Back in 1997 there were around 40,000 NBFCs operating in India. Then in 1998 the RBI came up with stringent capital adequacy and asset classification norms for NBFCs to reduce the systemic risk after the CRB fiasco. By 2002 there were just about 10 NBFCs that were still functional. The one thing that the 1998 exercise highlighted was the need to strike that fine balance between better regulation and greater freedom to function in the market. The debate is back all over again on NBFCs.
The pharma stocks had a bad week with the pharma index down by over 4% in the first day of the week itself. It all started with a Reuters news item stating that 44 states in the US had decided to file a lawsuit againe3st 20 generic drug manufacturers, which included 7 Indian companies. The principal case was against Teva Pharmaceuticals but the lawsuit also indicted 19 other generic manufacturers for colluding with Teva for price fixing and artificially inflating prices of essential drugs. How serious could these charges really be?
CRISIL recently published a report about the Rs.70,000 crore collected through NCLT in the fiscal year 2018-19. The collections in the current fiscal are likely to be closer to Rs.1 trillion. According to CRISIL, this represents 43% realization that is at par with global best practices. That is the good news. But it also, at the same time, highlights our systemic inadequacy when it comes to dealing with soft bankruptcies. With hardly any fixed assets, these soft bankruptcies post the big challenge to India. How to go about addressing this issue?