Weekend wrap: 2017 ends with a win-win for the banking sector

The much-hyped Insolvency and Bankruptcy Code gets its much needed amendment law and RCom finds buyer to reduce its debt. Also with the year coming to an end, Moneycontrol takes a look at the insolvency and digital revolution in India

One of the biggest news of the year was the passage of the Bill barring promoters of companies to buy their own assets undergoing the insolvency process in the courts.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2017, that bars wilful defaulters and existing promoters from bidding for stressed assets of companies undergoing insolvency proceedings, was passed in the Lok Sabha recently.

The new amendments are a part of the Ordinance that was brought in last month.

More than a year after the Insolvency and Bankruptcy Code (IBC), 2016, was put in place, here is a look at the emerging trends of the cases in the courts so far.

Also read: Insolvency and Bankruptcy Code: What has been done and what lies ahead?

Struggling as one amongst those undergoing insolvency proceedings, this week itself, the debt-laden Reliance Communications (RCom) entered into an agreement to sell its wireless assets to Mukesh Ambani-led Reliance Jio, brother of Anil Ambani who leads RCom. The transaction, which is subject to lenders' and other applicable approvals, will close in phased manner in January-March 2018.

A day prior, Anil Ambani, Chairman of Reliance group that owns RCom, had announced a new resolution plan to reduce its debt by up to Rs 39,000 crore through prepayment and form a new RCom with debt levels under Rs 6,000 crore.

Also, as the NPA clean up deadline ends for banks, they have filed most of the 28 accounts in the second list of the corporate defaults identified by the Reserve Bank of India to be taken to the insolvency courts.

Year-enders

Further, with the year coming to a wrap, Moneycontrol took a look at the year which witnessed its digital revolution. As the year of digital revolution in banking comes to an end, what lies ahead?

The finance ministry has also asked public sector banks (PSBs) to explore options for selling and swapping of loan assets with other lenders with a view to strengthen their balance sheets.

Depending on their competencies, banks can look at opportunities to buy or swap loan assets, sources said, adding this was one of the issues discussed during PSB Manthan last month.

The government is likely to push ahead with banking sector reforms alongside infusion of fresh capital in state-owned lenders in the new year as it looks to lift banks out of NPA crisis and revive lending growth from a 25-year low.

Bank of India and Dena Bank received the capital required from the government to boost growth and business for their banks as part of the recapitalisation plan

In another news, state-owned lender Bank of Baroda will fully acquire its mutual fund and trustee business and buy the entire 51 percent stake held by the joint-venture partner UniCredit.

Happy New Year!