RBI’s the Good the Bad & the Ugly Funding Ambani vs Farmers
RBI On June02, 2016 issued two notifications: –
1. ‘Refinancing of Loss Making & Defaulting Corporate/Companies’ and
2. Directions to Banks on ‘Disaster Affected Farmers’.
UGLY RBI: – Companies are Organizations which inherently compete with Rivals in own country & globally – Badly managed companies can be sold & handed over to New Management or Better Performing Companies – TATA took over CORUS & JLR or replace company management with PROFESSIONAL CEO, DIRECTORS. NO SUCH THING HAS HAPPENED BUT INSTEAD.
Ø Not considering Vijay Mallya like situation prevailing in over 50% Corporate reporting
over Rs.500,000 Cr Losses for FY2015-16, Companies who had taken term loans many times in past were allowed to take NBFCs Loans for ‘Longer Term’ without agreement with earlier Lenders who are not getting their dues.
Refinancing of Project Loans.
[3.] Accordingly, NBFCs may refinance any existing infrastructure and other project loans by way of take-out financing, without a pre-determined agreement with other lenders, and fix a longer repayment period, the same would not be considered as restructuring.
UGLIEST OF ALL 1: - Stressed Companies like SUGAR MILLS Stop Payments to Farmers, TATA MOTORS Stop Paying Dues of Hundreds of Ancillaries and RIL Diverting FUNDS to 103 Subsidiaries Most Loss Making & Tax Avoiding – SHOULD ACTUALLY BE BLACK LISTED.
UGLIEST OF ALL 2: - 75% of Farmers not Getting BANK Loans, Depend on MONEYLENDERS.
UGLIEST OF ALL 3: - Banks to Share Company & Corporate Losses ---- ‘fair sharing of losses between promoters and creditors.’
UGLIEST OF ALL 4: - Why Can’t Companies Go to MONEYLENDERS, for RIGHTS ISSUE, or Sell Promoters Share, or IPO, or Sell Assets to FUND TURNAROUND?
UGLIEST OF ALL 5: - In matters of ‘RE-FINANCING FARM LOANS’ Out of 12 designated Calamities - Cyclone, Drought, Earthquake, Fire, Flood, Tsunami, Hailstorm, Landslide, Avalanche, Cloudburst, Pest Attack and Cold wave/Frost
- except ‘Pest Attack’ all are WEATHER RELATED instead of IMD or SKYMET – Home Ministry & Agriculture Ministry are NODAL Agencies in Declaring Calamity but these ministries adopt ‘Ostrich-Like Attitude’ – Supreme Court.
RBI IGNORED SUPREME COURT IN TRUE LETTER & SPIRIT
‘HARD JUDGEMENT – SOFT & POOR RESPONSE’
BAD RBI: - RBI in case of DROUGHT or DISASTER affected Farmer merely directed Banks to follow older directions of JULY01, 2015.
Implementation of Supreme Court Orders in Writ Petition by Swaraj Abhiyan against Union of India and others- Guidelines on Relief Measures by banks in areas affected by Natural Calamities
During the hearing of the captioned Writ Petition, the Hon'ble Supreme Court has directed the concerned authorities in the Union of India, the State Governments and the Reserve Bank of India and other banks to religiously implement their policies since they are ultimately intended for the benefit of the people of our country and not for the benefit of any stranger.
In view of the above, all the Scheduled Commercial Banks (excluding RRBs) are advised to ensure implementation of our guidelines on Relief Measures by banks in areas affected by Natural Calamities contained in our Master Circular dated July 1, 2015.
Hard Hitting – Supreme Court OBSERVATIONS
1. ---- ‘An ostrich-like attitude is a pity, particularly since the persons affected by a possible drought-like situation usually belong to the most vulnerable sections of society. The sound of silence coming from these States subjects the vulnerable to further distress. During the hearing of this public interest petition, no one alleged a lack of effective governance, only the lack of an effective response and therefore we are at a loss to understand the hesitation of these States.’
2. -- The failure of these States to declare a drought (if indeed that is necessary) effectively deprives the weak in the State the assistance that they need to live a life of dignity as guaranteed under Article 21 of the Constitution.
3. -- firstly, we were of the prima facie opinion that the reliefs sought in the writ petition arising out of drought-like conditions and a declaration of drought in some parts of the country was not a political issue but a matter of grave humanitarian distress and invited concern for the affected persons and animals, particularly livestock.
GOOD RBI: - Only one good thing Raghuram Rajan did so far as Governor of RBI is ‘Early Recognition of Stress and Setting up of Central Repository of Information on Large Credits (CRILC)’ – But even this is ‘Half Hearted.’
Ravinder Singh, Inventor & Consultant, INNOVATIVE TECHNOLOGIES AND PROJECTS
Y-77, Hauz Khas, New Delhi-110016, India. Ph; 091- 9871056471, 9718280435, 9650421857
Ravinder Singh* is a WIPO awarded inventor specializing in Power, Transportation,
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