Latest news with #SecuritisationandReconstructionofFinancialAssetsandEnforcementofSecurityInterestAct
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Business Standard
28-07-2025
- 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.
Mint
22-07-2025
- Business
- Mint
PSU banks' gross bad assets drop to 2.58% in FY25 from 9.11% in FY21: Govt
New Delhi: The government on Tuesday said that the gross non-performing assets (NPA) ratio of public sector banks (PSBs) has declined from 9.11% in March 2021 to 2.58% in March 2025, marking a consistent improvement over the past five financial years. In a written reply to a question in the Rajya Sabha, minister of state for finance Pankaj Chaudhary said gross NPAs of PSBs stood at ₹ 6.16 trillion as of 31 March, 2021, and have since dropped by more than half to ₹ 2.83 trillion as of 31 March, based on provisional RBI data. Chaudhary attributed this sharp reduction to comprehensive measures taken by the government and the Reserve Bank of India (RBI) to reduce and recover NPAs. He said the Insolvency and Bankruptcy Code (IBC) has transformed the credit landscape by altering the creditor-borrower relationship, stripping defaulting promoters of control and barring wilful defaulters from resolution processes. Personal guarantors to corporate debtors have also been brought under the IBC's ambit to tighten the enforcement process. Choudhary said the government has amended the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Recovery of Debt and Bankruptcy Act, increasing the pecuniary jurisdiction of Debt Recovery Tribunals (DRTs) to focus on high-value cases, resulting in higher recovery. Public sector banks have set up specialised stressed assets management verticals and branches for effective monitoring. Deployment of business correspondents and adoption of the feet-on-street model have also boosted the recovery trajectory of NPAs in banks. Prudential framework for resolution of stressed assets was issued by RBI to provide a framework for early recognition, reporting and time bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan. The minister also outlined RBI-mandated practices around asset valuation. Banks are required to follow board-approved policies for property valuation, conducted by independent, qualified valuers. For assets worth ₹ 50 crore or more, at least two independent valuation reports must be obtained to ensure transparency. As per RBI's master circular on Income Recognition, Asset Classification and Provisioning (IRAC) norms (dated 1 July 2015), immovable properties held as collateral must be revalued once every three years. Additionally, under the Joint Lenders' Forum (JLF) guidelines issued in 2014, banks can seek explanations from valuers who overstate security values and report such instances to the Indian Banks' Association.
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Business Standard
22-07-2025
- Business
- Business Standard
IBC helps to resolve total bad debt worth ₹26 trillion in nine years
The introduction of the Insolvency and Bankruptcy Code (IBC) in 2016 has enabled the resolution of total debt worth Rs 26 trillion to date, reflecting its deterrent effect on defaulting borrowers. The direct resolution of approximately Rs 12 trillion of debt for about 1,200 cases of stressed borrowers, according to CRISIL Ratings' analysis. More importantly, it has also created significant deterrence among borrowers, leading to the settlement of around 30,000 cases with approximately Rs 14 trillion of debt, even before applications made to the National Company Law Tribunal (NCLT) were admitted, it said. CRISIL, in a statement, said IBC brought a change in the debt resolution approach by shifting from a "debtor-in-control" model to a "creditor-in-control" framework. This distinguishes IBC from other debt resolution mechanisms existing prior to it, such as the Debt Recovery Tribunal (DRT), Lok Adalat, and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI). Since 2016, the total debt of around Rs 48 trillion has been resolved across different debt resolution mechanisms. The average recovery rate under the IBC has been the highest at 30-35 per cent, compared to around 22 per cent for SARFAESI, about 7 per cent for DRT, and just 3 per cent for Lok Adalat. The relative success of the IBC compared to other debt resolution mechanisms has been due to factors like the flexibility accorded to creditors to change the management of viable assets on a going-concern basis and to right-size debt. These, coupled with the improved economic environment over the past three fiscals, have boosted investor interest, especially in the infrastructure and manufacturing sectors, CRISIL said. Mohit Makhija, Senior Director, Crisil Ratings, said, 'Aided by its deterrence effect, IBC will remain the preferred route for debt resolution in the days ahead. The improved economic viability of infrastructure and manufacturing assets makes them lucrative for investors to acquire and turn around under the IBC. Further, small- to mid-sized assets, which form around 85 per cent of the IBC's unresolved pipeline, are likely to attract investors with varied risk appetites,' he added. The IBC also enabled the resolution of numerous small- to mid-sized distressed assets in recent years. This is exemplified by the fact that while the past three fiscals accounted for 60 per cent of all resolution approvals since the IBC's introduction, they represented only 40 per cent of the total debt. A higher number of eligible investors, who qualify to participate in bids, will keep the demand for these small- to mid-sized distressed assets intact. While IBC has been periodically amended to further enhance its efficiency, stretched timelines and limited success in implementation for certain sectors may require some additional interventions, it added.
New Indian Express
22-07-2025
- Business
- New Indian Express
Nine years of IBC: Over Rs 26 trillion stressed debt resolved
MUMBAI: The Insolvency and Bankruptcy Code (IBC), introduced nine years ago in May 2016, has enabled direct resolution of Rs 12 trillion (excluding cases under liquidation) of debt across 1,200 cases of stressed borrowers but when the indirect resolutions are considered, the number tops Rs 26 trillion and another Rs 22 trillion of debt have been resolved through other mechanisms. While the IBC has directly resolved Rs 12 trillion worth of stressed loans, it has also created significant deterrence amongst borrowers leading to the settlement of 30,000 cases with Rs 14 trillion of debt even before insolvency applications were admitted by the various benches of the national company law tribunals (NCLTs), shows and analysis by Cirisil Ratings. When the number of resolutions through the pre-IBC mechanisms like the debt recovery tribunals (DRTs), the lok adalats and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), the total resolved debt tops Rs 48 trillion since 2016. While the IBC has been periodically amended to further enhance its efficiency, stretched timelines and limited success in implementation for certain sectors may need some more interventions, the report primary changes in debt resolution approach that IBC brought in has been the shift from a debtor-in-control model to a creditor-in-control framework that distinguishes it from other debt resolution mechanisms existing prior to IBC such as the debt recovery tribunals (DRTs), the lok adalats and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi). This has meant that since 2016, of the total resolved debt of Rs 48 trillion across different debt resolution mechanisms, the average recovery rate under the IBC has been the highest at around 35%, versus 22% for Sarfaesi, 7% for DRTs and 3% for lok adalats. Other reasons for the relative success of the IBC over other debt resolution mechanisms include the flexibility accorded to creditors to change the managements of viable assets on a going-concern basis and to right-size debt. These, coupled with the improved economic environment over the past three fiscals, have boosted investor interest, especially in the infrastructure and manufacturing sectors. The IBC has also enabled the resolution of numerous small-to-mid sized (up to Rs 500 crore) distressed assets--while the past three fiscals accounted for 60% of all resolution approvals since the IBC, it represented only 40% of the total debt. According to Mohit Makhija, a senior director with Crisil, one-fourth of total debt resolved since 2016 has been through the IBC, contributing to 50% of total recovery. Aided by its deterrent effect, the IBC will remain the preferred route for debt resolution going ahead as well. Further, small-to mid-sized assets, which form 85% of the IBC's unresolved pipeline, are likely to attract investors with varied risk appetites. That said, the key challenge, according to him that IBC faces, has been the high backlog of cases at the NCLTs, primarily due to procedural delays at various stages and cross-litigation by stakeholders stretching the resolution timelines beyond what was earlier envisaged (713 days as of last fiscal vs the regulatory prescribed 330 days).To address this, the Insolvency and Bankruptcy Board of India (IBBI) has increased the bench strength of NCLTs, allowed routine submissions by resolution professionals online, and enabled part-wise resolution of corporate debt.
Time of India
28-06-2025
- Business
- Time of India
Chikkamagaluru planter seeks euthanasia after farmland auction for loan default
Chikkamagaluru: A coffee planter from Chikkamagaluru district, struggling with debt, sought permission for euthanasia after his bank auctioned his farmland under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), leaving him without means of income. Dr Vijaya and his wife HN Parvathi presented their petition to the President of India through tahsildar, Rajshekhar. Vijaya borrowed Rs 25.9 lakh against his four acres of coffee plantation located at survey number 40/2 in Kelluru village. In addition, his wife borrowed a Rs 6 lakh agricultural loan against her 3.39 acres under survey number 40/1. However, they both failed to repay the loan due to repeated crop loss, price drop, the Covid-19 pandemic, and bad weather. Apart from this, wild animals damaged the coffee plantation put the couple into hardship to repay the loan amount. "In 2024, we repaid Rs 5.3 lakh, and the bank had assured us time to repay the remaining dues but they auctioned our property," Vijaya said. He stated, "Property worth nearly Rs 3 crore was sold online for just Rs 89.5 lakh. We are now left with no means to survive." The Raitha Hitha Rakshana Vedike condemned the banks for the inhumane act. BK Lakshman Kumar, president of the Vedike, said for the first time in the history of the district, a farmer has pleaded for mercy killing due to distress caused by SARFAESI Act. He there are 2,700 farmers under the SARFAESI bracket in the district, of which 400 have repaid loans. However, 2,300 farmers are at risk of losing their lands. He urged the authorities concerned to protect the welfare of farmers.
