Unending pain: On SBI’s Q3 loss
Governance reforms and recognition of losses are a must to solve the bad loans crisis
If the financial performance of India’s largest lender is anything to go by, an end to the severe bad loans crisis may be much farther beyond the horizon (आकाशगर्भ मण्डल) than previously anticipated. For the first time in almost 19 years, the State Bank of India reported a quarterly loss of ₹2,416 crore for the three months ended December, compared with a net profit of ₹2,610 crore in the year-earlier period. While the figures are not strictly comparable after SBI completed merger with its associates, the loss was the result of both a massive increase in provisions to account for bad loans and a substantial (वास्तविक) amount of mark-to-market losses on its holding of government bonds. Provisions for non-performing assets (NPAs) more than doubled to about ₹17,760 crore, from about ₹7,200 crore in the third quarter of 2016-17. On treasury operations, SBI recorded a loss of about ₹3,255 crore, versus a profit of about ₹4,776 crore in the comparable period. The bank revealed that an audit by the Reserve Bank of India showed a divergence (असहमति) of ₹23,239 crore in the way it classified assets at the end of the last financial year, which led to increase in provisions in the last quarter. Most of these reclassified assets are linked to troubled projects in sectors including power and telecom. SBI, of course, is not the only lender to have had its assets forcibly reclassified by the RBI. Private sector lenders have also been found guilty of pushing troubled assets under the carpet until the RBI called their bluff.
It may be tempting to believe that last year’s bankruptcy law reforms will soon begin to ease the pain at banks by encouraging the quick sale of assets of troubled borrowers. The proceeds from such sales, however, would likely amount to very little in comparison with the mammoth (विशालकाय) scale of troubled assets. According to a joint study by Assocham and Crisil, gross NPAs in the banking system are estimated to increase to ₹9.5 lakh crore by March 2018, from ₹8 lakh crore a year earlier. In that case, write-offs recognising losses may be the most honest and practical way to deal with the bad loans problem. So the RBI in the coming months should continue to push banks, both public and private, to promptly recognise the stressed loans on their portfolios (निवेश सूची). Incidentally, Prime Minister Narendra Modi last week laid the blame for bad loans on the previous government. While it is quite true that the present bad loans crisis has been a long time in the making, the problem of lax corporate governance, which has plagued (से ग्रस्त) public sector banks and contributed in no small measure to the present crisis, still remains largely unaddressed by the government. Even the latest plan to recapitalise public sector banks may achieve little more than giving some temporary relief to lenders for the sake of reviving credit growth. The bad loans problem is likely to remain a festering (कटुता उत्पन्न करना) sore and risks undermining (कमज़ोर कर देना) the health of the economy until meaningful structural reforms to the banking system are undertaken.
1. Horizon: The limit of a person’s knowledge, experience, or interest.
Synonyms: range of experience, outlook, perspective, scope, perception, compass, sphere, ambit, orbit, purview
2. Substantial: having great meaning or lasting effect
Synonyms: big, consequential, earthshaking, earth-shattering, eventful, historic, major, material, meaningful, momentous, monumental, much, significant, important, tectonic, weighty
Antonyms: inconsequential, inconsiderable, insignificant, little, minor, negligible, slight, small, trifling, trivial, unimportant
3. Divergence: a movement in different directions away from a common point
Synonyms: bifurcation, divarication, divergency, separation
Antonyms: convergence, accord, agreement
4. Mammoth: unusually large
Synonyms: jumbo, king-size (or king-sized), leviathan, huge, massive, mega, mighty, monster, monstrous, monumental, mountainous, oceanic, pharaonic, planetary, prodigious, super, super-duper, supersize, supersized, titanic, tremendous, vast, vasty, walloping, whacking, whopping
Antonyms: bantam, bitty, diminutive, infinitesimal, Lilliputian, little bitty, micro, microminiature, microscopic (also microscopical), midget, miniature, minuscule, minute, pocket, pygmy, teensy, teensy-weensy, teeny, teeny-weeny, tiny, wee
5. Portfolios: A range of investments held by a person or organization.
Synonyms: investments, shares, holdings, securities, equities, bonds
6. Plagued: A thing causing trouble or irritation.
Synonyms: bane, curse, scourge, affliction, blight, cancer, canker
7. Festering: the process by which dead organic matter separates into simpler substances
Synonyms: breakdown, decay, decomposition, corruption, putrefaction, putrescence, rot, spoilage
Antonyms: growth, maturation, ripening
8. Undermining: a gradual weakening, loss, or destruction
Synonyms: attrition, erosion, corrosion, waste
Antonyms: gain, increase, buildup
BNP in a bind: On Khaleda Zia conviction
Former PM Khaleda Zia’s conviction heightens political uncertainty in Bangladesh
The sentencing of former Bangladesh Prime Minister Khaleda Zia to five years of rigorous (कठिन) imprisonment by a special judge’s court in Dhaka on charges of corruption has upended (उलट जाना) politics in an election year. Her arrest and possible disqualification from contesting — unless higher courts decide otherwise — has created a political crisis for her Bangladesh Nationalist Party, and equally a challenging opportunity for the ruling Awami League. The BNP is entirely dependent for leadership on the Zia family. With Ms. Zia’s son Tarique Rahman, who has been named the acting chairperson of the party, in exile (निर्वासित करना) in London after being convicted in another corruption case in 2016, the BNP is caught in a bind (जिल्दबंदी). Elections are scheduled for December 2018, and even before Ms. Zia’s conviction the party was struggling. The BNP had boycotted the previous elections in 2014, practically allowing the Awami League a walkover. It was, in hindsight, a questionable strategy. Since 2014 the BNP has suffered significant erosion in its organisation. Besides Ms. Zia being embroiled (घपला) in dozens of corruption cases, party activists have also been hauled up in several cases. Ms. Zia is expected to appeal the judgment, and could be eligible to contest elections after release on bail — but the conviction will weigh heavily on her party’s fortunes.
Bangladeshis will hope the BNP gets its act together, because the withdrawal of the party from the electoral fray (प्रतिस्पर्धा) has not been beneficial for democracy. While it did not make tactical sense for the BNP to boycott polls in 2014, the consequent victory by walkover did not help the Awami League to assert its legitimacy (वैधता). In what is effectively a two-party polity, the absence of the BNP as an opposition within Parliament had externalised dissent (असहमत होना) and led right-wing forces to up their intimidatory (धमकाने वाली) tactics to attack liberal, secular voices. Since the end of dictatorship in 1990, Bangladesh alternated between Prime Minister Sheikh Hasina’s Awami League and Ms. Zia’s BNP, with short interregnums (अंतराल) of army and judicial rule, till the League’s re-election in 2014. The two parties have battled in a vituperative (कटु आलोचनापूर्ण) game, each trying its best to muzzle (नालमुख) the other while in power and the party in opposition preferring the street to the legislature to make its presence felt. Attempts to build a third force or project a different set of leaders from among these two leading parties have so far come to naught (कुछ नहीं). Keeping this in mind, the Awami League government should be cautious about being seen to be interfering in the judicial process in Ms. Zia’s cases. If Ms. Zia is allowed to contest elections, pending her appeal to a higher court, the Awami League should welcome the contest.
1. Rigorous: given to exacting standards of discipline and self-restraint
Synonyms: austere, authoritarian, flinty, hard, harsh, heavy-handed, ramrod, rigid, severe, stern, strict, tough
Antonyms: clement, forbearing, gentle, indulgent, lax, lenient, tolerant
2. Upended: to fix in an upright position
Synonyms: pitch, put up, raise, rear, set up, erect, upraise
Antonyms: demolish, flatten, knock down, level, raze, tear down
3. Exile: the forced removal from a homeland
Synonyms: banishment, deportation, displacement, expatriation, expulsion, relegation
Antonyms: repatriation, return, immigration
4. Bind: something that physically prevents free movement
Synonyms: band, bond, bracelet, chain, cuff(s), fetter, handcuff(s), irons, ligature, manacle(s), shackle
5. Embroiled: to place in conflict or difficulties
Synonyms: bog (down), broil, embrangle, mire
Antonyms: emancipate, free, liberate, release
6. Fray: a forceful effort to reach a goal or objective
Synonyms: battle, fight, struggle, scrabble, throes
7. Legitimacy: the quality or state of being legal
Synonyms: lawfulness, legality
Anotnyms: illegality, illegitimacy, unlawfulness, wrongfulness
8. Dissent: a lack of agreement or harmony
Synonyms: conflict, disaccord, discordance, discordancy, disharmony, dissension (also dissention), discord, dissidence, dissonance, disunion, disunity, division, friction, infighting, inharmony, schism, strife, variance, war, warfare
Antonyms: accord, agreement, concord, concordance, harmony, peace, concurrence, cooperation
9. Intimidatory: Frighten or overawe (someone), especially in order to make them do what one wants.
Synonyms: frighten, menace, terrify, scare, alarm, terrorize, overawe, awe, cow, subdue, discourage, daunt, unnerve
Antonyms: cheer, comfort, console, reassure, solace, soothe, embolden, encourage, hearten, steel
10. Interregnums: a break in continuity
Synonyms: discontinuity, hiatus, hiccup (also hiccough), interim, interlude, intermission, gap, interruption, interstice, interval, parenthesis
Antonyms: continuation, continuity, procession, progression
11. Vituperative: marked by harsh insulting language
Synonyms: contumelious, invective, opprobrious, scurrile (or scurril), scurrilous, truculent, vitriolic, abusive, vituperatory
Antonyms: discreet, judicious, tempered, civil, courteous, gracious, mannerly, polite
12. Muzzle: Prevent (a person or group) from expressing their opinions freely.
Synonyms: gag, silence, censor, suppress, stifle, inhibit, restrain, check, curb, fetter
13. Naught: Nothing
Synonyms: nothing, nothing at all, nought, nil, zero