Over the weekend some interesting news items in the country, which I would like to deliberate on with you all :
1 Friends you all are aware that Punjab & Maharashtra Co Op (PMC) Bank have been in trouble from the end Sept 2019, when it was found that the HDIL group have defaulted the loans of about Rs 6000 Cr which they have taken from PMC Bank. RBI immediately put the restrictions on withdrawl by account holders for next 6 months. Initially it started the limit of Rs 1000 in 6 months which slowly went up to Rs 50000 in 6 months. Additionally they allowed Sr citizens Rs 50,000 more as hardship amount. From the day 1 the arrested main directors of HDIL Wadhawans (father & Son duo) have been maintaining the stand that the value of their assets is much than the amount which is due to PMC Bank, they requested the RBI, and Economic Offence Wing (EOW) to sell their assets and pay to PMC Bank, this happened in mid Oct 2019. But RBI/EOW dilly dallied for some technical reason or other. This matter went upto the Bombay High Court, which by Mid Dec 2019 gave the directions to RBI/EOW to start the procedure for selling the properties owned by Wadhawans. As per SC , RBI appealed against selling of their assets as it would hamper their efforts of reviving the PMC Bank, but what are these efforts have not been disclosed to media. In fact, instead of allowing the sale of assets of Wadhawans, the SC ordered the stay on HC’s order of selling the assets. This move of SC caught lakhs of depositors of PMC by surprise, as this dashed the hopes of them as they were hoping when the sale of assets start, that will give the boost for revival of bank. Now they do not know what is the RBI plans for bank’s revival, and for no faults of their they are made to suffer. In the last 4 months 20 depositors have lost their lives because they could not bear the shock of losing their live’s savings. The problem is simple, as 95% of PMC’s depositors belong to middle class, and no political party consider them vote banks and hence these depositors are suffering and are constantly under tension. It looks like RBI is trying to hide their short comings and inefficiency of their officers who could not detect this scam for last so many years, in fact this scam was going on from 2017, and till May 2019 RBI had given PMC bank a rating of A+, and this rating was there for last so many years. As all Co Op banks come under RBI, so with the A+ rating the depositors had full faith in bank. It seems that RBI have taken all these poor depositors on royal ride.
One one hand Govt wants to push economy and on the other hand they have made depositors helpless. Govt always talks in numbers- and say that almost 78% depositors have received their amount, but they are not informing what is the total value of remaining funds which have blocked by RBI and which belong to depositors. No idea when this impasse will end.
2 This item is concerned with Reliance Industries Ltd- The RIL group which is the flagship company of Mukesh Ambani, and this company is the highest ranking Indian firm on the Fortune Global 500 list. The news is that the Credit Suisse has down graded RIL to under perform from neural and cut the target price of per share from Rs 1395 to rs 995, citing caution review on refining and petrochemical cycle and higher liabilities. According to brokerage firm, slow enterprise rollout, Jio phone financing and east West Pipeline, and weak Jio revenue per user were among the reasons for downgrade. On the liabilities side, it increased from $19 billion to $ 65 billion in last 4 years. the brokerage firm added the target price cut ‘factors in higher liabilities of $1i billion from crude payables. RIL crude payables have increased significantly over the years. now it is 121 days, which is still 2-4 times higher than industry norm of 30 to 60 days.
In Rupee term RIL debt is around Rs 4,68,000 Cr. Assuming RIL is paying an average of 10% interest on this debt, the yearly interest payments works out to be Rs 46,800 Cr, which is around Rs 128 Cr per day or about Rs 5.33 Cr per hour. No wonder Credit Sussie has Red flag on this debt. For this reason Mukesh Ambani has put up 25% of his company’s stake for sale. He is trying to sell his assets that he has created out of this debt. Along with lakhs of Crs of Rupee debt to Indian Banks, Mukesh Ambani’s RIL is main culprit behind the mounting NPA of our banking system itself. This could be among one of the major reasons for economic slow down in India.
What you say my friends.
Anil Malik
Mumbai, India
10 Feb 2020
R. N. Mungale.
It is true that RBI is trying to shield the officers
RIL is a cause of worry.