Articles and Updates

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Banks tend to restructure some distressed loan accounts instead of classifying them as non-performing assets (N PAs) so as to avoid provisioning (i.e., setting aside a specific portion of their revenue to make up for the loss that could arise from potential default) for such loans. In the financial year 2012-13, restructuring of distressed loans was at an all-time high of 764.7 billion.

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India’s regulatory framework has been uncharitably, if accurately, described as an accumulation of responses to crises, replete with instances of turf squabbles and blind spots, rather than a comprehensive system of diverse parts with a unified purpose.

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The Law Ministry is reported to have approved a proposal by the Securities and Exchange Board of India (SEBI) to permit the use of put and call options for corporate restructuring and non-speculative purposes. This development should finally bring some clarity over the use of these tools, favoured by those active in the spheres of private equity, and mergers and acquisitions.

• Sawant Singh -

The The Reserve Bank of India (RBI) recently issued guidelines on the licensing of new banks in the private sector and invited applications by 1 July 2013. While the guidelines have been on the anvil since 2010, it is understood that the RBI was keen for certain amendments to be made to the Banking Regulation Act, 1949 – which were brought about by the Banking Laws (Amendment) Act, 2012 – before releasing the guidelines. This article discusses some key features of the guidelines.

• Sawant Singh -

The Indian financial sector recently received a fillip with the enactment of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012. The act aims to remove some bottlenecks observed in the existing regulatory framework for recovery of non-performing assets (NPAs), namely the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act), and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI Act).