FM Sitharaman launches eBक्रय for online auction of assets attached by banks

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New Delhi : Union Finance Minister Nirmala Sitharaman on December 28, 2019, discussed banking issues with chiefs of Public Sector Banks (PSBs), chief executive of Indian Banks’ Association, and representatives of leading private sector banks. Finance Secretary, Revenue Secretary, Economic Affairs Secretary, Electronics and Information Technology Secretary, CBI Director, RBI representative and the chief executive officer of NPCI were also present.

The PSBs have attached assets worth over Rs. 2.3 lakh crore over the last three financial years and to enable online auction by banks of attached assets transparently and cleanly for improved realisation of value, eBक्रय, a common e-auction platform was  launched on December 28, 2019, by the Finance Minister.

The platform is equipped with property search features and navigational links to all PSB e-auction sites, provides single-window access to information on properties up for e-auction as well as facility for comparison of similar properties, and also contains photographs and videos of uploaded properties. As on December 27, 2019, a total of 35,000 properties had been uploaded on the platform by PSBs, according to a PIB release.

To strengthen banks, in addition to the recent infusion of Rs 60,314 crore, additional infusion of Rs 8,855 crore (Rs 4.360 crore to Indian Overseas Bank, Rs 2,153 crore to Allahabad Bank, Rs 2,142 crore to UCO Bank, and Rs 200 crore to Andhra Bank) has been approved and would be released shortly.

Having improved asset quality and internal resource generation, PSBs are now fully poised to support prudential credit growth towards a $ 5 trillion economy by 2025.

PSBs have sanctioned over 11.68 lakh Repo-linked loans to retail borrowers for home/vehicle/education/personal loans and to micro and small enterprises, amounting to Rs. 1.32 lakh crore post Finance Minister’s announcements on August 23, 2019, on measures to boost the economy.

On December 11, 2019, the Union Cabinet  approved the recently launched Partial Credit Guarantee Scheme (PCGS) that would now cover NBFCs/HFCs which may have slipped into SMA-0 (up to 30 days overdue) category during the one-year period prior to August 1, 2018, and asset pools rated BBB+ or higher. Under PCGS, the Government has already approved issuance of guarantee for buy-outs of NBFC asset pools worth Rs 4,294 crore from 10 NBFCs/HFCs covering a wide spectrum of entities.

Post IL&FS default, aided significantly by Government support, assets of NBFCs have grown by 12.83% from Rs 28.31 lakh crore to Rs 31.94 lakh crore, and assets of the 211 larger NBFCs with 81% of market share have grown at an even higher rate of 19.69%. Bank exposure to NBFCs has grown at a much higher rate of 17.46% as compared to market financing.

Similarly, 76 out of 101 HFCs with 82% of market share have shown a positive asset growth of 18% post IL&FS default from Rs 8.45 lakh crore to Rs 10 lakh crore. Exposure of banks and NHB to the 76 performing HFCs has grown by 38% post IL&FS default, as compared to 14% growth in market financing to these HFCs, according to a PIB release.

Thus, the NBFC/HFC sector post IL&FS default, is now stabilising and good NBFCs/HFCs are able to raise funds from market even at times at rates less than the pre-IL&FS rates. The market is, however, distinguishing between good and not-so-good entities which is reflected in the better entities being able to obtain higher financing from both banks and the market.