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Chinese banks go slow on large loans


MUMBAI: Top Chinese banks in India, Industrial and Commercial Bank of China (ICBC) and the China Development Bank (CDB), have considerably slowed their large-ticket term-loan advances in the country after bad loans surged in their portfolios that had included advances to the subsequently distressed companies such as IL&FS Transportation and Aircel.

So, these global financial powerhouses have since changed their strategy and are now largely engaged in bill discounting and bond investments after having to stomach brutal haircuts on exposures to Reliance Communications, IL&FS Transportation, Aircel and its subsidiary Dishnet Wireless, and Alok Industries.

Data with the central bank showed that ICBC is steadily moving away from term loans.

Charge filings with the Ministry of Corporate Affairs, compiled by data intelligence provider Propstack, show that ICBC and CDB have not disbursed any large-ticket term loan in India since 2018.

To be sure, these charge filings do not reflect loans disbursed through trustee services, bond investments and unsecured loans.

“The original idea of these banks was to grow their India book through trade finance. They deviated in between, with term loans to large corporates but since 2017, after a few failed loans, they started consolidating their business back toward bill discounting,” said Ashvin Parekh, founder, Ashvin Parekh Advisory Services.

ICBC and CDB did not respond to ET’s mailed query.

Central bank data showed that ICBC made advances of Rs 1,251 crore at the end of March 2019. The bank discounted bills worth Rs 857 crore and disbursed term loans worth Rs 298 crore. At the end of March 2018, the bank gave loans worth Rs 880 crore, and almost Rs 645 crore was through bill discounting. In 2017, ICBC’s total advances stood at Rs 681 crore. Similar data were not available on CDB.

Data provided by Propstack also showed that the banks had loaned more than Rs 8,000 crore to Reliance Communications in 2011 and 2012. There is litigation ongoing in a London court where these banks are trying to recover nearly Rs 5,000 crore from Anil Ambani, the promoter of Reliance Communications.


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