India announces new bad loan resolution plan

MUMBAI: The Reserve Bank of India said late on Monday it was withdrawing all its existing mechanisms for tackling bad debt at Indian banks and replacing them with a harmonised and simplified generic framework for resolving stressed assets

The new system will force lenders to identify and tackle any stressed-asset accounts more rapidly, the regulator said.

Last year, India tweaked its laws to give the central bank more authority to push lenders to deal with the nearly $150 billion in troubled debt at banks, which has choked off new lending and slowed the economy.

Dubai exchange exploring options

The Dubai Gold and Commodities Exchange (DGCX) said on Monday it was working with Indian counterparts to explore alternatives after India’s three main stock markets announced they would stop licensing their indexes and securities abroad.

India’s decision appears to threaten several products offered by the DGCX, which trades futures based on the Bombay Stock Exchange’s Sensex index; futures based on single Indian stocks; and Indian rupee and US dollar-based futures for an Indian index compiled using methodology from MSCI.

“DGCX is working very closely with the Bombay Stock Exchange (BSE) as well as India International Exchange (INX) to explore alternative offerings, which will be communicated in due course,” it said.

The BSE, the National Stock Exchange and the Metropolitan Stock Exchange said on Friday that they would terminate their foreign licensing agreements with immediate effect, subject to notice periods, because they wanted to prevent trading in Indian assets from migrating outside the country.

The United Arab Emirates and the Gulf have large populations of Indian expatriates, and India-related contracts have been a major reason for growth in the DGCX’s business over recent months.