Latest news with #NPAs
New Indian Express
15 hours ago
- Business
- New Indian Express
IndusInd Bank's net income sinks 68% to Rs 684 crore over legacy issues
MUMBAI: IndusInd Bank, which had red ink all across its book in the past quarter due to an internal accounting scam that shaved off more than Rs 2,340 crore, has managed to return to the black sequentially on a standalone basis in the June quarter but with a very weak set of numbers as net income plunged by a whopping 68% on-year to Rs 684 crore. The bank promoted by the Hindujas in fact had nothing in its books to write home about. On a consolidated basis, net profit fell 72 percent on-year to Rs 604 crore, according to the investor presentation on Monday. Despite the all-round poor show, brokerages said the figures are much better than they had penciled in, given the bad set of numbers it had reported in the previous quarter. In anticipation of more bad numbers, investors were averse to hold on to the bank's shares leading to a massive sell-off in its counter. After losing 5% in the intra-day, the stock finally closed with deep cuts at Rs 802.05 losing 2.63% of its value. The management led by non-executive chairman Sunil Mehta and interim executive committee led by Soumitra Sen and Anil Rao told analysts that 'though the numbers are weak they are fully clear off any one-offs and the March quarter chapter is fully behind the bank.' Mehta said the sole focus of the bank is to maintain profitability and prepare itself for the next phase of growth under a soon to be coming CEO, whose appointment is pending with the regulator, RBI. Gross NPAs jumped to 3.64% in June 2025 from 3.13% in March 2025, while net NPAs rose to 1.12% from 0.95% during the same period. But the provision coverage ratio was stable at 70 as provisions and contingencies for the June quarter declined to Rs 1,760 crore from Rs 2,522 crore in the March quarter. Total loan related provisions were at Rs 10,472 crore or 3.14% of the loan book, they said, attributing the spike in NPAs to the bank's inability to sell NPAs to ARCs or as SRs due to poor profits. In the previous quarter, the bank had reported its biggest-ever quarterly loss, as it took a nearly Rs 2,000-crore hit to its accounts in the year to March due to years of mis-accounting of internal derivative trades. Mehta said the bank has stopped the internal trading book for now.
&w=3840&q=100)
Business Standard
19 hours ago
- Business
- Business Standard
Union Bank of India puts 10 Future Group brands on block to recover dues
Public sector lender Union Bank of India has put on the block 10 brands of Future Brands Ltd, part of Kishore Biyani's Future Group, for recovery of dues. Brands being auctioned include BARE, HAUTE N SPICY, and STUDIO NYX, with the reserve price set at Rs 230 crore. The auction of secured assets is slated for the middle of August. The dues cover secured debt estimated at over Rs 181 crore, plus interest, costs, and other charges, according to the auction notice. The auction is being conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), which enables banks and financial institutions to recover non-performing assets (NPAs). A senior bank executive said the lender has an exclusive first charge on the brands. The bank wants to explore the value of these brands, which are intangible assets. The account became an NPA in early 2022, and provisions have been made in line with regulatory norms. Future Brands, a Mumbai-based entity incorporated in 2006, is a brand and intellectual property rights company focused on creating, developing, managing, nurturing, and acquiring brands. In June 2024, Acuite downgraded Future Brands Ltd's long-term rating from 'B+' to 'D'. The downgrade was based on banker feedback indicating the account's categorisation as an NPA. The rating continues to be flagged as 'Issuer Not-Cooperating' and is based on the best available information. Highlighting weaknesses associated with the entity, the rating agency noted that servicing obligations were dependent on timely refinancing or infusion of funds by the promoters, and pointed to a moderate financial risk profile. Besides licensing, FBL has advised global and Indian companies such as Colgate-Palmolive, Eicher Motors, and Tata Motors on conceptual and operational brand challenges, offering insights and knowledge-based brand solutions. In 2020, FBL held the licences to 40 brands, including John Miller, BARE, DJ&C, Fresh & Pure, Lombard, Srishti, IQIP, Knighthood, KORYO, and Rig, across fashion, electronics, and FMCG formats.
India Gazette
10-07-2025
- Business
- India Gazette
Private ARC AUM may drop 4-6% as redemptions outpace acquisitions: Crisil Ratings
New Delhi [India], July 10 (ANI): Assets under management (AUM) of private asset reconstruction companies (ARCs), as measured by security receipts (SRs) outstanding, is expected to decline 4-6 per cent to Rs 1.05 lakh crore this fiscal after sliding 15 per cent last fiscal, according to a latest report by Crisil Ratings. The rating agency said that the acquisition of stressed assets will continue to trend lower even as redemptions, which have improved in recent years, are likely to remain healthy, which will assist the ARCs. Additionally, with the securitisation of NPAs potentially disrupting the industry's status quo, ARCs may have to seek alternative opportunities to drive growth and profitability. The Crisil Ratings further added that with the Reserve Bank of India's (RBI) draft guidelines of April 2025 providing a framework for this new product, ARCs must prepare to pivot and adapt to a rapidly changing landscape. This fiscal, acquisitions by private ARCs will remain subdued. SRs issued last fiscal had already reduced 29 per cent to Rs 22,000 crore from Rs 31,000 crore in fiscal 2024, the report added. In the corporate segment, this was largely owing to limited opportunities given that gross non-performing assets (NPAs) for banks in the segment were at a multi-year low of less than 2 per cent as on March 31, 2025, and expected to remain subdued over the medium term, the report added. The report further said that despite the existence of a large stock of written-off corporate loan assets, private ARCs may not be very competitive, especially for large accounts, because of competition from the only government-supported ARC with its unique guarantee-backed SR model. As for retail assets, higher operational intensity due to stringent regulatory needs had reduced the interest among ARCs. Subha Sri Narayanan, Director, Crisil Ratings, said, 'However, retail acquisitions could see some pick-up this fiscal for two reasons. One, there is an uptick in delinquencies in certain segments, such as microfinance and unsecured loans. Two, the regulations have become more conducive. For instance, there is clarity now on appointing the selling entity as a servicer. This practice, commonly followed by ARCs, had raised eyebrows at the regulator. Moreover, ARCs can now settle retail loans under Rs 1 crore without IAC3 approval, simplifying the process.' But such acquisitions may not necessarily be AUM-accretive, given the relatively higher discount rates in retail pools, especially for unsecured loans. Nevertheless, private ARCs will continue to tap both corporate and retail assets based on opportunity and value. Apart from the quantum of acquisitions, the healthy trajectory of SR redemptions also had a bearing on AUM growth for ARCs. Lower vintage of assets in recent acquisitions, higher share of retail assets that typically churn faster, and more of optimally priced cash transactions were some of the factors driving this trend. In this milieu, private ARCs continued to see high SR redemptions at over Rs 28,600 crore last fiscal, outpacing acquisitions for the second consecutive year. Another aspect that ARCs have had to manage over the years is the evolving regulatory environment, the report added. The RBI published draft guidelines on a new product, i.e., the securitisation of stressed assets, on April 5, 2025, offering lenders an alternative to the existing ARC mechanism. This involves the selling entities -- banks and other institutions -- hawking their bad loans to special purpose entities (SPEs) that, in turn, will create securities and sell to investors. Such SPEs may appoint resolution managers (ReMs) to be responsible for the administrative process and recovery of the underlying stressed exposures. Only the RBI-regulated entities, i.e., scheduled commercial banks (excluding regional rural banks), non-banking financial companies (NBFCs; including housing finance companies) and ARCs can be appointed as ReMs. Aesha Maru, Associate Director, Crisil Ratings, stated, 'The new product could increase competition for ARCs when it comes to acquisitions. They can look to build asset-light, fee-based business models by leveraging the existing resolution infrastructure and expertise in stressed assets resolution and become ReMs under the new framework.' 'Implemented well, ARCs can reduce dependency on management fees and upside income as their primary revenue sources (which remain linked to the pace of acquisitions and redemptions) and replace that with fee income from direct transactions between selling institutions and investors. But the level of activity here would be a function of the asset quality in the financial sector,' Maru further added. (ANI)
Time of India
10-07-2025
- Business
- Time of India
Private ARC AUM may drop 4-6% as redemptions outpace acquisitions: Crisil Ratings
Assets under management (AUM) of private asset reconstruction companies (ARCs), as measured by security receipts (SRs) outstanding, is expected to decline 4-6 per cent to Rs 1.05 lakh crore this fiscal after sliding 15 per cent last fiscal, according to a latest report by Crisil Ratings . The rating agency said that the acquisition of stressed assets will continue to trend lower even as redemptions, which have improved in recent years, are likely to remain healthy, which will assist the ARCs. Additionally, with the securitisation of NPAs potentially disrupting the industry's status quo, ARCs may have to seek alternative opportunities to drive growth and profitability. The Crisil Ratings further added that with the Reserve Bank of India's (RBI) draft guidelines of April 2025 providing a framework for this new product, ARCs must prepare to pivot and adapt to a rapidly changing landscape. This fiscal, acquisitions by private ARCs will remain subdued. SRs issued last fiscal had already reduced 29 per cent to Rs 22,000 crore from Rs 31,000 crore in fiscal 2024, the report added. Live Events In the corporate segment, this was largely owing to limited opportunities given that gross non-performing assets (NPAs) for banks in the segment were at a multi-year low of less than 2 per cent as on March 31, 2025, and expected to remain subdued over the medium term, the report added. The report further said that despite the existence of a large stock of written-off corporate loan assets, private ARCs may not be very competitive, especially for large accounts, because of competition from the only government-supported ARC with its unique guarantee-backed SR model. As for retail assets, higher operational intensity due to stringent regulatory needs had reduced the interest among ARCs. Subha Sri Narayanan, Director, Crisil Ratings, said, "However, retail acquisitions could see some pick-up this fiscal for two reasons. One, there is an uptick in delinquencies in certain segments, such as microfinance and unsecured loans. Two, the regulations have become more conducive. For instance, there is clarity now on appointing the selling entity as a servicer. This practice, commonly followed by ARCs, had raised eyebrows at the regulator. Moreover, ARCs can now settle retail loans under Rs 1 crore without IAC3 approval, simplifying the process." But such acquisitions may not necessarily be AUM-accretive, given the relatively higher discount rates in retail pools, especially for unsecured loans. Nevertheless, private ARCs will continue to tap both corporate and retail assets based on opportunity and value. Apart from the quantum of acquisitions, the healthy trajectory of SR redemptions also had a bearing on AUM growth for ARCs. Lower vintage of assets in recent acquisitions, higher share of retail assets that typically churn faster, and more of optimally priced cash transactions were some of the factors driving this trend. In this milieu, private ARCs continued to see high SR redemptions at over Rs 28,600 crore last fiscal, outpacing acquisitions for the second consecutive year. Another aspect that ARCs have had to manage over the years is the evolving regulatory environment, the report added. The RBI published draft guidelines on a new product, i.e., the securitisation of stressed assets, on April 5, 2025, offering lenders an alternative to the existing ARC mechanism. This involves the selling entities -- banks and other institutions -- hawking their bad loans to special purpose entities (SPEs) that, in turn, will create securities and sell to investors. Such SPEs may appoint resolution managers (ReMs) to be responsible for the administrative process and recovery of the underlying stressed exposures. Only the RBI-regulated entities, i.e., scheduled commercial banks (excluding regional rural banks), non-banking financial companies (NBFCs; including housing finance companies) and ARCs can be appointed as ReMs. Aesha Maru, Associate Director, Crisil Ratings, stated, "The new product could increase competition for ARCs when it comes to acquisitions. They can look to build asset-light, fee-based business models by leveraging the existing resolution infrastructure and expertise in stressed assets resolution and become ReMs under the new framework." "Implemented well, ARCs can reduce dependency on management fees and upside income as their primary revenue sources (which remain linked to the pace of acquisitions and redemptions) and replace that with fee income from direct transactions between selling institutions and investors. But the level of activity here would be a function of the asset quality in the financial sector," Maru further added.
Mint
10-07-2025
- Business
- Mint
Private ARC AUM may drop 4-6% as redemptions outpace acquisitions: Crisil Ratings
New Delhi [India], July 10 (ANI): Assets under management (AUM) of private asset reconstruction companies (ARCs), as measured by security receipts (SRs) outstanding, is expected to decline 4-6 per cent to ₹ 1.05 lakh crore this fiscal after sliding 15 per cent last fiscal, according to a latest report by Crisil Ratings. The rating agency said that the acquisition of stressed assets will continue to trend lower even as redemptions, which have improved in recent years, are likely to remain healthy, which will assist the ARCs. Additionally, with the securitisation of NPAs potentially disrupting the industry's status quo, ARCs may have to seek alternative opportunities to drive growth and profitability. The Crisil Ratings further added that with the Reserve Bank of India's (RBI) draft guidelines of April 2025 providing a framework for this new product, ARCs must prepare to pivot and adapt to a rapidly changing landscape. This fiscal, acquisitions by private ARCs will remain subdued. SRs issued last fiscal had already reduced 29 per cent to ₹ 22,000 crore from ₹ 31,000 crore in fiscal 2024, the report added. In the corporate segment, this was largely owing to limited opportunities given that gross non-performing assets (NPAs) for banks in the segment were at a multi-year low of less than 2 per cent as on March 31, 2025, and expected to remain subdued over the medium term, the report added. The report further said that despite the existence of a large stock of written-off corporate loan assets, private ARCs may not be very competitive, especially for large accounts, because of competition from the only government-supported ARC with its unique guarantee-backed SR model. As for retail assets, higher operational intensity due to stringent regulatory needs had reduced the interest among ARCs. Subha Sri Narayanan, Director, Crisil Ratings, said, "However, retail acquisitions could see some pick-up this fiscal for two reasons. One, there is an uptick in delinquencies in certain segments, such as microfinance and unsecured loans. Two, the regulations have become more conducive. For instance, there is clarity now on appointing the selling entity as a servicer. This practice, commonly followed by ARCs, had raised eyebrows at the regulator. Moreover, ARCs can now settle retail loans under ₹ 1 crore without IAC3 approval, simplifying the process." But such acquisitions may not necessarily be AUM-accretive, given the relatively higher discount rates in retail pools, especially for unsecured loans. Nevertheless, private ARCs will continue to tap both corporate and retail assets based on opportunity and value. Apart from the quantum of acquisitions, the healthy trajectory of SR redemptions also had a bearing on AUM growth for ARCs. Lower vintage of assets in recent acquisitions, higher share of retail assets that typically churn faster, and more of optimally priced cash transactions were some of the factors driving this trend. In this milieu, private ARCs continued to see high SR redemptions at over ₹ 28,600 crore last fiscal, outpacing acquisitions for the second consecutive year. Another aspect that ARCs have had to manage over the years is the evolving regulatory environment, the report added. The RBI published draft guidelines on a new product, i.e., the securitisation of stressed assets, on April 5, 2025, offering lenders an alternative to the existing ARC mechanism. This involves the selling entities -- banks and other institutions -- hawking their bad loans to special purpose entities (SPEs) that, in turn, will create securities and sell to investors. Such SPEs may appoint resolution managers (ReMs) to be responsible for the administrative process and recovery of the underlying stressed exposures. Only the RBI-regulated entities, i.e., scheduled commercial banks (excluding regional rural banks), non-banking financial companies (NBFCs; including housing finance companies) and ARCs can be appointed as ReMs. Aesha Maru, Associate Director, Crisil Ratings, stated, "The new product could increase competition for ARCs when it comes to acquisitions. They can look to build asset-light, fee-based business models by leveraging the existing resolution infrastructure and expertise in stressed assets resolution and become ReMs under the new framework." "Implemented well, ARCs can reduce dependency on management fees and upside income as their primary revenue sources (which remain linked to the pace of acquisitions and redemptions) and replace that with fee income from direct transactions between selling institutions and investors. But the level of activity here would be a function of the asset quality in the financial sector," Maru further added. (ANI)
