1/n A short thread on a story today, which I think is systemically important.
Last week, RBI issued new draft rules for housing finance companies. Until recently, HFCs were under NHB. This was transferred to RBI post the DHFL fiasco.
2/n One of the quirks of NHB rules was that HFCs were allowed to restructure developer loans once without marking them down as NPAs.
This has existed for some time and has gone under the radar even though the RBI clamped down on restructuring forbearance at banks many years ago
May 17, 2020 • 5 tweets • 1 min read
MGNREGA budget raised to Rs 1 lakh crore from budget estimate of Rs 61,000 crore.
Good.
---Debt related to COVID-19 should be excluded from the category of default.
-- No fresh insolvency proceedings for 1 year.
-- For MSMEs, special insolvency framework to be notified.
-- Minimum threshold for insolvency raised to Rs 1 crore.
May 13, 2020 • 13 tweets • 2 min read
FM says 15 measures to be announced today.
- Collateral free loan for MSMEs upto Rs 3 lakh crore.
- MSMEs with Rs 25 Crore outstanding loan or Rs 100 crore turnover can avail.
- 100 percent credit guaranteed (presumably by govt)
- To benefit 45 lakh MSMEs 1/n
Loans will be of 4 year tenure. 12 month moratorium on principal payment. Interest to be capped.
May 8, 2020 • 8 tweets • 2 min read
1/n A thread on some of the points Raghuram Rajan makes on monetisation:
1) The government’s priority should be to protect the economy and spend what’s needed. It’s inability to finance itself or fears of monetisation should not be a constraint....
1-A) That’s not to say fiscal deficits don’t matter. Medium term roadmap must be clear else investors and rating agencies will take “fright.”
He suggests following NK Singh committee advice, using medium term debt targets and an independent fiscal council. 2/n
May 7, 2020 • 9 tweets • 2 min read
Answers to two questions on Yes Bank getting clearer:
1) What was the real quality of the bank's loan/investment book?
2) Will depositors keep the faith?
26.63% of corporate loan book is bad (after write-offs).
- Corporate NPA: Rs 31,731 cr
- Total NPA: Rs 32,878 cr
- SMA 1 + SMA 2: Rs 11,102 cr
If you assume much of SMA 1+ SMA 2 is corporate (going by current NPA proportions), about Rs 42.599 cr of corporate book is stressed.
Mar 27, 2020 • 9 tweets • 1 min read
THREAD: RBI Governor Announcements
- MPC met over the last days. CUTS RATES BY 75 BPS
Reverse repo cut by 90 bps to discourage banks to park funds at RBI window
Mar 16, 2020 • 8 tweets • 1 min read
RBI Governor: Yes Bank revival the first example of public-private partnership for revival of a financial institute.
Participation of private sector banks signals confidence.
RBI Governor; Depositors are safe. Depositors have never lost money in a scheduled commercial bank.
Oct 31, 2019 • 6 tweets • 2 min read
A short thread on a bunch of consumer finance stories we have done in the past year. The dots, when connected, tell you how the consumer economy is changing. 1/6👇
Unlike earlier generations, this generation does not believe debt is only for assets. It's the new 'working capital' as one banker aptly put it. 2/6
A thread on this Yes Bank-Paytm/ Rana Kapoor potential deal.
1) For the bank (if Paytm is not just buying equity from RK), all is gets is capital. If anyone thinks getting a tech company on board is going to help bank’s revival plan, they are being hopeful at best. 1/62. The bank still needs to clean up, strengthen its liability franchise and improve profitability. This plan to use its UPI customer base to sell more loan products is ambitious as even admitted by HDFC Bank. 2/6
