Latest news with #M.Nagaraju
Mint
09-05-2025
- Business
- Mint
Centre puts merger plans on hold after trio of weak general insurers hit profit
New Delhi: The government has deferred plans to merge or privatize three public sector general insurance companies to FY27 after they posted profits, people familiar with the matter said, giving them time to notch up sustained profitability. The three companies—United India Insurance, Oriental Insurance Company and National Insurance Company—are the weaker of the four state-owned general insurers. But they posted profits in the first nine months of FY25, a turnaround after years of losses. United India reported profits of ₹27.45 crore, Oriental Insurance ₹368.37 crore and National Insurance ₹29.46 crore in the period. The fourth company, New India Assurance, is the stronger of the quartet. Also read: Man Industries to complete Saudi facility in FY26, says MD Nikhil Mansukhani All three have been told to focus on profitability rather than revenue growth as the government sets out to monitor their performance for a possible decision next year. If the insurers remain profitable through FY26, options such as a merger or even privatization may be revisited, the people mentioned above said. A potential merger could involve the integration of the three entities and their subsequent amalgamation with the stronger New India Assurance. 'The weaker general insurers have shown improved performance in FY25, with all three posting profits in the first nine months. If they remain profitable through all four quarters of FY26, the government may consider options next year,"the first person mentioned above said. 'Privatization of one insurer is also under consideration. However, no formal policy decision has been taken yet," the person mentioned above said, requesting anonymity. Also read: State-run banks may be tasked to clear 30-40% unclaimed deposits in FY26 Meanwhile, the three insurers have been directed to focus on profitable business and prioritize improving margins over chasing revenue growth, the second person mentioned above said. 'The emphasis is now on underwriting discipline, cost control and better risk assessment to ensure sustainable profitability," the person said. At a recent event, financial services secretary M. Nagaraju said no decision had been taken yet on merging the PSU insurers and that the government would announce its policy when one was finalized. An emailed query sent to the finance ministry remained unanswered at the time of publishing. Spokespersons for United India Insurance, Oriental Insurance Company, National Insurance Company and New India Assurance didn't respond to emailed queries. Ironically, talk of consolidation in the public sector general insurance space has grown louder with the improved performance shown by these historically loss-making entities. Oriental and National began posting profits from Q4 FY24 and Q2 FY25, respectively, while United India turned profitable in Q3 FY25 after a gap of seven years. However, their solvency positions remain weak. As of 31 December, 2024, United India's solvency ratio stood at -0.91, Oriental Insurance's at -1.05 and National Insurance's at -0.53—well below the regulator's mandated minimum of 1.5. A negative solvency ratio indicates that liabilities exceed assets, raising concerns about financial stability. 'As we have seen in the banking industry in India, there has been a business case of merging an under-performing bank with a leading performer. In such mergers, the leading performer can support the acquired business at negligible accretive cost for the overall good of the customers and shareholders alike," said Narendra Ganpule, Partner, Grant Thornton Bharat. Also read: Payments from public sector cos to govt likely to cross ₹80,000 cr in FY26 'However, when you merge two below-par performers, you don't get that benefit. It ends up becoming a larger inefficient company. The way to go should be to find a buyer for these companies through a competitive bidding process for the larger good of the companies, employees, customers and to ensure the financial prudence of taxpayers' money," he added. The government had earlier proposed merging the three into a single entity and listing it on the stock exchanges. It also considered whether one of the three could be privatized or if the merged entity itself could undergo equity dilution. The merger plan was announced in 2018 by then finance minister Arun Jaitley. However, it stalled as the insurers continued to incur losses and remain weak on solvency ratios.
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Business Standard
08-05-2025
- Business
- Business Standard
DFS tells public sector banks to speed up CIRP filings, cut delays at NCLT
The Department of Financial Services (DFS) has called on public sector banks (PSBs) to minimise procedural delays, particularly in filing applications under the Corporate Insolvency Resolution Process (CIRP), in an effort to accelerate the resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC). At a high-level review meeting, DFS Secretary M. Nagaraju emphasised the need for banks to expedite the admission of cases at the National Company Law Tribunal (NCLT), avoid unnecessary adjournments, and ensure that other recovery channels are actively pursued in parallel with the IBC route. The meeting, attended by senior officials from DFS, the Ministry of Corporate Affairs, the Insolvency and Bankruptcy Board of India (IBBI), and top PSB executives, focused on improving the efficiency of the insolvency resolution process and eliminating bottlenecks that delay asset recoveries. Banks were specifically instructed to regularly review their top twenty non-performing accounts and monitor cases where resolution plans have been pending with the Committee of Creditors (CoC) for more than three months. DFS also stressed the importance of promptly vacating stay orders to prevent further delays in the resolution process. According to a finance ministry statement, a detailed review of cases pending for admission at the NCLT was undertaken. Banks were advised to adopt a more proactive approach in filing and following up on CIRP applications. Legal teams at banks were directed to strongly contest any attempts to stall proceedings on frivolous grounds.
Mint
07-05-2025
- Business
- Mint
Can JSW ruling upset insolvency regime's balance?
The Supreme Court ruling quashing Bhushan Power & Steel's (BPSL) resolution plan has upended JSW Steel 's ₹ 19,000 crore acquisition. Mint explains the recovery options—from a Supreme Court review to potential government intervention. The Supreme Court ruling invalidating JSW Steel's ₹ 19,700 crore acquisition of BPSL is a major blow to its growth ambitions, especially its 2030 target of achieving 50 million tonnes (mt) of steel capacity. JSW paid ₹ 19,350 crore to settle BPSL's creditors. BPSL's Odisha Jharsuguda plant contributed 13% to JSW's total production and around 10-11% of Ebitda (earnings before interest, taxes, depreciation and amortization). Analysts say losing the asset could slash JSW's FY26 Ebitda by ₹ 4,000–4,500 crore. The ruling affects 2.5mt of flat products, disrupting downstream sectors. With the SC annulling JSW Steel's acquisition, banks must return ₹ 19,350 crore under the March 2020 CoC undertaking. JSW had paid this to settle ₹ 47,204.51 crore owed to BPSL's financial creditors. Major public lenders like State Bank of India , Punjab National Bank and Canara Bank , along with private lenders like Axis Bank and Karur Vysya Bank , are affected. With BPSL now heading for liquidation, lenders are likely to recover far less than under the resolution plan. This affects earnings, especially amid pressure on PSU banks' margins and could worsen with Reserve Bank of India's expected rate cuts in FY26. Also Read | Mint Primer | India's economy looks strong. What could go wrong? JSW Steel and the lenders can file a review petition before the Supreme Court within 30 days under Article 137 of the Constitution. A full reversal is unlikely, say analysts, but partial relief—such as clarity on JSW's paid funds—is possible. A new bench may hear the petition, as Justice Bela Trivedi, who was part of the ruling bench, is set to retire in the first week of June. The government is reviewing the ruling decision. Department of Financial Services secretary M. Nagaraju said the matter could soon be placed before the government for legal or policy action. Experts suggest the Centre may issue an ordinance to uphold the finality of resolution plans and curb post-resolution litigation. Drawing from Insolvency and Bankruptcy Code amendments, the Centre may consider statutory protection for resolution applicants like JSW to avoid uncertainty in future insolvencies. Experts warn that the judgment could weaken the IBC by eroding the finality of resolution plans. Reopening settled cases over procedural lapses may deter bold decisions by lenders and the CoC. Resolution professionals might become too cautious, slowing things to avoid risk. Using Article 142 to reverse an implemented resolution plan and order liquidation is unprecedented and raises concerns of judicial overreach, potentially disrupting the balance in India's insolvency regime.
Hans India
06-05-2025
- Business
- Hans India
RRBs should leverage lending in agriculture, MSME schemes: DFS Secretary
New Delhi: The government has urged regional rural banks (RRBs) to leverage their lending in agriculture and allied activities, MSMEs and government-sponsored schemes, with the implementation of the 'One State-One RRB' initiative. M. Nagaraju, Secretary, Department of Financial Services (DFS) reviewed performance of RRBs and progress on amalgamation plan in Mumbai. The DFS Secretary urged the rural banks to continue to focus on their amalgamation process and long-term sustainability. RRBs have grown in their reach to more than 22,000 branches, covering 700 districts of the country and more than 92 per cent of its branches are in rural/semi urban areas. They have recorded consolidated net profit of Rs 7,148 crore in FY 2024-25. Gross non-performing assets (GNPA) reached a new low of 5.3 per cent, lowest in a decade period. Nagaraju also asked sponsor banks to guide RRBs in their amalgamation process and provide level-playing field for long-term sustainability. 'Sponsor banks should continue to facilitate technology upgradation in RRBs and to complete integration process adhering to the strict timelines of 30-09-2025,' he said. He also suggested sponsor banks and RRBs to also address HR-related issues emerging in the process. The DFS Secretary asked sponsor banks and RRBs to recognise the challenges that lie ahead. Sponsor banks, in consultation with RRBs, were asked to draft a roadmap for RRBs for next five years. NABARD Chairman and officials of DFS, sponsor banks, SIDBI, Reserve Bank of India and Chairpersons of all RRBs were also present at the meeting. Last month, the Department of Financial Services notified the amalgamation of 26 Regional Rural Banks (RRBs) on the principles of 'One State One RRB' as part of the fourth phase of the continuing exercise to improve efficiency. At present, 43 RRBs are functioning in 26 states and 2 UTs. Post amalgamation, there will be 28 RRBs in 26 states and 2 UTs with more than 22,000 branches covering 700 districts. Their predominant area of operation is in rural areas, with approximately 92 per cent of branches in rural and semi-urban areas. RRBs play a crucial role in promoting rural economic development by providing financial services, particularly credit and other facilities, to small and marginal farmers, agricultural labourers, artisans, and small entrepreneurs in underserved rural areas.
Reuters
17-02-2025
- Business
- Reuters
India mulls raising limit for bank deposit insurance, financial services secretary says
NEW DELHI/MUMBAI, Feb 17 (Reuters) - India is actively considering raising the bank deposit insurance coverage, a top official said on Monday, days after the central bank suspended withdrawals from New India Co-operative Bank over supervisory concerns. Every Indian bank account holder's deposits are insured up to 500,000 rupees ($5,758) in case a bank goes under. In 2020, the limit was raised from 100,000 rupees after restrictions were placed on Punjab and Maharashtra Cooperative Bank over financial irregularities. "This is under active consideration of the government," Financial Services Secretary M. Nagaraju said of another hike. "As and when the government approves, we will notify," he said, without specifying the new limit under consideration. Asked about the waning depositor sentiment after the restrictions on New India Co-operative Bank, Nagaraju said, the Reserve Bank of India (RBI) is appraised of the matter, declining to comment further. On February 13, RBI superseded the Mumbai-based lender's board and barred it from issuing new loans while suspending withdrawals for six months. ($1 = 86.8410 Indian rupees)
