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AGR verdict: SBI, IndusInd Bank slip up to 4% as banks stare at NPA pile-up

Banking shares, which include IndusInd Bank, Axis financial institution, and Point out Bank of India, tumbled at the bourses right after the Supreme Court rejected Bharti Airtel and Vodafone Idea’s plea looking for to neogtiate the payment timetable in the AGR case.

Among the person shares, IndusInd Bank strike fresh fifty two-week lower, down 4 for each cent, to Rs 1181.one on the NSE. Aside from, IDFC Initially Bank slipped 2.7 for each cent, RBL Bank (2.three for each cent), Axis Bank (2 for each cent), HDFC Bank (one.9 for each cent), Federal Bank (one.4 for each cent), and SBI (one.8 for each cent). Indeed Bank, on the other hand, ended up trading 8 for each cent increased. As for ICICI Bank, the stock slipped up to .8 for each cent, just before paring losses to trade .8 for each cent increased.

At eleven:forty one am, the Nifty financial institution index was trading .seventy two for each cent lower, as in opposition to a .15 for each cent slip in the benchmark Nifty50 index.

According to a report by Goldman Sachs, Vodafone Idea’s financial debt excluding deferred payment liability is all over Rs 28,000 crore, with dollars and dollars equivalents of Rs 15,four hundred crore as of September 2019. This translates to a net exposure of about Rs 13,000 crore which, even although, is not considerable (or considerably less than 2 for each cent) in the context of overall non-undertaking loans in the overall banking process, but “would impact investor self esteem and lead to increased risk aversion between financial institutions in the direction of telcos”.

The world brokerage estimates the person exposure to Vodafone Concept as Point out Bank of India (Rs eleven,two hundred crore), IndusInd Bank (Rs three,995 crore), IDFC Initially Bank (Rs 2,500 crore), ICICI Bank (Rs one,725 crore) and Punjab National Bank (Rs one,027.7 crore). In phrases of exposure, financial debt provided to Vodafone Concept account for eleven for each cent of the IDFC Initially Bank’s networth, and 9 for each cent of the IndusInd Bank’s networth, the report added.

“In normal, the exposure of financial institutions to the overall telecom sector ranges amongst ten for each cent and thirty for each cent of their complete equity with Indeed Bank acquiring the greatest exposure (Rs 7,937 crore) of 29 for each cent (of its equity) amongst personal financial institutions. Inside of the community sector financial institutions, Point out Bank of India has prolonged financial debt of Rs 36,542 crore (or sixteen for each cent of its complete equity). Now if a telco defaults on these payments, it will have impact on not just other telcos but also on the telecom infrastructure companies and the banking process,” the report dated January seventeen observed.

Coming down seriously on the Section of Telecommunications (DoT) for not having coercive action in opposition to telcos for failing to repay, the apex courtroom ordered contempt proceedings in opposition to Bharti Airtel and Vodafone Concept. The Apex Court also pulled up the DoT desk officer who wrote to the Lawyer Typical inquiring him to not insist on payemnt of dues. The SC issued a contempt observe to the officer to reveal why no action need to be initiated in opposition to him.

The courtroom summoned controlling director, director of all telcos which include Bharti Airtel, Vodafone Concept and some others on March seventeen to reveal why these dues ended up not deposited inspite of orders and why contempt action need to not be taken in opposition to them for non-compliance of order. Read through Extra