CHENNAI BusinessLine 15 MONDAY • APRIL 24 • 2017 THINK Dealing with bad debt BOOK REVIEW NEW READS Banks should step up NPA provisioning MOHAN R LAVI Not quite a fanatic providing for NPAs based on ex- pected credit losses is based on he IMF recently released the premise that none knows the Audrey Truschke argues that is too complex a figure to be condemned altogether a Financial Stability Re- borrower better than the bankers Tport that contains a sec- which provided the loan and UDAY BALAKRISHNAN ritual as part of the Indian Mughal one where a small Muslim elite tion on asset quality and hence they are the best people to tradition, even if he had personally controlled a mass of non-Islamic Title: Sonal Mansingh: A Life capital indicators for emerging estimate the amount of losses. udrey Truschke’s Aurang- shied away from it.’ In his later people making it a insecure quasi- Like No Other market banks. In the list of coun- zeb: The Man and the Myth years — when he was considered to garrison state. Not too long after Author: Sujata Prasad tries whose banks are most vul- Advisory matters Ais a very short, readable have turned to fundamentalist Is- Aurangzeb took charge of it, the Publisher: Penguin Random nerable, India joins Russia, Colom- In slow doses, the RBI appears to biography of the sixth lam — ‘Aurangzeb’ Truschke tells us empire was being seriously chal- House India bia and Saudi Arabia. The be forcing banks to increase their Mughal Emperor, Aurangzeb Alam- ‘even endorsed the syncretism that lenged internally, amongst others, Price: ₹599 quantum of NPAs with banks in provisions for NPAs so that by the gir. Although it is written by a was part of his bloodline as a great by the Marathas under the re- More than a biography of a India varies depending on whom time they adopt the new account- scholar of considerable repute, the strength that might enable the em- doubtable . renowned dancer, the book one asks but everyone agrees that ing standard, at the least they do book has none of the complexity pire to survive in the face of formid- tries to capture the contem- there is a problem and it is gargan- not have an opening baggage of associated with an academic treat- able opposition.’ The way of force porary ’s tuan. bad loans. The Asset Quality Re- ise, being free of the citations and Truschke certainly makes out a It is very possible that Aurangzeb classical arts. view (AQR) was the first step in footnotes blighting similar works. good case for a reconsideration of concluded that there was an exist- Accounting standards this direction. Recently, RBI ad- Truschke’s work resembles an Aurangzeb’s legacy as a man of his ential threat to the empire. It was a The RBI has been doing its bit to vised all banks that the provision- older and more profound one by times and one who should not be threat which he felt, could only be ensure that banks report NPAs ac- ing rates prescribed by them are AJP Taylor, Bismarck: The Man and judged by the standards of our Title: Aurangzeb: The Man and seen off by a sustained application curately. The Prudential Norms for the regulatory minimum and The Statesman. But then, Taylor had own. Yes, he had blood on his hand the Myth of force and what better way, than Income Recognition and Asset banks are encouraged to make a lot more easily accessible mater- and not the least of his murdered Author: Audrey Truschke by demonstrably letting the world Classification (IRAC) issued by the provisions at higher rates in re- ial to draw on, and Bismarck, un- brothers; amongst these, the sad- Publisher: Penguin Random know where power lay –– through RBI have been regularly amended spect of advances to stressed sec- like Aurangzeb, lived much closer istic execution of a seemingly House India the imposition of the Jizya, the un- to ensure that they capture the tors of the economy. to our time in archive-crazy gentler Dara Shukoh sticks out. But Price: ₹399 challenged destruction of correct amount of NPAs. The advisory asks banks to put Europe. where does the truth lie? When Hinduism’s holiest shrines and a Accounting standards were in place a board-approved policy Aurangzeb asks him what he marked expansion of the Empire blamed for perpetuating the 2009 for making provisions for stand- A different man would have done had roles been re- In popular imagination, Aurang- through force? This is the kind of Title: Wiring the Nation: credit crisis as the diktats of the ard assets at rates higher than the Truschke’s Aurangzeb emerges as a versed with Aurangzeb at the re- zeb is also seen as destroyer of interconnection that Elias Canetti Telecommunication, accounting standards guided regulatory minimum, based on more troubled, more human per- ceiving end, Dara Shukoh, Hindu temples. Truschke tries to would almost not have missed. Newspaper-Reportage, and banks to provide evaluation of risk and sonality, capable of giving and re- Truschke tell us, ‘sneered, telling debunk this, contending that Aur- In her concluding chapter, ‘Aur- Nation Building in British for too little losses, stress in various sec- ceiving love — one who was sensit- him, ‘that he would have Aurang- angzeb destroyed far fewer angzeb’s Legacy,’ Truschke brings India, 1850–1930 too late. Account- tors. The policy has to ive enough to put up a beautiful zeb’s body quartered and dis- temples than he is said to have, and out the immense difficulty in un- Author: Michael Mann ing regulators be reviewed every mausoleum for his wife, Dilras played on Delhi’s four main gates.’ that anyway temple-destruction derstanding a complex personality Publisher: OUP India amended their quarter based on vari- Banu Begum, who died in child- was an activity that Hindu as well like Aurangzeb. She acknowledges Price: ₹995 standards by mov- ous parameters. As an birth, in Aurangabad. He was, if Unpopular measures as Muslim rulers indulged in. Even that Aurangzeb ‘repeatedly acted An analysis of the social, ing from an in- example, RBI states one goes by Truschke, cultured, The most contentious part of if, for one moment, we accept her against his professed values to feed cultural and political curred loss model that as the telecom perpetually seeking to enforce Truschke’s book is on the anti- argument, the fact remains that an insatiable hunger for political consequences of telegraph to an expected loss sector is reporting justice, and not quite the Muslim Hindu aspect of Aurangzeb’s rule, Aurangzeb razed three of power’ and, to some extent, in British India. model to provide stressed financial con- fanatic he is made out to be. In sup- not the least his imposition of Hinduism’s holiest shrines in Ben- Truschke also holds him respons- for bad loans. Ironically, banks in ditions with interest coverage ra- port, she quietly slips in Aurang- Jizya, a tax on non-Muslims. It is ares, Somnath and Mathura to the ible for initiating the collapse of India will transition to these new tio less than one, banks may re- zeb’s gushing admiration for possible, Trutschke tells us, that he ground and built mosques there. the . standards only in 2019. The expec- view the telecom sector latest by Hindu, Jain and Buddhist temples imposed the tax to ingratiate him- Truschke explanations, for such Truschke’s sensitive biography ted credit loss approach forces June 30, 2017, and consider mak- in Ellora calling them “one of the self with the powerful body of selective destruction, are unsatis- partially rehabilitates Aurangzeb banks to not only look into the ing provisions for standard assets finely crafted marvels of the real, Muslim religious scholars, the factory. As a historian, Truschke and helps us make better sense of past but also gaze into the future in this sector at higher rates. transcendent Artisan (i.e., God).” ulema, and to firmly mark ‘the would have done well to examine if his 49-year-long reign, without by developing a specific model to The intent of the RBI to encour- To buttress her point that he was Mughal Empire as a proper Islamic there was a link between the im- downplaying his faults. Her book make loss allowances for bad age banks to provide more is to be alive to the realities of his time, State.’ This was an unpopular tax, position of the Jizya, the destruc- on Aurangzeb, Truschke admits, is debts. welcomed. To apply the advisory Truschke draws upon Persian and riling Hindus while doing little to tion of Hindu shrines and the re- obviously not the last word on an If banks were to practice this ap- would require banks, which till Hindu sources as well as Aurang- increase his control over the lentless expansion of the Mughal emperor who continues to live in proach, it would mean that provi- date have been guided by RBI in- zeb’s own observations to let us ulema. Nor did the Jizya collection empire that took place under Aur- our memory, even more so than his Title: Deviate: Seeing Reality sioning would need to be done at structions, to change their culture know that he even ‘endorsed Shah amount to much, especially since angzeb till it had covered almost illustrious great grandfather, Ak- Differently the bank level and not on RBI noti- by resorting to proactive provi- Jahan’s enjoyment of music’ and much of it did not get past ‘the the entire Indian subcontinent. For bar, does. Our own historians Author: Beau Lotto fications. An RBI committee has sioning. Banks can make a start by recognised ‘Hindu-based weighing pockets of greedy tax collectors.’ this we need to understand the would do well to attempt a deeper Publisher: Hachette India suggested that the IRAC norms listing out sectors that are nature of the Mughal Empire and study of Aurangzeb whose actions Price: ₹399 would be the minimum amount stressed instead of blindly making MEET THE AUTHOR its fragile base. impact us to this day. The book examins how our that banks would need to provide additional provisions for telecom Audrey Truschke teaches South Asian history at Rutgers Of the three great Islamic em- brain plays tricks with us, and and if they feel that the amount is loans just because the RBI says so. University in Newark, New Jersey. She is the author of Culture of pires of its time – the Ottoman and The reviewer is a visiting faculty at why we must understand insufficient, they are free to Encounters: Sanskrit at the Mughal Court. the Safavids being the other two – the Centre for Contemporary Studies, when that happens. provide more. The concept of The writer is a chartered accountant the Mughal Empire was the only IISc, Bangalore

BY THE WAY DIPANKAR BHATTACHARYA looks at people and professions BusinessLine TWENTY YEARS AGO TODAY april 24, 1997

B The first tranche of GE Capital offers total buy-out of SRF Finance sovereign gold bonds for this US financial services giant GE Capital has made the first fiscal will open for offer by a corporate under the new takeover regulations to subscription today, and close acquire 100 per cent of the equity in a target company — on April 28. The bonds will be the Delhi based SRF Finance. GE Capital’s revised offer to sold through banks, Stock acquire the entire block of shares of SRF Finance has been Holding Corporation of India, cleared by SEBI. Earlier, the company had offered to acquire designated post offices and 20 per cent of the equity of SRF Finance after buying out recognised stock exchanges, the entire equity holding of 53 per cent held by the including the NSE and BSE. promoters — the Shriram group in Delhi at Rs. 53.50 per share. Mercedes Benz India to focus on exports B Mukesh Ambani-promoted After a dismal run in the domestic market, Mercedes Benz Reliance India, now armed with bulk export orders, has reworked Industries its business strategy to concentrate on offshore markets to will hold a boost sales. Sources told Business Line that the company board recently received orders worth about Rs. 125 crores from meeting Malaysia and South Africa for 700 cars. In the short-term, today to the large overseas order has prompted the company to approve push back its new business plan for the domestic market. standalone and consolidated Mortgage claims: Banks seek powers audited financial results for Nationalised banks have urged the Ministry of Finance to the quarter/ year ended amend the Debt Recovery Tribunal (DRT) Act to ensure that March 31, 2017 and to consider banks are able to enforce their mortgage claims against a and recommend dividend on defaulting party. Banks have pointed out that the Recovery equity shares of the company. of Debts Due to Banks and Financial Institutions Act, 1993, under which the DRTs were set up, has chosen to remain silent on the aspect of “mortgages”, despite making clear mention of “debts”. A nationalised bank has asked the B BCCI’S acting Secretary ministry that the controversy over the enforceability of the Amitabh Choudhary will mortgage claims need to be settled with finality since it is a attend an ICC meeting today, wholly different concept from that of recovery of debts. accompanied by the Indian apex cricketing body’s CEO Rahul Johri. The Supreme Court last week said Choudhary will attend the ICC’s board and financial and easy not so easy commercial committee bl two-way crossword 834 meetings. Johri would attend ACROSS DOWN ACROSS the Chief Executives’ 27. Rely on need for pence (old Committee meeting. 01. Load that’s oppressive (6) 01. They swear eternal 01. 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Looked starlike, kind, and let B LG soldiers at sea (4) West run around (8) is to launch the G6 in India SOLUTION: BL Two-way Crossword 833 today, targeting the premium 22. When about to start tanning, 17. Treat in a new way, with market. The phone will be ACROSS 1. Approach 7. Death 8. Unicorn 9. Dolphin 10. Each Sol will prove a knockout (4) fertiliser (7) priced at ₹56,990. The G6 12. Eagerly 14. Rustler 17. Knee 18. Summons 21. Episode 22. Amiss 24. Sing praises of former spouse 18. Becoming Mrs, she will be packs 5.7-inch QHD LCD panel 23. Stressed to first of lovers (5) about to get shot of it (5) with 18:7 aspect ratio, 5.7-inch DOWN 1. Amulet 2. Princess 3. Oboe 4. Candle 5. Lath 25. It’s a long way removed from 20. The proportion of air to the display in a 5.2-inch typical 6. Whinny 7. Delight 11. Mellows 13. Rainbows 14. Rascal the way one could stand it (7) mixture (5) smartphone body. The 15. Resent 16. Behead 19. Main 20. Pine 26. Poor material isn’t even used 23. 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