Identifying bad assets, airlines seeking for good times, and fate of WFH: Three things Teji Mandi investors should know on June 08, 2021
Identifying bad assets, airlines seeking for good times, and fate of WFH: Three things Teji Mandi investors should know on June 08, 2021

Bad Bank Gets Underway

The Indian banking sector is ready to transfer the total loan outstanding worth Rs 89,000 crore to the proposed National Asset Reconstruction Company (NARCL).

​The Indian Banks' Association (IBA) has identified 22 accounts that could be transferred to the NARCL or the bad bank. It includes large accounts, which are above Rs 500 crore and of which 100% provisions are made. As per the RBI's estimates, a total of about Rs two lakh crore worth of bad assets could be transferred to the NARCL over a period of time.

The announcement of establishing the bad bank was made in the Union Budget of 2021-22. Its objective is to efficiently recover the bad assets that have clogged the banking system.

Bad bank is yet to commence its operations. But the banks have tried to stay one step ahead by identifying bad assets. The idea here is to start the process immediately as soon as the NARCL or the bad bank starts functioning.

Air Travel Momentum to Pick Up?

The country's largest airline Interglobe Aviation is executing the air travel demand to gain momentum by early July.

Ronojoy Dutta, CEO of Indigo, suggested that there was a modest turnaround in demand in the last week of May. And it has continued in the early parts of June. It is an indication of returning passengers' confidence. The declining number of COVID-19 cases and the increased pace of vaccination has further increased the hops of a turnaround in the sector.

The aviation sector has been through a tough time in the last one and a half years. And the return of travellers is necessary to bring the momentum back to the sector. For now, airlines continue to burn cash, and it is proving hard to contain losses. Indigo's net loss in Q4FY21 widened to Rs 1,147 crore, while the airline reported a daily cash burn of Rs 19 crore for the quarter.

What Happens to WFH?

With all the major states easing the restrictions, there is a growing likelihood of companies reopening their doors for employees to return.

Major business hubs like Mumbai, Pune, Delhi and Noida, witnessed an increase in traffic as soon as the curbs were lifted.

And with other major cities also likely to reopen soon, there could be more people joining the office going public.

The companies could be willing to bring the employees back to the office. But many employees have embraced work from home as a new routine, and they are likely to resist that change. Also, the absence of mass transport and prediction of the third COVID-19 wave needs to be taken into account before arriving at any decision.

The companies would do better to take up the entire procedure gradually and take the sentiments of employees into account before arriving at a decision.

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