$14 bn loans to builders under severe stress, may result in default: Report

“Over 62% or about $58 billion of the total loan advances ($93 billion) to Indian real estate by banks and NBFCs/HFCs is currently completely stress-free,” Anarock said in a statement

Loans worth $14 billion provided to real estate firms by banks, NBFCs and housing finance companies (HFCs) are under “severe stress” and facing issues of debt servicing, according to a report.

“Over 62% or about $58 billion of the total loan advances ($93 billion) to Indian real estate by banks and NBFCs/HFCs is currently completely stress-free,” Anarock said in a statement. Another 22% (about $21 billion) is under some pressure but can potentially be resolved. The stress on this segment is largely on recovery of interest and not on principal amount.

“$14 billion (or merely 16 per cent) of overall lending to Indian real estate is under ‘severe’ stress, meaning that there has been high leveraging by the concerned developers who have either limited or extremely poor visibility of debt servicing due to a combination of factors,” the consultant said.

HFCs accounted for the largest share of total realty loans equalling 38 per cent, followed by banks at nearly 34 per cent share while NBFCs (non-banking financial companies) have 28 per cent share (including loans given under trusteeships).

“Of these, banks and HFCs are much better placed with 70 per cent and 65 per cent of their lending book in a comfortable position. However, it also comes as no surprise that nearly 58 per cent of the total NBFC (non-banking financial company) lending is on a watchlist,” it said…Read More

Now, you can allow up to Rs 2,000 of recurring payments via digital wallets

RBI has permitted processing of e-mandate on credit and debit cards, besides prepaid payment instruments, including wallets like Paytm, PhonePe and Amazon Pay for recurring payments of up to Rs 2,000

The Reserve Bank on Wednesday permitted processing of e-mandate on credit and debit cards for recurring transactions (merchant payments) with a cap of Rs 2,000. The RBI has been receiving requests from industry stakeholders to allow processing of e-mandate on cards for recurring transactions with Additional Factor of Authentication (AFA) during e-mandate registration and first transaction.

“…it has been decided to permit processing of e-mandate on cards for recurring transactions (merchant payments) with AFA during e-mandate registration, modification and revocation, as also for the first transaction, and simple / automatic subsequent successive transactions,” the Resrve Bank of India said in a circular.

This, the RBI said, has been done keeping in view the changing payment needs and the requirement to balance the safety and security of card transactions with customer convenience. The maximum permissible limit for a transaction under the e-mandate facility on cards would be Rs 2,000.

The RBI added that no charges should be levied or recovered from the cardholder for availing the e-mandate facility on cards for recurring transactions. The direction is applicable for transactions performed using all types of cards debit, credit and Prepaid Payment Instruments (PPIs), including wallets.

Explained: Why poorer nations can’t just print more money and become rich

When Zimbabwe was hit by hyperinflation, in 2008, prices rose as much as 231,000,000% in a single year

Economy News: Curious Kids is a series for children of all ages, where The Conversation asks experts to answer questions from kids. All questions are welcome: find out how to enter at the bottom of this article.

Why don’t poorer countries just print more money? – Clementine, age 12, London, UK

Thanks for the question, Clementine. When a whole country tries to get richer by printing more money, it rarely works. Because if everyone has more money, prices go up instead. And people find they need more and more money to buy the same amount of goods. (Click Here: Business Standard OR BS)

This happened recently in Zimbabwe, in Africa, and in Venezuela, in South America, when these countries printed more money to try to make their economies grow. As the printing presses sped up, prices rose faster, until these countries started to suffer from something called “hyperinflation”. That’s when prices rise by an amazing amount in a year.

When Zimbabwe was hit by hyperinflation, in 2008, prices rose as much as 231,000,000% in a single year. Imagine, a sweet which cost one Zimbabwe dollar before the inflation would have cost 231m Zimbabwean dollars a year later….Read Full Story

Bitcoin tumbles as PBOC declares initial coin offerings illegal

Bitcoin tumbled as much as 11.%, the most since July, to $4,326.75

Bitcoin tumbled the most since July after China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales.

The People’s Bank of China said on its website Monday that it had completed investigations into ICOs, and will strictly punish offerings in the future while penalising legal violations in ones already completed. The regulator said that those who have already raised money must provide refunds, though it didn’t specify how the money would be paid back to investors.

It also said digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies. Digital tokens can’t be used as currency on the market and banks are forbidden from offering services to initial coin offerings.

“This is somewhat in step with, maybe not to the same extent, what we’re starting to see in other jurisdictions —the short story is we all know regulations are coming,” said Jehan Chu, managing partner at Kenetic Capital in Hong Kong, which invests in and advises on token sales. “China, due to its size and as one of the most speculative IPO markets, needed to take a firmer action.”

Bitcoin tumbled as much as 11.4 percent, the most since July, to $4,326.75. The ethereum cryptocurrency was down more than 16 per cent Monday, according to data from Coindesk.

ICOs are digital token sales that have seen unchecked growth over the past year, raising $1.6 billion. They have been deemed a threat to China’s financial market stability as authorities struggle to tame financing channels that sprawl beyond the traditional banking system.