Just a few days into his role as the acting Indian Finance Minister, Piyush Goyal, took on a major task – to try to clean up the country’s beleaguered banking system.
Mr Goyal, whose usual role is as the Railways and Coal Minister, last Thursday gathered together the heads of 11 of India's ailing public sector banks in New Delhi, as the industry continues to reel under the impact of the country's largest ever bank loan fraud that came to light this year and the weight of bad loans.
"I am extremely confident that we will be able to overcome the banking sector legacy issues in a very short period of time," Mr Goyal posted on Twitter following the meeting. Known in political circles as a troubleshooter, he is standing in for Finance Minister Arun Jaitley, who underwent a kidney transplant last week.
_______________
Read more:
Investors dump Indian bonds on concerns over banking regulations, weakening rupee
India's $1.8bn jewellery scandal is down to risk management failure, former banker says
_______________
Meanwhile, India’s banks are also in poor health. And the Nirav Modi scandal – in which the celebrity diamond jeweller in February was accused by one of India’s biggest state-owned lenders, Punjab National Bank (PNB), of defrauding a single branch of $2 billion – is forcing authorities to take a closer look at the sector and work on its regulatory overhaul, analysts say.
“I think we still have a long way to go,” says Abhimanyu Sofat, the vice president of research at IIFL, a financial services company headquartered in Mumbai. “From a regulatory angle, better risk management, accountability of people making decisions, as well as accountability of board of directors, these things need to be looked at.”
There are signs that regulators are cracking down.
Last Thursday, PNB was slapped with a warning letter by India’s markets regulator, the Securities and Exchange Board of India (Sebi), for delays in making disclosures to the stock exchanges in relation to the alleged Nirav Modi bank fraud.
Sebi, in the letter posted on the stock exchanges by PNB, said the bank’s delayed disclosures “are viewed seriously and PNB is hereby warned and advised to be cautious in future to ensure compliance”.
In the case of Nirav Modi, the fraud is alleged to have been carried out at a single branch in Mumbai, with letters of understanding, or bank guarantees, being issued without any collateral behind them.
India's banking regulator, the Reserve Bank of India, reacted by setting up a committee to look into the problem of banking fraud in the country and demanded that banks tighten international mechanisms.
"The issues in the banking system started off much earlier than Nirav Modi and are a much bigger problem of bad loans, the issue of loans not getting serviced, and how non-performing assets are being classified and recognised," says N Chandramouli, the chief executive of TRA Research, a business advisory company. "That's becoming more rigorous now. When things come to light, one thing is that the scrutiny system has become better. These are not scams that have started today. These are going to be good measures in the long run."
But the central bank is held back from having full control over regulation of the sector, according to its head. In a lecture given by Urjit Patel, the RBI governor, at the Gujarat National Law University in March, he highlighted that there were “fundamental fissures that exist in the regulation of banks, in particular, public sector banks”.
He said RBI's regulation over public sector banks is limited by the fact that these banks are also regulated by the Indian government.
"RBI's regulatory powers over public sector banks are weaker than those over the private sector banks," he said. Mr Patel said the government should make "banking regulatory powers neutral to bank ownership ... levelling the playing field" for public and private sector banks.
The government following the Nirav Modi allegations, had implied that the RBI was at fault, but it seems to have changed its tune towards the central bank.
Mr Goyal also said: "RBI is ensuring proper banking supervision, taking action against defaulters. The indiscriminate lending in the past has caused this distress but we are ensuring the orderly growth of the industry and accountability in the system."
But analysts warn it is important that the authorities do not become too overbearing when it comes to regulation of banks in India.
Manish Hingar, the chief executive of Financial Hospital, an investment advisory company headquartered in Mumbai, says that the RBI went too far when it decided to ban the issuance of letters of understanding by banks for trade credits for imports into India, in what he sees as a knee-jerk reaction to the PNB scam.
“That’s not the best solution at all,” says Mr Hingar. “They need to make their systems so robust and highly integrated that any transaction cannot bypass any approvals and any internal control system.”
He adds that there should also be greater controls and punishments for auditors to ensure “they perform their duties more professionally”.
But the industry has expressed concerns, as bankers have become more hesitant to lend after the regulator crack down following the alleged fraud. "Both the government and the central bank have taken a series of measures to tighten the regulatory and supervisory framework with regard to the banks," says Rashesh Shah, the president of the Federation of Indian Chambers of Commerce and Industry, a lobby group.
“Banks have also been directed to identify and deal firmly with wilful defaulters.”
He says he “welcomes and supports” these measures.
“However, at the same time, we are also seeing expression of concern from sections of industry, particularly micro, small and medium sized businesses, about limiting of credit facilities that could affect their business performance and increase costs,” he says.
Mr Shah “urges the government and the RBI that at the current stage of the economic cycle, when we are in a recovery mode, we should ensure that genuine businesses and entrepreneurs are not deprived of the needed liquidity and credit support”.
Just before the PNB scandal broke, the RBI issued new rules stating that if a firm’s debt is not serviced for 180 days, banks have to take action under the insolvency and bankruptcy code to force the company’s sale or liquidation.
Bad debts at India's banks amount to almost $150bn, according to unpublished RBI data reported by Reuters, with state-owned lenders being more affected than their private peers.
Some argue that there are more fundamental problems in the sector and that a far more dramatic overhaul of the banking industry in India needs to happen to reduce its problems. India has 21 public sector banks.
Privatisation and consolidation could be the answer, says Mr Sofat. Privatisation would bring more accountability, he says.
“I think we need to have fewer banks,” says Mr Sofat. “Why do I need to have so many nationalised banks? Why don’t I have just two or three banks as a government, if I want to fulfil the objectives of the country. This concept of having so many banks is one of the key reasons why there is so much mismanagement.”
If this fundamental structure of the entire banking system is not overhauled, he warns “the problems will continue to linger for more time.”
War
Director: Siddharth Anand
Cast: Hrithik Roshan, Tiger Shroff, Ashutosh Rana, Vaani Kapoor
Rating: Two out of five stars
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EYango%20Deli%20Tech%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EUAE%0D%3Cbr%3E%3Cstrong%3ELaunch%20year%3A%20%3C%2Fstrong%3E2022%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3ERetail%20SaaS%0D%3Cbr%3E%3Cstrong%3EFunding%3A%20%3C%2Fstrong%3ESelf%20funded%0D%3Cbr%3E%3C%2Fp%3E%0A
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
Results
1. New Zealand Daniel Meech – Fine (name of horse), Richard Gardner – Calisto, Bruce Goodin - Backatorps Danny V, Samantha McIntosh – Check In. Team total First round: 200.22; Second round: 201.75 – Penalties 12 (jump-off 40.16 seconds) Prize €64,000
2. Ireland Cameron Hanley – Aiyetoro, David Simpson – Keoki, Paul Kennedy – Cartown Danger Mouse, Shane Breen – Laith. Team total 200.25/202.84 – P 12 (jump-off 51.79 – P17) Prize €40,000
3. Italy Luca Maria Moneta – Connery, Luca Coata – Crandessa, Simone Coata – Dardonge, Natale Chiaudani – Almero. Team total 130.82/198.-4 – P20. Prize €32,000
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
KILLING OF QASSEM SULEIMANI
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
The nine articles of the 50-Year Charter
1. Dubai silk road
2. A geo-economic map for Dubai
3. First virtual commercial city
4. A central education file for every citizen
5. A doctor to every citizen
6. Free economic and creative zones in universities
7. Self-sufficiency in Dubai homes
8. Co-operative companies in various sectors
9: Annual growth in philanthropy
FINAL LEADERBOARD
1. Jordan Spieth (USA) 65 69 65 69 - 12-under-par
2. Matt Kuchar (USA) 65 71 66 69 - 9-under
3. Li Haotong (CHN) 69 73 69 63 - 6-under
T4. Rory McIlroy (NIR) 71 68 69 67 - 5-under
T4. Rafael Cabrera-Bello (ESP) 67 73 67 68 - 5-under
T6. Marc Leishman (AUS) 69 76 66 65 - 4-under
T6. Matthew Southgate (ENG) 72 72 67 65 - 4-under
T6. Brooks Koepka (USA) 65 72 68 71 - 4-under
T6. Branden Grace (RSA) 70 74 62 70 - 4-under
T6. Alexander Noren (SWE) 68 72 69 67 - 4-under
The%20Kitchen
%3Cp%3E%3Cstrong%3EDirector%3A%C2%A0%3C%2Fstrong%3EDaniel%20Kaluuya%2C%20Kibwe%20Tavares%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%C2%A0%3C%2Fstrong%3EKane%20Robinson%2C%20Jedaiah%20Bannerman%2C%20Hope%20Ikpoku%20Jnr%2C%20Fiona%20Marr%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%C2%A0%3C%2Fp%3E%0A
Sukuk explained
Sukuk are Sharia-compliant financial certificates issued by governments, corporates and other entities. While as an asset class they resemble conventional bonds, there are some significant differences. As interest is prohibited under Sharia, sukuk must contain an underlying transaction, for example a leaseback agreement, and the income that is paid to investors is generated by the underlying asset. Investors must also be prepared to share in both the profits and losses of an enterprise. Nevertheless, sukuk are similar to conventional bonds in that they provide regular payments, and are considered less risky than equities. Most investors would not buy sukuk directly due to high minimum subscriptions, but invest via funds.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
Countdown to Zero exhibition will show how disease can be beaten
Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a month before Reaching the Last Mile.
Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
RESULTS
Men – semi-finals
57kg – Tak Chuen Suen (MAC) beat Phuong Xuan Nguyen (VIE) 29-28; Almaz Sarsembekov (KAZ) beat Zakaria Eljamari (UAE) by points 30-27.
67kg – Mohammed Mardi (UAE) beat Huong The Nguyen (VIE) by points 30-27; Narin Wonglakhon (THA) v Mojtaba Taravati Aram (IRI) by points 29-28.
60kg – Yerkanat Ospan (KAZ) beat Amir Hosein Kaviani (IRI) 30-27; Long Doan Nguyen (VIE) beat Ibrahim Bilal (UAE) 29-28
63.5kg – Abil Galiyev (KAZ) beat Truong Cao Phat (VIE) 30-27; Nouredine Samir (UAE) beat Norapat Khundam (THA) RSC round 3.
71kg – Shaker Al Tekreeti (IRQ) beat Fawzi Baltagi (LBN) 30-27; Amine El Moatassime (UAE) beat Man Kongsib (THA) 29-28
81kg – Ilyass Hbibali (UAE) beat Alexandr Tsarikov (KAZ) 29-28; Khaled Tarraf (LBN) beat Mustafa Al Tekreeti (IRQ) 30-27
86kg – Ali Takaloo (IRI) beat Mohammed Al Qahtani (KSA) RSC round 1; Emil Umayev (KAZ) beat Ahmad Bahman (UAE) TKO round
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
