Prajna Capital - An Investment Guide

ASSET reconstruction was evolved as an answer to the distressed debt management problem faced by banks and financial institutions in this country. So, has the experiment succeeded? Going by the improvement in non-performing assets (the all banks’ gross NPA ratio declined to 2.3% in 2008 from 4.6% in 2002) and the number of players it has attracted, the experiment has certainly succeeded. But what needs to be emphasised is that no other country in the world operates an ARC (asset reconstruction companies) model like we do. Internationally, ARCs were set up as centralised government agencies for tackling the bad-debt problem in a banking crisis. Funded by the government, ARCs generally enjoyed special powers to cut short legal procedures and engaged in wholesale purchase of banks’ bad loans. By contrast, Indian ARCs are private sector entities that operate under a tightly-controlled regulatory regime and enjoy no special powers. They acquire NPAs through a transparent bidding pr...

PRUDENT saving and smart investing may be important for building your portfolio and creating a huge-nest egg, but assuming them to be the only keys to accumulating wealth is akin to financial hara-kiri. For, in the absence of a good debt strategy, the financial planning for your secured future can not only get topsy-turvy but awfully wobbly as well. Debt management, in fact, assumes more importance in the light of the fact that today debt has become a way of our lives, with consumer finance schemes and credit cards becoming big drivers of this devil. Rising disposable incomes, soaring aspirations and convenience in availing credit have increased the amount of debt that an average individual is carrying. In the US, for instance, the household debt-to-income ratio is said to have reached an all-time high, topping 19%, with Americans collectively spending more than what they have earned for the past two years in a row. Likewise, the latest Grant Thornton research shows that personal ...