ABSTRACT
During Covid 19 pandemic, Public Sector Banks (PSBs) experience the high and increasing level of gross non performing assets. This is as high as 14 per cent which is matter of concern to all stakeholders. Consequently, these banks to witness high provisioning, low capital base and dismal credit growth. To arrest the trends in stressed assets, existing recovery channels including Insolvency Bankruptcy Code have not produced the desired results. Hence, the Government has recently taken a bold decision to set up a Bad Bank and provide the sovereign guarantee to security receipts issued by the Bad Bank upon purchase of stressed assets from PSBs. The Bad Bank aims at buying stressed assets, restructure them successfully and, thereafter, to sell the same to investors which would facilitate the PSBs to clean their balance sheet and strengthen the capital base. While there is enough business potential for the Bad Bank in the near future, its success will depend on purchase price of assets transferred, expertise in management of distressed assets, business model and presence of a conducive environment to operate. It is hoped that, during the post pandemic, the Bad Bank would prove to be the best option for revival of stressed assets and enable PSBs to lend optimally for productive purposes. Towards this end, before the Bad Bank starts functioning, there is a dire need to create awareness of the same by understanding its background, organization structure, business model and emerging challenges.
ABSTRACT
For promoting financial inclusion in India, both banks and Non-Banking Finance Companies - Micro Finance Institutions (NBFC-MFIs) play a pivotal role by providing microfinance to individuals and tiny enterprises. There are 187 lending institutions in India engaged in providing microfinance of more than Rs.2.27 lakh crore. Today, microfinance activity is more technology driven to ensure adequate, timely and hassle free financial services. During the Covid-19 pandemic, the sector suffered significantly due to lack of demand for credit and increasing loan defaults. Hence, RBI announced certain measures including debt restructuring to provide relief for stressed micro loan customers and creating more liquidity in the market. Post the pandemic, there are enough business opportunities for the microfinance sector to prosper. However, the age old issues such as lack of due diligence in lending, over-indebtedness and multiple borrowing by customers and unethical recovery practices need to be addressed. Therefore, there is a need to make microfinance activity more digital, promote financial literacy, strengthen risk management systems, upgrade skills of the field level staff and formulate an effective grievance redressal system. Towards this end, the article attempts to review the performance of the microfinance sector at a time when India is currently celebrating the 75th year of Independence and offer suggestions to strengthen the microfinance sector in the country.
ABSTRACT
There is a fear of recession worldwide as is evident from the decline in the economic activities in all major economies of the world. As per the prediction of the IMF, the Indian economy looks somewhat better placed compared to other major economies for the current financial year. The real estate sector has always been a significant contributor to the process of growth of India and depends on the soundness of the Housing Finance sector to a great extent. The study tries to examine the profitability of the housing finance sector as well as identifies significant hurdles, especially in the post Covid period when the fear of global recession looms large. Three leading housing finance companies based on market capitalization are taken as the sample companies and one-way Anova is used as a significant tool of analysis. The study points that the favourable time ahead for housing finance sector in near future.