A week after pointing out an Rs.11,000 crore divergences in the NPA reporting of SBI, the RBI has now pointed to a Rs.2617 crore divergence in Punjab National Bank. Divergence occurs when the NPA reported by the bank for the full year is sharply lower than the NPA level as per the RBI analysis. Any divergence in excess of around 15% is made public by the RBI and is normally negative for the stock price performance of the bank. Banks are normally required to restate the financial accounts and report the revised profits in such cases where the divergence is significant as not to give a clear picture.
The central government is likely to pare its 28% stake in Bharat Earth Movers Ltd. (BEML) to give a major thrust to it is divestment program. The government proposes to raise Rs.105,000 crore during the current fiscal year through divestment of PSUs. The BEML stake is expected to be hived off through the strategic disinvestment route. BEML is a major government owned manufacturer of earth moving equipment, heavy equipment, rail coaches and also defence production. BEML has been among the better performers in the stock markets over the years and this is likely to have a ready market.
In a thumbs-up for the digital initiatives of the Indian government, Google has praised the Indian UPI model for digital real time payments. In fact, Google has asked the US Federal government to also replicate something on the lines of the UPI that India has launched to facilitate payments. The Unified Payment Interface (UPI) is a unique id (like an email) that can be used to implement a bank-to-bank transfer of funds. The process of adding account and IFSC code of the transferee is totally done away with. UPI was launched in 2016 in India and has emerged as a smart initiative in digital transfers.
SEBI has ruled out any relief to lenders that had given loans to Karvy against pledged shares. SAT had referred the matter back to SEBI and asked them to give a final verdict. SEBI has turned down the request of lenders to reverse the transfer on 3 grounds. Firstly, the transfers were not legitimate and hence banks should have done due diligence. Secondly, the small holdings of KSBL and the low LTV ratio should have raised suspicion in the minds of the banks. Lastly, many of the loans were given after September 20th which was the cut-off date of brokers to stop pledging client shares to raise funds.
Global steel major, Arcelor Mittal, has initiated the payment of Rs.42,000 crore for the acquisition of Essar Steel. The bid by Arcelor Mittal was just approved only last month and the company has already transferred the funds into the SBI account. This will be the single biggest recovery under the IBC process and will unclog scores of other similar cases that are also stuck due to a variety of technical reasons. Of course, SBI will receive the largest chunk of Rs.12,161 crore followed by Canara Bank at Rs.3,493 crore and ICICI Bank at Rs.2,110 crore. The Essar promoters had tried their best to protect its franchise by agreeing to pay all the creditors in full but the NCLT had refused to approve the same. It was clarified in a recent court judgement that financial creditors will have priority over operational creditors.
Even as Boris Johnson managed a resounding win in the December 12th elections; he has a new problem on hand in the form of the phenomenal performance of the Scottish National Party (SNP). The SNP won over 90% of the Scottish seats fought and the people of Scotland have been keen to stay in the EU. SNP leader, Nicola Sturgeon, has already emphasized that the vote for Conservatives should not be construed as a vote for BREXIT and that Scotland was firmly against exiting the EU. Scotland had earlier sought secession from the United Kingdom over the BREXIT issue and could be a thorny issue for UK.
