Lending Trouble

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Irfan M A, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

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The ripples created by Vijay Mallya’s Kingfisher Airlines defaulting their repayments has not yet settled. The arrest of the top brass of IDBI Bank for approving Mallya’s loan has made the banks, especially the public sector to be cautious in dealing with the large non performing accounts.  It seems that the stressed loan accounts may  have to undergo the bankruptcy code and might not get a helping hand like they used to in the past. Previously, the banks used to take certain steps to help the corporate borrowers during stressful times. They often restructure through methods like lowering of the interest rates, increasing the payback period, conversion of debt into equity in which the bank appoint its representative in the director board, all of which actually helped these heavy borrowers to surpass their hurdles.

When the bankruptcy code is invoked as soon as the business is stressed out, without considering the restructuring option in fear of actions from enforcement agencies, the firms which otherwise might have had a huge chance of being revived, will get axed without even being given a second chance. This actually does more harm as once the firm is declared bankrupt, it can never be sold for the market valuation it had. The firms will be taken up for auction by the banks which fetches them only a depressed value or as in many cases, no takers at all. Thus the banks lose out again on a large chunk of its capital. At the end of all this the public funds are at stake due to this. Hence it is high time that the RBI come up with a structured procedure to revive large corporate firms depending upon their potential to rise again. Instead of writing off the large debts , it can actually be realized in most of the cases. The current behavior of the banks might only help the asset reconstruction firms.

The New POTUS

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Irfan M A, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

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Trump’s entry into the mainstream politics as the president of the United States, the most powerful chair in the world, has been the most talked about topic these days. Holding a real estate conglomerate, Trump contested the elections through a Republican ticket and his run to the post was full of controversies. His statements regarding religious minorities, ethnic groups and women had irked many. These could be seen as a part of a well defined strategy to instil nationalism in the minds of the American people and has worked extremely well for his campaign. Although there were allegations that Russia has intervened in the election process aiding Trump, a couple of things which worked in his favour were his opponent Hilary Clinton’s leaked email controversy and the fact that she had nothing different from the usual set of politicians whom the people were fed up with. His maiden speech got many by the nerves, mainly Indian IT firms and businesses relying on export to US.

As the new president has taken over, there are many who are looking forward to his reigns favoring the American people on one side and the whole gamble of media and entrepreneurs keenly watching and adapting to his new policies on the other side. At this point in time, the only thing that we can say is that the show has just begun.