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Essence of the Week
Jul 03, 2017 | Source: AxisDirect
Banking sector resolution efforts picked up a notch with the RBI identifying 12 accounts that can be referred for bankruptcy proceedings. The central bank has asked for 50% provisioning on the secured and 100% provisioning on the unsecured bits of these accounts.
In addition, the central bank has given a broad guideline that accounts with outstanding greater than INR 50bn where atleast 60% of the amount has been classified as NPA can be taken up for bankruptcy proceedings. The government, RBI and other probe agencies have put 50 other stressed assets on a watch list which may be taken up in the next round.
All of this cleansing obviously presents an overhang on the profitability of wholesale lenders (& banking index), due to higher provisioning,which could continue into FY19 as well.
Enough has been said about GST already, here is a list of key data points to track progress:
Restocking of inventory after the drawdown – PMI on 1 August should provide initial signs
Retail prices – Movement of mandi and retail prices and final CPI mid August
Tax collection – Monthly tax collection figures end August
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Essence of the Week