Do it yourself

 The recent order of the Supreme Court regarding classification of NPAs and payment of compound interest for the period of moratorium has reignited a debate on the state of Indian financial sector. The order of Supreme Court has been received by markets as a relief, as it removes a regulatory overhang and paves way for the banks to proceed with recovery of NPAs. Nonetheless, the next few quarters need to be watched closely for any precipitous rise in bad loans; especially if the recovery appears faltering. Past few years have been quite challenging for Indian financial services sector. A decade of massive infrastructure building exercise (1998-2008) resulted in significant advancement of demand and therefore unviable projects in key sectors like housing, roads, power, civil aviation, metal & mining, SEZs, Ports etc. resulted in a multitude of stalled and unviable projects. Administrative and regulatory irregularities in allotment of natural resources to private parties led to...

The government of India has been the greatest value destroyer for the investors in Indian Equities. The Nifty PSE index, comprising most listed PSU stocks, now trades at the same level as it was in 2006, implying no return for 13yrs, if we consider point to point investment period. The CPSE ETF comprising top 22 Central government undertaking stocks, launched in 2014 is giving negative return to its investors. Many large Public Sector companies are now trading at multi year low prices, adjusted for all dividends and other corporate actions. The government of India therefore has legal and moral duty to explain to the investors, why it should continue to manage these businesses. They have obviously not managed these great businesses like MTNL BEL, Coal India, etc well and destroyed huge wealth for the nation as a whole and individual investors as well. The Supreme Court may like to examine, whether the government should be permitted in the first place t...

Yes Bank is a peculiar case study expanding across spheres of corporate governance; financial sector regulation; securities market regulation; investor behavior; crisis management; audit failure; risk management; decision making; and much more. The consequences are (i) investors' wealth has eroded materially and (ii) the interest of the entire financial system, including depositors, has been imperiled. By dithering on taking a prompt and appropriate action, the regulators are perhaps indicating that no lessons have been learned from the debacle of IL&FS and PMC. The worst, the bank continues to be a part of the benchmark Nifty50 and NiftyBank, forcing the passive investors to buy this poor quality stock. Besides, the equity shares of the bank continue to trade in the derivative segment encouraging speculative trades, especially by small investors in search of windfalls. Apparently, the bank has been violating the prudential lending norms with impunity. Bo...