https://www.thequint.com/currency-ban/2016/12/12/how-your-bank-deposit-may-be-used-wipe-out-huge-corporate-loans-ice-nin
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Archived from the IMDb Discussion Forums — Indian Cinema
PimpinAinttEasy — 9 years ago(December 14, 2016 05:41 AM)
https://www.thequint.com/currency-ban/2016/12/12/how-your-bank-deposit-may-be-used-wipe-out-huge-corporate-loans-ice-nine-approach-cyprus-banking-crisis-neoliberal
I get melancholy if I don't write. I need the company of people who don't exist -
PimpinAinttEasy — 9 years ago(December 14, 2016 06:31 AM)
mummers, many indian banks lent to corporates who defaulted on the loans after a period of time. the loans defaulted on, formed a significant percentage of total loans of these banks. these banks also reported huge net losses because provisions for loan losses (an item in income statement) were huge on account of the loan defaults.
since there was a threat of the banks becoming bankrupt, the government decided to bail them out by making people deposit money in banks. that is what the article argues.
I get melancholy if I don't write. I need the company of people who don't exist -
Mummers-Farce — 9 years ago(December 14, 2016 06:44 AM)
hmm that's intriguing. An accounting professional recently told me many startup IT companies which project and posture about their success are actually financially bleeding and owe large sums in debts to banks and investers and they are kept afloat only so that the elderly top management can continue drawing their over the top salaries which are no way justifiable.
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PimpinAinttEasy — 9 years ago(December 14, 2016 09:32 PM)
banks, bonds and maybe even investments in equities. a company like reliance industries has debt close to one lakh crores. this completely dwarfs their cash holdings.
I get melancholy if I don't write. I need the company of people who don't exist -
vikade1 — 9 years ago(December 14, 2016 09:47 PM)
Not all corporate debt is bad debt. Anyway, my point was their cash holdings definitely might be substantial if we are comparing the aam aadmi's deposits.
And this cash has nowhere to go but come into the banks, just like any other aam aadmi.
But let's see if this infusion of cash can help recapitalize the banks enough to wipe out their debts. I don't think the aam aadmi is going to leave his cash lying around in the bank one day more than the deadline, and a run on the banks is more than probable on the day after the imposition is limited. -
PimpinAinttEasy — 9 years ago(December 14, 2016 10:01 PM)
Not all corporate debt is bad debt.
true. but we are not just talking about one company.
Anyway, my point was their cash holdings definitely might be substantial if we are comparing the aam aadmi's deposits.
its a good point. i doubt whether corporates would be allowed to invest too much of their cash and cash equivalents in equities. i mean, its not a part of their core operations. but im sure there is some loophole.
And this cash has nowhere to go but come into the banks, just like any other aam aadmi.
hmmm. its an interesting point. but in a country which allows corporates to get away with murder - default on lakhs of crores of loans, dont you think there would be loopholes through which these corporates could invest money elsewhere?
I don't think the aam aadmi is going to leave his cash lying around in the bank one day more than the deadline, and a run on the banks is more than probable on the day after the imposition is limited.
a predominantly cashless society would prevent a run on the banks. but thats really far away.
I get melancholy if I don't write. I need the company of people who don't exist -
calonclick — 9 years ago(December 14, 2016 08:21 AM)
My Father put in a significant amount of his savings in unit 64 scheme, the government is the safest bet we thought. And then overnight the entire scheme was scrapped.
The demonetization scheme gives me the chills and a sense of Deja Vu.
Get your money out of India if you can. -
nicermog — 9 years ago(December 14, 2016 03:24 PM)
Yeah, have some savings in fixed deposits considering the high interest rates which I am going to take out before the rupee falls anymore. Of course, I am no financial expert but it seems like the value of the rupee will go down at least in the short term.
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Asphyxiod — 9 years ago(December 16, 2016 03:13 AM)
Hi Pimpin,
This could have happened if RBI had made profit i.e. by having large sum of Rs. 500/- & Rs. 1000/- notes not getting deposited at all. They were expecting that some 3 to 4 Lakh Crore won't get deposited which becomes a straight profit for RBI since as much less they stand to pay to public. But it seems that by the end of December almost full of the 86% demonetised currency notes will get deposited, quite likely more than that, if counterfeit notes are also accounted for.
The Liability for RBI will remain as it is as before or may increase. Whereas, on the asset side, they have already written off 1.14 Lakh crore of NPAs this year. They still have more 4 Lakh crore of NPAs which is very difficult to be written off.
The demonetisation will only help them with liquidity as banks will have deposits against which they can lend more money and do business.
Anwyay, I feel if Mr. Modi has the guts to say that even a farmer in a rural area can safely use a mobile to make digital payments, then he need to have guts to say that even the Chairman and Directors of all those NPA companies can do business without travelling abroad. All of their Passports must be seized. Otherwise, another Vijay Mallaya can rise and escape anytime.
But it won't happen. Dirty politics!
Next we have Peter Breene