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Event:
According to Business Line, 14 October 2011, the government has decided to introduce the
Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2001, during the
winter session of Parliament.
The new bill proposes to amend nine sections of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, and four sections
of the Recovery of Debts Due to Banks & Financial Institutions (RDBF) Act, 1993.
Two key proposals are: 1) mandatory registration of subsisting security interest (equitable
mortgages). This registration will have to be done within 30 days of the transaction with the
Central Registry; and 2) allow conversion of corporate debt into equity
http://www.thehindubusinessline.com/industry-andeconomy/
banking/article2535088.ece?ref=wl_industry-and-economy
Impact analysis
We believe such a regulatory change could be a structural positive for the sector in the long term.
The proposed changes will enable better information management of the collateral and speed-up
the time taken to dispose off the asset. For corporate loans, it will give banks an option to convert
debt to equity.
We continue to remain overweight on the sector and our top picks are - SBI (trading at 1.2x book
value and 6.8x earnings on FY12F), Axis Bank (trading at 2.1x book value and 11.4x earnings on
FY12F) and Power Finance Corp (trading at 0.9x book value and 6.4x earnings on FY12F).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Event:
According to Business Line, 14 October 2011, the government has decided to introduce the
Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2001, during the
winter session of Parliament.
The new bill proposes to amend nine sections of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, and four sections
of the Recovery of Debts Due to Banks & Financial Institutions (RDBF) Act, 1993.
Two key proposals are: 1) mandatory registration of subsisting security interest (equitable
mortgages). This registration will have to be done within 30 days of the transaction with the
Central Registry; and 2) allow conversion of corporate debt into equity
http://www.thehindubusinessline.com/industry-andeconomy/
banking/article2535088.ece?ref=wl_industry-and-economy
Impact analysis
We believe such a regulatory change could be a structural positive for the sector in the long term.
The proposed changes will enable better information management of the collateral and speed-up
the time taken to dispose off the asset. For corporate loans, it will give banks an option to convert
debt to equity.
We continue to remain overweight on the sector and our top picks are - SBI (trading at 1.2x book
value and 6.8x earnings on FY12F), Axis Bank (trading at 2.1x book value and 11.4x earnings on
FY12F) and Power Finance Corp (trading at 0.9x book value and 6.4x earnings on FY12F).
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