The NPA Resolution!!! A Big Sham Against The Nation, The Taxpayers and Especially The Farmers?

What is the NPA resolution?
The government of India has amended the RBI Act, to give RBI the power to direct banks to take action against the loan defaulters under the code called Insolvency and Bankruptcy Code (IBC). According to amendment the lending banks approach the National Company Law Tribunal (NCLT) to appoint a professional to manage a defaulting company despite the existing board has been suspended. The professional has to find out a solution within 180 days to repay bank loans. If the professional is not able to find a solution within 180 days, the process timeline would get extended by another 90 days. If a solution could not be found within max 270 days, the company would go into liquidation.   

The total bad debts in the Indian Banking System identified and reported so far are worth
                                              Rs.7.11 LAKH CRORES!!!
One cannot imagine the amount of loans not yet identified or for that matter reported as NPAs. Given the history of corrupt and unscrupulous bankers, one should not rule out this possibility and should always be cautions with the numbers which are published. To add more fuel to this fire it has been reported that number of NPAs with every passing day is going higher and higher, worsening the situation with every passing day. The government has already delayed more than 2 years to come out with any sort of solution to put this mess in the grave. Meanwhile, during the past two years the Government has already infused Rs. 50,000/- crores; as a part of the capitalization program? Whose money it is, I ask. Does the government earn any money? NO!!!! Then on what basis the Government of India has decided to save these brat bankers. The government has promised Rs. 70,000/- crores in total to the Indian Banks , that means another Rs. 20,000/- crores will be deployed by the end of 2018-19. Although the number Rs. 70,000/- crores looks less in comparison to Rs. 7.11 lakh crores, one must remember that the Banking system has the ability to create or generate an investment of minimum 10 times with the deposit what they receive, because of reserve ratios – lending ability – and withdrawals (demand on the deposits). May be the government’s attempt was to create this sort of huge investments and value in the economy with the infusion of Rs. 70,000/- crores has clearly been failed? Instead of value being created, what this system has created is more NPAs. What should have acted as a medicine has became a poison in this slowing down economy. It is an another indication of the economy being slowed down and so is the demand for credit. The defaults on credit are on the high and rising. (you may read my article: about the http://gappaa.blogspot.in/2017/06/is-india-heading-into-recession-growth.html  published on 08^th of June).

Before the failure could become obvious to everyone, probably it is wise to trigger the so called NPA resolution and give it a popularity through the media.

Also there are some loopholes and if-then situations in this resolution process. Although, the maximum of 270 days deadline has been set for this resolution process before the company goes into liquidation, a promoter of the company has a right to move the High Court on various grounds, delaying the process to find resolution or liquidation. Another possibility is how many of those professional appointed by the NCLT would be able to understand the business of the company in the time period of 270 days to come out with the workable, making liquidation more certain, but only further delayed process. Even if one finds the resolution

The Finance Minister Mr. Arun Jaitley had announced capital infusion of Rs. 10,000/- crores for the current financial year in line with the Indradhanush scheme. I wonder why such Indradhanush does not shine for the Farmers of India? Why only for the irresponsible Bankers and the Industrialists?

When the topic of Farmers’ loan waivers was hot in media, a famous Banker said waiving of Farmers’ loan would encourage indiscipline in farmers. So does it mean discipline has to be followed by the Farmers and the poor and middle class people in the society? What about Bankers and the Industrialists? These bankers are acting like bloody street dogs who are eating the bread of the society and barking and biting back the society. Was it not the duty of Bankers to ensure that the loans were granted to the companies which are financially disciplined? The 12 defaulters listed by the government to undergo new IBC code have defaulted to the extent of 1.78 Lakh Crores. In short only 12 companies with these Banker’s help have managed to fool the economy by 1.78 Lakh Crores.

The government of India is instead of punishing these bankers, supporting them. This government is also promoting it’s governance of the country by the performance of the stock market. How many Indians are actually benefitted by this performance of the stock market? While economy is slowed down, let’s think of people who have invested money in mutual funds where so called professional managers are managing the public money. The NIFTY has moved 2500 points up from 7000 in Feb 2016 to 9500 on today’s date? i.e. 35.71% return on the people who invested in the Index in Feb 2016. How many Mutual Funds Schemes have actually provided return = 35%. It is the best way to measure the performance of one’s Mutual Funds investment. If not 35%, how many Mutual Funds have provided return of at least 25% during the last year or two years for that matter? If not, poor and simple people of this nation are getting dragged in the so called financial bubble in the economy. Once again I would like to re-iterate that the People of India should really save their money which are not accessible to the corrupt bankers or the financial service providers such as mutual funds. ( You can read my article http://gappaa.blogspot.in/2017/06/protect-your-savings-deposit-in-post_15.html).

Also read my article about unethical practices in the Indian Stock market. How, the so called sharks are making money by looting Indian Traders and Investors. http://gappaa.blogspot.in/2017/06/immoral-and-probably-unlawful-practices.html

Protect Your Savings, Deposit In Post Office Savings Account, Punish Indian Banks!!!

The picture of Indian Economy portrayed in Media be it News Papers, You Tube, New Channels on TV, Stock Market is all rosy, green and promising. But the underlying facts shows it to be shockingly different. My previous article published on 08^th of Jun on this same blog shows how the Quarterly growth in the GDP of this country has been negative since the 2^nd quarter of the 2016 calendar year. The GDP growth has actually been slowed down. Despite good monsoon last year the profit numbers of the most Indian companies are not as predicted by the stock market. Private sector investment is shrinking. Public sector undertakings need government support. Indian Banks have accumulated huge NPAs (i.e. Non Performing Assets) on their balance sheets. Credit growth in the economy has been slowed down. Interest rates are going down. In the latest RBI Monetary Policy announcement happened on 5^th of June although RBI Monetary Policy Committee did not reduce the interest rate; it indicated that although RBI has paused the rate cut, it has not ruled out the option of cutting rates further. It is a clear sign that our Indian Economy has been slowed down and requires a boost from the central bank to keep it going further without causing many disruptions in the next two years of Modi Government. The BJP government cannot afford to expose the weakening economy with the elections not very far. Although it is very tough for any government to change the course of accelerated falling economy, Modi government tried to lift it to the height of prosperity. Undeniably Modi government did lift the pace of the economic growth to the height of prosperity, however the force of gravity has been acting stronger to pull the economy down more and more with every passing quarter.

Modi government did the best it could to save the Indian Banks, by bringing in more cash in to the banking system. However, the question one must ask to oneself and to the government is how it is going to use it further with the shrinking demand for the credit, and accumulated NPAs on the banks balance sheets. These Indian Banks follow so much documents and stricter norms while processing a loan request of a common man. The man, who is regular in paying taxes, working hard to earn the bread and butter for his family. Well, following the stricter norms while giving away any loan is not only mandatory but a social responsibility of the banks since they are lending the depositor’s money. Then one does not understand how these banks and the responsible banking personnel could be so negligent in granting business loans??? And be it because of demonetization or not the size of NPAs on banks’ balance sheet has been increasing. With the credit contraction in the economy and increased deposit base of the people Banks will have to bare more load on giving interest to depositors. With the past history in mind banks would try to build poor loan/assets portfolio to generate income. Of course, these activities in the slowing down economy is not worth taking a risk. That is what happened in Credit crisis in the USA in 2007-08. However, that credit bubble had started growing up long time before, i.e. since 1998-1999.

Another strong reason I believe is in favor of me opening post-office account for most of my savings is first of all post-office does not give loan by itself like those corrupt bankers and definitely not to corporates. So first of all we would bring chances to minimum for our money being mis-applied for the benefit of few corrupt people in the society/ nation. Second, we are keeping our money close to the government where the chances of default are minimum to pay back our deposits anytime we need. And even if case by devil’s act (opposite to God’s act) the ruling Government can always print the money needed for the benefit of large public; like it does for any Public Sector Undertaking. Then it does not matter which party is ruling, be it BJP or Congress.

In such scenario, as a saving account holder I would like to open an account in the Indian Post Office Savings scheme, where the minimum required balance is Rs. 50/- only for an account without cheque book & with cheque book Rs. 500 i.e.  very much less than the current limits prescribed by private banks as well as public banks.  One would also get cheque book, ATM card and online banking facility. 

Apart from Saving Accounts, Indian Post office provides many other financial services, especially to generate public’s saving which could be used by the government for the nation’s development activity. Also I feel it’s the most secured place in the country to safeguard one’s savings.

For more options about various Post Office saving schemes one may visit the following link.

https://www.indiapost.gov.in/Financial/Pages/Content/Savings-Account.aspx

Click on the images below to enlarge

Immoral and probably unlawful practices in Indian Stock Market? Should SEBI probe and investigate for the possibility of INSIDERS TRADING?

Stocks discussed here are Aurobindo Pharma (ISIN: INE406A01037) and Escorts (ISIN: INE042A01014)

One of my friends who does full-time stock trading, just placed his number on the network somewhere in the mid-April 2017, that he is looking for an advisory services. He received many calls from the firms located in Indore (MP) and Rajkot (Gujarat) while he is residing in Bangalore. Initially calls he received were about annual fees ranging from Rs. 30,000 – Rs. 50,000. He shared with me that these fees sound to be more than normal market charges. He started asking for profit sharing option whereby instead of paying annual fees and receiving no service or sub-standard service; he thought it would be wise to share his profit with the advisor. That way even advisor would be more interested to make more profit for his client. But then here there was a catch. Some people started asking him to open an account with them with the offer that de-mat account would be provided for free of cost and there would not be any annual charges. Also that advisory firm would manage trading also on my friend’s behalf. That means entrusting one’s hard earned money to someone who is staying so remote that it would be virtually impossible to hold that advisor to be responsible for the loss of money. Some firms were even went ahead to promise 100% positive return on every trade/ transaction. My friend chose not to trust these calls and kept running his business on his own independently without any outside help.

Modus Operandi:
By the 2^nd week of May my friend started receiving calls from some firms in Rajkot offering advice for free. At least they claimed these to be free. And showed interest to have a long term partnership. These calls were mainly to buy a lot/ multiple lots in ‘FUTURES’ market segment of ‘ESCORTS’ and the ‘AUROBINDO PHARMA’.  These callers used to enquire about his capital and accordingly used to ask him to multiply his lots. What is most important is whenever my friend asked them about the Target and the Stop Loss, these callers would simply say just buy and hold the position. Ridiculous!!! Isn’t it? Another most important fact is that, these callers would ask him, which broker he is having an account with. And further these callers would ask him to call them back once the long position is bought in these stocks. If both of us are not wrong, it gave us a picture that these callers were having a tie up with various brokers all over the country to confirm the position bought and sold by their trapped clients (i.e. their victims). It also gave us an impression that these so called advisors would be earning commission based on the turnover they generated through various clients.

A BIG NETWORK OF SHARKS!!!

TO EAT AWAY MONEY OF INNOCENT PEOPLE BY INDUCING THEM TO TRADE IN CERTAIN STOCKS IN A CERTAIN POSITION.

Why would these callers never induced anyone to buy shares instead suggested only a lot of Futures?
Naturally, one lot of futures means more turnover with less capital.

Now, one would like to take a look at what happened to the prices of these stocks.

With long positions accumulated from various people all over the nation, sharks were ready to take the market down to eat away people’s money.

During 8^th of May to 12^th of May the price of Escorts rose from Rs. 602.60 to Rs. 655.90
Whereas the price of Aurobindo Pharma went from Rs. 604.65 to Rs. 614.50

By 23^rd May Escorts hit the lowest price of Rs. 595.65 in the last 30-35 days period.
Whereas Aurobindo Pharma hit the lowest price of Rs. 512.40 in the last 30-35 days period.

Can one imagine how for much money those people who had built long positions in these stocks based on those calls from con advisors, might have been robbed for? Humongous!!!

Then both stocks recovered significantly by 30^th of May to celebrate 3 years of Modi Government.
Huh!!! Celebration of Modi Government by the stock market at the cost of people’s money robbed by cons. What a pity!!!!

***I would also like to add one more thing, the most people who had taken long position while stock prices plunged, might have tried to build short position to recover the lost money. And while stock prices bounce back on 30^th of May to celebrate 3 years of Modi Government. Money churned? Two times humongous!!!

I’m not sure if this article is worth for SEBI (Securities Exchange Board of India) to initiate any probe into such operations in the interest of general public to promote more retail investment and the healthy operations in the stock market, or if SEBI is waiting to receive complaint in writing from those people who have been looted.

Whatever the case is, I would like to hereby appeal to the General Public and the Retail Investors in India to withdraw their investments from the Stock Market or Mutual Funds, for market is too boiled up, while underlying economic picture is not very promising!!!

Pictures below are Line charts extracted from the most popular website: www.moneycontrol.com

(Please click on the picture to have enlarged view)

ESCORTS

AUROBINDO PHARMA

Protect Your Savings, Deposit In Post Office Savings Account, Punish Indian Banks!!!

The picture of Indian Economy portrayed in Media be it News Papers, You Tube, New Channels on TV, Stock Market is all rosy, green and promising. But the underlying facts shows it to be shockingly different. My previous article published on 08^th of Jun on this same blog shows how the Quarterly growth in the GDP of this country has been negative since the 2^nd quarter of the 2016 calendar year. The GDP growth has actually been slowed down. Despite good monsoon last year the profit numbers of the most Indian companies are not as predicted by the stock market. Private sector investment is shrinking. Public sector undertakings need government support. Indian Banks have accumulated huge NPAs (i.e. Non Performing Assets) on their balance sheets. Credit growth in the economy has been slowed down. Interest rates are going down. In the latest RBI Monetary Policy announcement happened on 5^th of June although RBI Monetary Policy Committee did not reduce the interest rate; it indicated that although RBI has paused the rate cut, it has not ruled out the option of cutting rates further. It is a clear sign that our Indian Economy has been slowed down and requires a boost from the central bank to keep it going further without causing many disruptions in the next two years of Modi Government. The BJP government cannot afford to expose the weakening economy with the elections not very far. Although it is very tough for any government to change the course of accelerated falling economy, Modi government tried to lift it to the height of prosperity. Undeniably Modi government did lift the pace of the economic growth to the height of prosperity, however the force of gravity has been acting stronger to pull the economy down more and more with every passing quarter.

Modi government did the best it could to save the Indian Banks, by bringing in more cash in to the banking system. However, the question one must ask to oneself and to the government is how it is going to use it further with the shrinking demand for the credit, and accumulated NPAs on the banks balance sheets. These Indian Banks follow so much documents and stricter norms while processing a loan request of a common man. The man, who is regular in paying taxes, working hard to earn the bread and butter for his family. Well, following the stricter norms while giving away any loan is not only mandatory but a social responsibility of the banks since they are lending the depositor’s money. Then one does not understand how these banks and the responsible banking personnel could be so negligent in granting business loans??? And be it because of demonetization or not the size of NPAs on banks’ balance sheet has been increasing. With the credit contraction in the economy and increased deposit base of the people Banks will have to bare more load on giving interest to depositors. With the past history in mind banks would try to build poor loan/assets portfolio to generate income. Of course, these activities in the slowing down economy is not worth taking a risk. That is what happened in Credit crisis in the USA in 2007-08. However, that credit bubble had started growing up long time before, i.e. since 1998-1999.

Another strong reason I believe is in favor of me opening post-office account for most of my savings is first of all post-office does not give loan by itself like those corrupt bankers and definitely not to corporates. So first of all we would bring chances to minimum for our money being mis-applied for the benefit of few corrupt people in the society/ nation. Second, we are keeping our money close to the government where the chances of default are minimum to pay back our deposits anytime we need. And even if case by devil’s act (opposite to God’s act) the ruling Government can always print the money needed for the benefit of large public; like it does for any Public Sector Undertaking. Then it does not matter which party is ruling, be it BJP or Congress.

In such scenario, as a saving account holder I would like to open an account in the Indian Post Office Savings scheme, where the minimum required balance is Rs. 50/- only for an account without cheque book & with cheque book Rs. 500 i.e.  very much less than the current limits prescribed by private banks as well as public banks.  One would also get cheque book, ATM card and online banking facility. 

Apart from Saving Accounts, Indian Post office provides many other financial services, especially to generate public’s saving which could be used by the government for the nation’s development activity. Also I feel it’s the most secured place in the country to safeguard one’s savings.

For more options about various Post Office saving schemes one may visit the following link.

https://www.indiapost.gov.in/Financial/Pages/Content/Savings-Account.aspx

Click on the images below to enlarge

Is India heading into recession? The growth engine of the largest and the fastest developing economy has been slowed down!!!

Before reading this article one must be aware that the Government does not create a situation of recession or prosperity in the country. What government can do at the most is to create an inducing and efficient infrastructure in the country to promote more investment in the private sector, creating jobs. Modi’s government has brought many changes to the age-old corrupted financial infrastructure to promote healthy investment atmosphere in the country. However, no government in the world has a power to stop the recession.

There is a debate whether demonetization caused economy to slow down or economy had already started to slow down before the demonetization was triggered. However, there is no doubt that the demonetization actually sucked out the purchasing power (in terms of cash held) of the consumers for more than 6 months, since the time it was announced in the first week of November 2016. The Indian economy advanced 6.1 percent year-on-year in the first quarter of 2017, slowing sharply from a 7 percent expansion in the previous period and well below market expectations of 7.1 percent. It is the lowest growth rate since the last quarter of 2014, due to a slowdown in consumer spending and a drop in investment. One must also consider the continuous decline in the quarterly GDP number since March 2016 as depicted below. I am more interested to know the GDP growth in the 2^nd quarter of the calendar year 2017.

Actually, based on the chart below it is pretty obvious that the economy has been shrinking with every quarter since April 2016; for 4 quarters continuously.

Source: https://tradingeconomics.com/india/gdp-growth-annual

(click on the image above to maximise)

Generally accepted definition of the recession is “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters”.

RBI and the government has been claiming the inflation is under control. Could this not be the result of underlying recession in the economic activity? A possibility could not be ruled out. Besides, RBI has been reducing interest rates for the past 4-5 quarters to boost the demand for credit in the economy, still the picture of investment in the private sector is not promising and the picture of employment looks all the more gloomy.

India being the global hub of outsourcing be it for Information Technology or for Business Processing has been more dependent on the developed countries in the world for the employment purpose. The picture in the IT sector is not very promising. While many employees have been laid off, most IT companies don’t have enough projects to engage the staff to its full capacity. Changes in VISA regulation in major outsourcing countries such as the UK and the USA have already escalated cost of operating for these companies. Post BREXIT IT companies have also lost the geographical advantage of operating in whole undivided EUROZONE. To add fuel to this fire, a NEWS was released yesterday that the IT companies have to negotiate pricing of their existing projects and of course for the future projects also; which would be a great toll on the revenues of IT companies. Plus, post BREXIT and since the rise of Mr. Donald Trump as the President of the US, the concept of protectionism (reversal of the globalization i.e. localization) has been taking it’s roots. There is also a fear that the Indian IT companies are not finding sufficient talent pool to work on the latest technologies. One cannot imagine how the IT sector would survive in next few quarters.

Pharma and Telecom sectors have been badly hit already due to reduction in prices by one reason or the another. The wave of unemployment has already touched telecom sector. One would not be surprised if even Pharma sector gets hit by loss of jobs. While the fresh demand for credit has not grown up satisfactorily, the demand to refinance existing companies is definitely going up with every passing day. The increase in the demand to re-finance existing loan is a clear indicator of inability of Business Conglomerates to serve the existing debts at the current rate. The reduction of interest rates is another effect and the signal of recession. Automobile sector has given mixed numbers for the month of May.

The Global uncertainty is highest and tensions have risen to such an high extent that I had not witnessed in my life since the time I was born, I believe. Political & economic tension between England + Wales and Ireland and Scotland and Eurozone. Eurozone by itself cannot promise it’s existence for long. Geo-pollitical tensions in the middle-east countries. Also rising tensions between the US and the North Korea.

With Africa has already been declared to be in recession for the second time in a decade, it remains to be seen how other countries in the world dodge or manage to keep away the wave of recession.

The corrupt Indian Banks, Demonetization & promises by the Government to waive Farmers’ loans:

Where does the common man paying taxes stand in this chaos?

It has been more than 1 year since I have been hearing of NPA mess created by Indian Banks, both by Public Sector as well as Private Sector by lending loans to inefficient and corrupt corporates. Naturally, it raises a doubt that the bank authorities who had sanctioned these bad loans must have been corrupt too. Isn’t it? Whose money it was? The money was out of deposits; the deposits belonging to people of the nation.  Although these bad loans were created during the Congress ruling regime, it is the Bank Authorities and consequently Banks should be held responsible and should be made to pay the price for it.  On the contrary it looks like the current BJP ruled Indian Government has decided to save these banks despite their bad and irresponsible behavior. Of course, the government’s intention is pretty obvious and i.e.to save the economy from being collapsed or being pushed on to the slow track of growth, due to failing banks, which would have consequential effect such as failure of a banking system, rising unemployment and the growth of black economy. The question comes to my mind and which is quite natural is that who is going to pay the price for all this mess!!!

The government smartly flipped a coin of ‘Demonetization’ to fuel the banks with cash. Because the NPA’s created by banks were so high that in case depositors had decided to withdraw cash they had in credit to their accounts, perhaps banks would have been exposed of their inability to return the public money. Also it would have been difficult for the banks to generate fresh credit in the economy to push for it’s contribution in the industrial development and also it’s own survival. So the Government decided to infuse more cash in these empty banks, and how did the Government do? By forcing people to deposit their cash holdings into the banks. People did it willingly and also did not make much fuss about it, due to our overwhelming support to the honorary Prime Minister Mr. Narendra Modi. But the reality is, do these banks deserve this public money after screwing public trust in the past? I think it would not be improper for the people to withdraw these deposits in cash and hold it at home again. The first supporting reason is that, after depositing this black turned white money has already been reported to the Banks and the Government, so now whether one holds it in a cash form or as a bank deposits does not make much difference. However, holding cash in hand gives an advantage over depositor’s funds been misapplied by the corrupt banks. One would have better security of his/ her own funds. I don’t think the government would trigger another demonetization in another 3-4 years at least. Other better option I could think of is to transfer these funds from the banks to the Post Office accounts, which would be providing more security in comparison to the bank deposits.

These problems were not enough, the government promised in it’s election campaign in UP to waive farmer’s loan. If the government can waive farmer’s loan from the one state then the question arises is that why cannot it do that with the farmer’s in the other state. It has resulted in the farmer’s strike in the state of Madhya Pradesh and in the state of Maharashtra. Yesterday, during the strike and demonstration in Maharashtra 5 farmers were shot dead by the RPF (Reserved Police Force). One must think if government waives off the farmer’s loan, the Banks would have to write those assets off their balance sheet; from where all this money would come, naturally from the common man’s deposits. The Public Money. In short Public has to pay Taxes, Public has to give deposits to the Banks, and the Banks would keep abusing these deposits and get fatter and fatter being protected by the government.

Although I am of the opinion that the ruling government is the best team we have, ruling my nation, I wonder to what extent the common man would have to pay the price to clean the pre-existing corrupt system? Would corrupt bankers and the banks not get punished for their irresponsible or the negligent acts? Let us see, what plan the RBI comes up with, to resolve the NPA issues these Banks have been carrying so long time. To add fuel  into this fire, day-by-day the debts by the corporate India are being rated low.

One thing I would definitely like to underline one more time in the interest of the general public of India and that is, please ensure your hard earned money are kept at place safe, safer than the Indian Banks and the Mutual Funds companies.