Act.

Statement showing the number of properties being auctioned by different Banks & with different e – Auction service providers are furnished below.

Status of E-auctions – 04.11.2013

State Bank of India, SARB, Nampally, Hyderabad”s notice

sbh

Dear Home loan Borrowers of State Bank of India,

    ATTENTION

State Bank of India, SARB, Nampally is conducting

MEGA BANK ADALAT

on 26.6.2013 & 27.6.2013 from 10.30 AM to 5.30 PM.

If your Home loan is pending since long time,
If your loan account is categorised as NPA,
If Bank has initiated legal action against your home loan,
If you want to explain about your loan account & sort out the loan account,
Please approach Bank and settle your Home loans under One time settlement scheme.

Debt Recovery Tribunal fines Jayant Patil (Minister for Rural Development)

The Debt Recovery Tribunal, Pune has imposed a fine of Rs 500 on minister for rural development Jayant Patil for delay in filing his say in a case, where he has been named as respondent.

In order to recover its debts there was a move to auction the Raje Vijaysinh Daphale Co-operative Sugar Factor Limited at Jat in Sangli district.

Former factory director Kundalik Dudhal and four others had filed a miscellaneous application through their lawyer Anita Katariya in 2012 seeking a stay on the auction.

The application named Patil, the Maharashtra State Co-operative Bank Limited, Mumbai, Raje Vijaysinh Daphale Co-operative Sugar Factor limited, Sangli, the commissioner of Sugar Maharashtra State, Rajarambapu co-operative sugar factory limited and state of Maharashtra as respondents.

The DRT had asked the respondents to file their says. Instead of filing a written statement, Patil’s lawyer had preferred to submit an application urging Patil’s name be deleted from the matter, since he has no role in it.

Additional sessions judge Rajiv Vikram Singh Gautam stated in his order, “No say order was passed on October 3, 2012. Say on the miscellaneous application was filed on March 4, this year. The say will be taken on record on payment of the cost of Rs 500.”

SBI Chief: New NPA provisioning norms to have minimal impact

SBI chairman Pratip Chaudhuri said “Total impact will be around Rs. 200 crore a year which will be less than 1 per cent on a profit before tax (PBT) basis,” speaking to reporters on the sidelines of an international banking summit organised by the industry lobby IMC in Mumbai speaking about the revised on non-performing assets (NPAs) and restructuring norms  set by Reserve Bank of India (RBI).

On May 19, the central bank revised the norms on restructuring and NPA accounts, increasing the provisioning percentage on restructured accounts besides making loan recasts tougher by increasing promoters contribution. Under the new rules, from June 1, banks must set aside provisioning for five per cent of the value of a loan that is newly restructured, from two per cent previously.

“All restructured accounts which have been classified as NPAs upon restructuring, would be eligible for upgrade to the standard category after observation of ‘satisfactory performance’ during the ‘specified period’,” the RBI had said. According to Icra, banks may have to keep an additional Rs 1,500-2,500 crore as provisions this fiscal for their existing recast loan book.

On the possible impact of reducing deposit rates on retail rates, Mr Chaudhuri said it would depend on what competitors are offering on other instruments.

SBI Keeping NPAs in Check

In a resent report by the IndianExpress  a senior SBI official commented “A bad loan portfolio of R1,000 crore has been identified which may be put up for sale to an asset reconstruction company if we get a good price,” . The sale of R1,000 crore in bad assets is part of a bigger strategy at the bank to bring down growing pile of bad loans which hit R51,189 crore in terms of Gross NPAs and R21,956 crore in terms of net NPAs as on March 31, 2013.

SBI is also trying to push stressed corporates to consider sale of assets to recover dues.

One such case is  Suzlon, where lenders are pushing for a sale of non-core assets along with asking Suzlon to look at sale of certain core windmill assets which may may not be generating adequate returns, said officials.

Last year, bankers brokered a deal between Lloyds Steel and Uttam Galva, in which Uttam Galva bought out Lloyds Steel and agreed to take on the company’s debt, thereby making it easier for banks to recover their outstanding loans.

In the stressed textile sector bankers are pushing units to consolidate or downsize in keeping with the demand realities of the market.

Convincing managements to sell down assets might be an easier way for bankers to recover money, but the prevailing conditions in the market is making it tough to find buyers, say bankers and analysts.

However bankers are being careful not to push for asset sales at rock bottom prices.  “We should not sell assets where the price being offered is below the reserve price,” says Soundara Kumar, the State Bank of India DMD. In the absence of an easy way out of the bad loan problem, the banking industry is also looking at more innovative ways to recover their dues.

Keeping in mind that a significant portion of new NPAs is coming from the SME sector SBI also SBI introduced the concept of “bank adalats” where bankers meet SME clients and try and arrive at a one-time settlement.  In FY13, SBI listed more than 250 companies as willful defaulters which then prevents these companies from accessing finance from any other registered financial institution and pushes them towards one-time settlements.

ICRA: NPAs to double in Two years on revised RBI norms

ICRA  one of the most experienced Credit Rating Agencies in the country has released its comments on Reserve Bank of India (RBI) final guidelines on asset classification and provisioning norms for restructured accounts, released on May 30, 2013.

The ICRA report said there would be a “A steep increase in the reported NPA percentage in 2015-16 from an estimated 3.3% as on March 2013 to as high as 5.5%-6.5% as in June 30, 2015.”  due to withdrawal of regulatory forbearance previously standard accounts are allowed to remain standard and NPA accounts allowed not to deteriorate further in asset classification, Now according to the new guidelines standard account on restructuring (for reasons other than change in DCCO) would be immediately be classified as NPA on restructuring and NPA Account would continue to slip into harder buckets (sub-standard to Doubtful and loss) on non-payment (with reference to the pre-restructuring repayment schedule).

However due to reduction in specified period to one year of satisfactory performance of standards restructured accounts from earlier two years could also facilitate faster upgradation of non stressed restructured accounts. New guidelines are likely to reduce the level of restructured advances as well as flow of restructured advances for most banks because of special dispensation to projects, As a result vulnerable accounts (Gross NPAs+ restructured accounts) in the system are likely to drop further in June 2013 from estimated 8.2%-8.5% as on March 31, 2013 (9.6% as on December 31, 2012).

The ICRA report also commented that incremental flow of restructured accounts with 5% provisioning could impact annual profitability by 2-2.5 basis points and there could be no impact on FY14 profitability as negative impact of increase in provisioning on existing restructured advances could be balanced by decline in stock of restructured advances but medium Term profitability could get impacted by 1-2 bps in relation to Average Total Assets (ATA)

Read More About ICRA Report here – Livemint Economic TimesMoneycontrol

Jammu and Kashmir seeks to enact SARFAESI Act

The Jammu and Kashmir government will soon seek to enact the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities (SARFAESI Act) Act in the state very shortly as part of a two-pronged strategy to increase the credit-deposit ratio of the banks operating in the state as per the statement made by The Governor of Reserve Bank of India, D Subbarao on May 9th.

The SARFAESI Act is not presently in force in Jammu and Kashmir due to the special status the state enjoys by virtue of Article 370.

Referring to the meeting of The State Level Bankers Committee In Srinagar last month, Subbarao said the Chief Minister has also assured him that the District Administration including the District Industries Centres in the state will generate credit proposals for increasing the credit-deposit ratio of the banks in the state.

The RBI governor said there was a suggestion that this aggregate target of 40 per cent credit-deposit ratio should be spread across banks in all 22 districts of the state and be made into an operational plan. He said that the plan would be submitted by latest June 15th to the RBI.

Subbarao also said the Reserve Bank has asked banks in the state to prepare financial inclusion plans for providing banking access to 5400 villages of Jammu and Kashmir with population of less than 2000 people.

However this proposal has recieved opposition from Kashmir-based traders and industrialists who have resolved to fight tooth and nail any government proposal to introduce the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI Act) Act in the state.

Kashmir Economic Alliance, said the introduction of this Act will act harshly against the business fraternity of Kashmir, which according to them were already facing a number of problems. Muhammad Yaseen Khan, Chairman, KEA, said “It is unfortunate that the state government has expressed its willingness to introduce the Act,we will launch strong agitation and come on roads.”

Federation Chamber of Industries Kashmir (FCIK), a representative body of Kashmir industry and trade, also opposed any move to introduce SARFAEST Act in Jammu and Kashmir. Shakeel Qalandar, former president of Federation Chamber of Industries Kashmir expressed surprise over the assurance of Omar Abdullah to the RBI Governor, saying “it is a severe attempt to dilute the Article 370, but any attempt to do that would be opposed.”