The Stressed Asset Resolution announced in India’s 2021-22 Union Budget proposed the establishment of a novel twin structure to clean up bank balance sheets in India. In this dual structure, the primary company, the National Asset Reconstruction Company Limited (“NARCL”), is a public sector asset reconstruction company mandated to acquire and aggregate non-performing assets (“NPAs”) (i.e. the ‘bad bank’). The second company is a private sector asset management company established to focus on the management and resolution of the NPAs held by NARCL, the India Debt Resolution Company Limited (“IDRCL”). Two years on, it is fair to say that the aggregation and resolution of NPAs by the bad bank in the Indian banking sector have fallen short of initial expectations.Continue Reading India’s bad bank, two years on…
Combined stakeholder effort is needed to mobilise available resources to tackle Africa’s multi-billion-dollar energy deficit
Current need and opportunities
The International Finance Corporation (IFC) and the Emerging Africa Infrastructure Fund recently co-invested in a US$97.6 million social bond issuance to support access to electricity in Ivory Coast. African countries, however, need around US$28 billion of investment each year for the next seven years if they are to meet the ‘Access
Utkarsh Small Finance Bank’s IPO: what it means and why it matters
The Bank – who they are
Initially operating from the small town of Varanasi in Uttar Pradesh, India, Utkarsh was established in 2009 as a Micro Finance Institution. Over the years it has evolved into a Small Finance Bank with the objective of creating “umeed” (hope) amongst the unbanked population by providing micro, small and medium enterprise (MSME) loans, housing loans (with a specific focus on affordable housing), savings accounts and other essential financial services to the under-served low-income rural and semi-urban population in north and east India. The micro-banking segment accounts for about 66 per cent. of the bank’s gross loan portfolio.Continue Reading Utkarsh Small Finance Bank’s IPO: what it means and why it matters
India raises $2bn in first Sovereign Green Bond issuances
On January 25, 2023, the Government of India launched and sold its first-ever Sovereign Green Bond issuance for Rs80 billion ($1 billion); with half in five-year bonds at a coupon rate of 7.1% and the other half in 10-year bonds at a coupon rate of 7.29%. The auction for the second issuance took place on
India’s ECB market: long term downturn or short term blip?
Read time: 4 minutes
External Commercial Borrowings (ECBs) are commercial loans advanced to Indian borrowers in a foreign currency by non-India resident Lenders. Following the gradual relaxation of India’s tight external debt controls in the mid-1990s and early 2000s, ECBs have emerged as an important source of funding for eligible Indian entities, particularly in the
India’s bad debt – an international perspective
In January 2022, Dinesh Khara, the Chairman of the State Bank of India announced that the National Asset Reconstruction Company (“NARCL”) has received all approvals to commence its operations. NARCL is what is colloquially known as a bad bank, formed to acquire illiquid and risky assets, such as bad debt, from distressed financial institutions. NARCL
India – Modi-fied for green energy? Some reflections following COP26
During this year’s COP26 summit in Glasgow, the Indian prime minister, Narendra Modi, pledged that India would cut its emissions to net zero by 2070, and that by 2030 it would: increase non-fossil fuel energy capacity to 500 GW; meet 50 per cent of energy requirement from renewable energy; reduce total projected carbon emissions by
An Indian summer for LIBOR transition
Read time: 2 minutes 50 seconds
Over the summer, the Reserve Bank of India (RBI) issued a notice to banks and other RBI-regulated entities, emphasising the need to speed up the transition away from LIBOR. The RBI notice states that banks and financial institutions should not enter into any new LIBOR-related contracts after 31 December
2021: a critical year for LIBOR transition in India
Read time: 4 minutes 50 seconds
As well as ringing in the start of a hopefully brighter and better 2021, January also saw Indian banks testing the waters of LIBOR transition, with State Bank of India and ICICI Bank involved in their first alternative risk free rate transactions. Utilising the US dollar Secured Overnight Financing
Lessons learnt from “The Missing Cryptoqueen”: has cryptocurrency regulation caught up?
Read time: 4 minutes
As terms like social distancing and the second wave have permeated our lives throughout the 2020 Covid-19 pandemic, people have been forced to adapt to the new normal. It hasn’t been all bad, and an unanticipated quirk of lockdown has been the huge uptake in hobbies and personal interests as people