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The uncertain crisis as a DHFL survival is sharp

The uncertain crisis as a DHFL survival is sharp

The mortgage crisis in Deewan Housing and Finance Company Limited (DHFL) has worsened due to two reasons. First of all, the company’s legal auditors sought additional information for meeting their annual results for the fiscal year 2018-19, thereby increasing the suspicion that the company is already under official scrutiny of allegations of fraudulent activities .

Second, to recover the liquidity crisis, the company will require a new equity investment of around Rs 3,000 crore, which is a potential task for its existence.

Shares of DHF on Monday fell by 29% on the Bombay Stock Exchange, in the Bose File on the Bombay Stock Exchange Saturday, that many recent developments “can cause serious doubts about the continuation of the company’s capacity.

” DHFL President and General Manager said on Monday that he expects the company to “resume operations in August 2019”.

But the mortgage bank is struggling to find a strategic investor or equity investor to support its capital base for some time. Unless the bank can deposit sufficient funds, they will not be ready for a loan or recession or will not spoil their business.

According to a report by Mint, in order to maintain the lending operation, the company needs Rs. 2500 crore to Rs. 3 crore for new investments.

Wadhawan claims that the company is out of the crisis due to the perception that it “managed to repay more than Rs 41,800 crore in the last 10 months through securitization of property and repayment groups”.

But this lenders do not have to explain them. DHFL has already made an agreement between creditors and lenders and is going to announce the solution till July 25.

According to media reports, microfinance institutions (lenders) are now considering breaking the rank with the banks and going to the debt collection court. (DRT) cases.

According to the company’s undeclared financial results for the fourth quarter ending March 2019, the company recorded a net loss of Rs.2223 crore in the fourth quarter and a net loss of Rs.1,036 crore for the previous financial year.

The company has outstanding debt of Rs 89,387 crore at the end of March 2019. Thus, the share of banks is Rs 40,000 crore, and the rest are due to many investment funds, savings funds and individual investors.

On 6th June, the legal auditors of Deloitte Haskins and Sales and Chaturvedi and Shah, DHFL sought additional financial information from the company to compile its annual results for fiscal year 2018-19, including Section 143 of the Companies Act, 2013 That includes rules also.

And for the auditor to report suspicious fraud or fraud to the system. DHFL is providing necessary information till July 21.

Apart from this, the revival of the housing finance company is uncertain, given the development, it has delivered it to the brink of collapse.

When the infrastructure and financial services disaster (IL & FS) broke, DHFL was the toughest hit with fund houses, especially investment funds, tightening the rules for refinancing.

In January this year, the Cobrapost News Portal claimed that DHFL had “stolen Rs 31,000 crore from public funds” using loans and advances to Shell companies and other means.

” This has prompted the Serious Fraud Investigation Office to consider the allegation in which the investigation is going on.

While DHFL management denied all allegations of “shell companies” and appointed an accounting firm TP Ostwal and Associates LLP to look into the allegations.

Although the company denied the claims of Kublib, it indicates that there were some discrepancies in the DHFL books.

For example, although DHFL has been accused by the borrower of monitoring the end use of the money, but the accounting firm found that the control of the company in relation to 15 borrowers (loans of Rs 78585 crore) is largely inadequate.

But recent demand by the auditors has only increased the crisis of DHFL.

The fate of banks after 50 years of nationalization

The fate of banks after 50 years of nationalization

Fifty years ago, on July 19, 1969, 14 major private banks were nationalized.

Contradictably, the Golden Jubilee of the event, which was an important step in the process of building a new financial structure for the country, is today not celebrated by the trade unions in the banking sector but by the government today.

The logic of nationalization of banks was simple: Since credit capital is controlled, how it is distributed in the areas, in the social groups and in all areas, determines the path of social development.

If the banks have strong social consequences for the distribution of debt, then this distribution should be subject to social control, where banks should be owned by the state on behalf of the community.

In fact, banks were nationalized shortly, when attempt was made to control social ownership without state ownership, their failure to nationalize as the only possible means of obtaining social control.

Definitely, despite all the promises, nationalization of banks meant that there was no democratization of access to credit, how can it lead to capitalist development in an economy?

But this expanded the scope of capitalist development along with the expansion of banking facilities across the country, which was providing loans to the agricultural sector which was deprived of institutional credit system till then, it made the so-called Green Revolution possible.

It also made financing subject to production requirements, rather than using it in speculative and corporate acquisition strategies.

However, from the very beginning, nationalization of banks had to face huge opposition to large capital, because it was dominated by the financial sector with its own hands. This protest got accelerated after the application of “economic liberalization”.

International financial capital, now a major power that integrates the domestic financial elite of domestic firms, was eager to operate the world without interruption; There was a financial structure in the idea of ​​a big country like India which not only escaped its control but was also owned by the state. To a great extent, an impossible idea.

Isolation of Indian financial system from global finance, which requires state ownership, has emerged significant in the financial crisis in 2008.

For the entire Indian banking system, foreign property was only 7% of total assets. These properties were mainly owned by private sector banks.

, Such as ICICI Nationalized banks rarely have any foreign property, let alone toxic property, which leaves them unchanged due to financial crisis. But this isolation is that which annoys the international capital.

The American administration has put heavy pressure on India to privatize the banking system, at least to privatize the State Bank of India (SBI) as its “signal”.

Lawrence Summers and Timothy Gatherner, US Treasury Secretary, respectively, under the chairmanship of President Bill Clinton and Barack Obama, will visit India and emphasize the privatization of SBI.

However, the Indian government has not been able to raise enough courage to do this, because nationalization of banks has captured the imagination of the people.

Then, a new attack was carried out, that nationalized banks were not profitable, and they had comparatively profitable profitability with private sector banks. It was an ideal red rose: Nationalization of banks was done to serve a social purpose, not to earn maximum profit.

The criterion for judging them was the limit of their service for this social purpose, not the amount of profit they earned; However, this argument was shamelessly put forward to individuals and “slot machines” committees (who want to submit reports to the government) to defame nationalized banks and prepare the public.

Slowly privatize it at the end.

Finally, there has been controversy over the fact that nationalized banks are overlapped with “non-executed assets” which refer to “non-responsible” borrowing practices.

In fact, NPAs are not created for nationalized banks, because of the reasons for “non-liability”, but due to the change of government policies, and in the context of the role they are called to play, they are NPAs ( Non-executed assets and bad credit).

There are three clear changes in government policy, which means that nationalized banks have captured Cain.

The first thing is that on the one hand financial pressure imposed by the government through the provision of financial responsibility and budget management.

By reducing the size of the fiscal deficit, and by providing significant tax concessions to private sector companies on the other hand.

Fund reduction allocation for SC / ST schemes, insufficient expenses

Fund reduction allocation for SC ST schemes, insufficient expenses

Between the financial year 2014-2015 and 2019-2020, the Modi government has not allocated Rs 7.51 crore for the care of Scheduled Community (Scheduled Castes) and Scheduled Tribe (ST). This difference is 79.16% of the required funds.

In other words, only 20.8% of the required amount is used for the welfare of SC and ST communities.

In his 2014 statement, BJP talked about “social justice and social harmony” and committed itself to setting up an environment system for equal opportunities – education, health and livelihood.

But after completing our full term at the center, we can see that these promises were just an idiom (false promise).

In this article, we analyze the budget documents, while focusing on the three criteria in the budget of 2019-2020, along with the first chapter of the Moody’s Government.

the gap between the allocated allocation, the actual expenditure and allocation against the government allocation, And use the average plans for SCS and STS.

The huge difference between the requested amount and the provisions:

In order to ensure direct policy-driven benefits for SCs and STs through special interventions, during the decade of 1970, the Planning Committee presented a SCP scheme for TSP for SCS and STS.

Later, the SCP was renamed to Scheduled Subclass (SCSP). The main purpose behind SCSP and TSP is to channel communities to develop communities according to their population.

For better development and utilization, the funds became unviable and non transferable by the Central Government in 2006.

However, after the plan integration and unplanned budget in 2017-18, SCSP and TSP are now referred to as allocation for SCS (AWSC) welfare and allocation for the welfare of STS (AWST).

From 2014-15 to 2018-19, according to the analysis of National Dalit Rights Campaign (NCDHR) on the budget estimates of dalits and tribals, the required allocation is calculated on the basis of policy guidelines.

For the period 2019-2020, the amount requested is based on new guidelines, in which CS + CSS [Central Zone Diagram + Central Advertising Plans] to be allocated in the form of budget for SC and ST schemes to the Ministries or Departments A specific ratio is given.

On the basis of these guidelines, the amount required for the period 2014-15 to 20-2019 was Rs 6.20 crores, while the government allocation was Rs. 3.10 crores of the requisite Appropriations.

Only 8% of the total CS + CSS expenditure was directed to the funds allotted to SC. While the SC is approximately 16% of the total population.

For the STS, the required allocation [between 2014-15 and 2019-2020] was 3.28 crores per lakh, while the government allocated Rs 2 crores for KOR, accounting for 61% requirements.

This allocation shows only 5.12% of the total expenditure on CS + CSS, while the ST population is 8% of the total population.

Actual expenditure is very low

After allocation of insufficient funds for the first time, Modi Government failed to spend the allotted amount.

Managed to spend about Rs 2.07 per lakh for private loans, in which 43.2% of the amount sought was, while Scheduled Tribes Expenditure (STS) was 54% of the amount requested.

In the budget of 2019-2020 compared to the previous year’s budget, there was an increase in the standard and standard procurement provisions. However, this allocation is far beyond the actual requirement.

Budget status for direct target plans and total intervals

The main allocation of the Central Government comes under “Non-Targeted Plans”, only 37.35% go to schemes for the welfare of social services and 40.7% come to the targeted schemes in health services.

Non-target plans are actual real plans, in which SC / ST has a mask for budget plans.

Do not qualify as SC / ST schemes that benefit these communities. In the budget of 2019-2020, out of 329 plans for personal recognition, 233 are non-targeted and without any comprehensive strategy to benefit the society.

Similarly, 71 out of 338 ST plans have the ability to provide direct benefits, while the rest are of normal nature.

We calculated the overall difference in the allocation of welfare of communities and scheduled tribes – which was 7.51 crores from 2014-15 to 2019-20. This figure includes the adaptation gap of KWD 4.38 / kg for non-targeted plots of 3.13 crore rupees.

If we compare these allocation and the real expenditure of the government to the Finance Ministry, then the expenditure will not be taken to address issues related to the SC / ST community.

Why Budget 2019-20 caters to the aspirations of urban people

Why Budget 2019-20 caters to the aspirations of urban people

The EU budget, presented by Finance Minister Nirmala Setharaman, connects economic growth to 8%. The goal is to reach $ 5 trillion (5 kW) of GDP by 2024. This will leap 100% from the current GDP figures of $ 2.5 trillion. The issue is how India is achieving this growth.

Investment in cities is an important area to ensure development in the country. Currently, 66% of GDP and around 90% of the total government revenue, while only 33% of the population live in cities. However, it is expected that by 2032, there will be 600 million (600 million) cities in India.

Therefore, any desire to achieve high growth and high goals should be kept in mind in this aspect of “development” in the cities. There are many factors that promote development in the cities. Earth plays an important role.

The IT industry is another area that contributes to the development of cities. However, to make the cities sustainable for development, there must be a mandatory level of infrastructure.

For example, if the traffic starts to fall, people like to find another destination. Likewise, if the city is unable to provide safe drinking water, or if it is unable to manage waste and sanitation, then people will flee outside the city.

To maintain the city’s development, the budget plays an important role. Works as an instrument to ensure that urban development is sustainable.

The Government of India is providing an incentive for urban development through some of its pilot programs and other projects like Smart City Mission (SCM), Atal Yuva Renovation and Urbanization Mission (AMRUT), Swachh Bharat Mission (SBM) etc.

There is no doubt that cities also have their own development mechanisms, but most of the cities are not able to fulfill the heads of expenditure in the city’s governments through their own resources, do not mention the mobility of capital formation.

Let’s take a look at what the EU budget has set for these plans and what they will provide in the future. To achieve high growth rate, high allocation should be in the urban development sector.

However, according to budget figures on the proportion of GDP spending, urban growth is still stable at 0.23%. This means that there will be less expenditure on urban development in 2019-2020.

With less revised estimates and fiscal deficit of more than 3%, there will be less marks on urban development. How and where this deduction will take place, and only time will tell.

Let’s take a look at how the past years have been spent on urban development. More than 5,000 projects (mainly infrastructure) were small and large, under various urban development schemes developed in the last four years.

However, only 897 projects are under implementation. Since the announcement of SCM, amount of Rs. 14,847 crore has been pumped, though the target investment was more than 2 crores.

This is approximately 7% of the required investment. It should be emphasized that in the Smart Cities Mission Center, BJP Government is one of the main programs.

With this history of the past, the government announced an investment of Rs 100 crore in the next five years. I.e. 20 rupees per khh per year The big part of this investment will be to build roads in the cities.

The budget is adopted to make the environment favorable for such investment through a set of measures. In the Isle of Doing Business Index, the government has claimed its superior credibility.

It is to attract private investment, especially in cities. Even in the past, for SCM and many other schemes, PPP was still a model which was postponed. To attract private investment, the government is proud to create an enabling environment. However, the final record otherwise indicates.

Under various schemes and projects in cities, it should have been 21% of private investment. However, only 15% of your 21% private investment has been in the last few years. However, the budget still has high hopes for private investment in cities.

The flow of private investment in cities has been directed primarily to the development related to the network, which is to establish a “leadership center” in smart cities rather than building infrastructure.

Hardly any city has been selected under the work of Smart Cities for Green Area Project.

As the table clearly shows, only minor increase in allocation has been noticed and keeping in mind the inflation rate and revised estimates after tax collection, there will not be any positive effect.

Under PMAY, budget allocation for the economically weaker sections (EWS) and low income group (LIG) has been reduced from Rs. 1,000 crore to Rs. 600 crores.

Sinking companies and lenders give priority to a non-judicial settlement

Sinking companies and lenders give priority to a non-judicial settlement

Many agreements have been signed between creditors or confirmation by the lenders in less than a month after issuing detailed instructions on June 18 by the Association of Indian Banks (IBA).

(DHFL), Reliance Infocomm Ltd. of Anil Ambani Group and JPF Industries to manufacture polyester-based materials.

In the case of DHFL, ICA consists of 27 lenders including State Bank of India (SBI). A total of 16 lenders with Reliance Infra joined the ICA.

The lender of JBF Industries will also include many lenders led by a large public sector bank. After the Reserve Bank of India (RBI) relaxed the rules for tight asset settlement on June 7, the IBA released its new guidelines.

What is ICA

In the ICA, lenders collaborate for businesses and deal with the borrowers whose property starts showing signs of becoming sticky. In fact, for the first time default payment has been enabled to navigate it.

They deal with the borrower and the borrower prepares a debt settlement plan by the lenders. Lenders have full discretion in this regard. Thus ICA is an additional debt settlement window, which has been developed by the IBA considering the RBI structure.

On the contrary, the action under Insolvency and Bankruptcy (IBC) Act 2016 is a judicial intervention by National Corporate Law. In ICA, there is no judicial intervention, therefore, the solution to stressful property is expected to be intensified.

Once the scheme is resolved by the creditors either by consensus or the majority as part of the ICA, it becomes binding. However, under IBC, any complainant of NCLT’s decision can appeal to NCLAT and delay the process in spite of specified timetable.

Under IBC, the process of precision starts practically when crisis signs appear. Under ICA, when lenders see the first signs of stress (first default case), starts.

IBC is one of NCLT’s responsibilities. Due to the lack of judges, it is too big and obstructed. In this case, it seems that the borrowers have an advantage in dealing with the lenders under the CIV.

According to the banking industry, hopefully, as of now, the route of ICA can prove to be “a faster way to do this outside IBC”. This point will be demonstrated if the lenders are able to make some more international contracts.

Sources said that due to increasing regulatory pressure and increased alertness by the investigating agencies, asset holders who are upset and defaulted are more interested in sorting out things with lenders.

DHFL has been informed that it liked the RP compound of lenders without shave (loss). Sources said that the “sudden and sudden” suggestion came in a time when hairstyles were sometimes very harsh, today’s arrangement for lenders became.

When newsclick asked about the prospects of ICA’s success, then IBA CEO VG Kannan said: “I think the banks are satisfied with the framework of Reserve Bank of India and ICA coordination.

RBI’s revised structure for bad loans

This framework was issued by the RBI in its revised circular dated June 7, after the order of the Supreme Court of April 2, which issued the RBI circular as the subject on February 12, 2018.

In the revised circular, the Reserve Bank of India (RBI) emphasized that the underlying principles of the regulatory approach are as follows:

Revised ICA Modified as ICA

To set the base, all IBAs should enter into an international licensing agreement during the 30-day review period (given to the lenders after the first defaults to establish the basic rules to confirm the decision and implementation strategy).

Regulation of implementation of RP in relation to borrowers having more than one lender’s credit facility.

The principal lender will keep others up to date for the RP preparation and at the beginning of the audit period, whose shares are applicable to lenders, will be free to hold meetings, at least 33% of the value.

In order to vote, the main lender should develop the evaluation method to calculate the value of the decision and the proposed RP. If any lender fails to vote on any issue, then such lender will be deemed to be voting against it by the principal lender.

During the decision-making process and the implementation of RP, lenders, including lenders, should not agree to initiate any legal action (even under IBC), which is successful of the RP against the borrower or any other person Can implement the implementation.

The new framework of the Reserve Bank of India (RBI) defines, among other things, the process of decision making by lenders, which is 75% (according to the value of total outstanding facilities) and 60%.