The Hindu Editorial (The endgame) – Sep 21, 2021

The Government has offered a sovereign guarantee to help the new ‘bad bank’, proposed in this year’s Budget, extract better value from non-performing loans worth ₹2-lakh crore in the banking system. For further reading, visit “The Hindu”. Below is today’s word list-1 for The Hindu Editorial (The endgame) – Sep 21, 2021.

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The Hindu Editorial (The endgame) – Sep 21, 2021:

bad bank (noun) – a ‘bad bank’ is a financial entity set up to acquire non-performing assets (NPAs) from banks and resolve them.
guarantee (noun) – a legal promise made by a third party (guarantor) to cover a borrower’s debt or other types of liability in case of the borrower’s default.
guarantor (noun) – warrantor, surety; a person who provides a guarantee.
default (verb) – fail to pay, not pay (banks/lenders’ debt on time for various reasons).
suffice (verb) – be enough, be sufficient, be adequate.
lender (noun) – financial institution (bank) which lends money.
woes (noun) – trouble, difficulty, problem.
sovereign guarantee (adjective) – a promise/assurance/guarantee by the Government to cover the liability (debt) of a third person (borrower/debtor) in case of his/her default.
extract (verb) – obtain, get, acquire.
non performing loans (NPLs) (noun) – a loan in which the borrower/debtor is in default due to the fact that they have not made the scheduled payments for a specified period (for at least 90 days).
non-performing assets (NPAs) (noun) – bad loans, toxic/ troubled assets/loans; stressed assets/loans; a debt instrument (loan/advance) on which the principal is past due and on which no interest payments have been made the borrower/debtor for a period of time. In general, loans become NPAs when they are outstanding for 90 days or more. A loan is classified as a non-performing asset when it is not being repaid by the borrower.
to begin with (phrase) – at first, originally, to start with.
National Asset Reconstruction Company Limited (NARCL) (noun) – NARCL has been incorporated under the Companies Act and has applied to Reserve Bank of India for license as an Asset Reconstruction Company (ARC). NARCL has been set up by banks to aggregate and consolidate stressed assets (NPAs) for their subsequent resolution. Public Sector Banks (PSBs) will maintain 51% ownership in NARCL.
pitch (verb) – try to convince/assure someone to accept something.
toxic asset (adjective) – a financial asset that has fallen in value significantly and for which there is no longer a functioning market.
upfront (adverb) – (of payment) in advance, beforehand, ahead of time.
tradable (adjective) – able to be bought or sold.
security receipt (noun) – “security receipt” means a receipt or other security, issued by an asset reconstruction company to any qualified buyer pursuant to a scheme, evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in securitization.
rope in (phrasal verb) – persuade, convince, urge (someone to take part in an activity).
India Debt Resolution Company Ltd. (IDRCL) (noun) – IDRCL is a service company/operational entity (asset manager) which will manage the asset and engage market professionals and turnaround experts. Public Sector Banks (PSBs) and Public financial institution (FIs) will hold a maximum of 49% stake and the rest will be with private sector lenders.
ailing (adjective) – failing, in poor condition, inadequate, deficient, imperfect, substandard, flawed.
going concern (noun) – (deep-pocketed) business that is making a profit.
liquidate (verb) – convert to cash, cash in, sell off, sell up.
invoke (verb) – cite, refer to, adduce.
shortfall (noun) – deficit, inadequacy, deficiency.
face value (noun) – asking price, market price, selling price; the superficial/outer appearance of something.
nudge (noun) – push, reminder, encouragement, prompting.
speed up (phrasal verb) – advance, increase (speed), accelerate, expedite, hasten.
resolution (noun) – a plan with detailed steps to be followed by banks in case they face any difficulty; solution/answer.
dither (verb) – be indecisive, be unsure, be undecided, hesitate.
pros and cons (phrase) – the advantages and disadvantages of something.
expeditious (adjective) – speedy, quick.
substantial (adjective) – considerable, significant, large.
persist (verb) – continue, carry on, last, remain, linger, stay.
debt (noun) – liability, financial obligation, borrowed capital.
mechanism (noun) – procedure, process, method, technique.
Insolvency and Bankruptcy Code (IBC) (noun) – Insolvency and Bankruptcy Code 2016 was implemented through an act of Parliament. It got Presidential assent in May 2016. The law was necessitated due to the huge accumulation of bad (non-performing) loans of banks and the delay in debt resolution. Insolvency resolution in India took 4.3 years on an average against other countries such as the United Kingdom (1 year) and the United States of America (1.5 years), which is sought to be reduced besides facilitating the resolution of big-ticket loan accounts.
insolvency (noun) – a condition in which the financial difficulties of an individual or organisation are such it is unable to pay its debts.
bankruptcy (noun) – legal state of insolvency. An individual or organisation is declared bankrupt if a court judges that the party involved can no longer meet debt payments to creditors. It is defined as the outcome of a legal procedure.
provision (noun) – distribution, supplying, providing, furnishing.
legacy loan/asset (noun) – it refers to a loan/asset that is outdated or obsolete; a loan/asset that has been on the company’s books for a long period of time and has generally decreased in value.
unique opportunity (noun) – rare chance.
personnel (noun) – force, staff, workforce, employee.
falter (verb) – oscillate, fluctuate, be undecided, be irresolute.
credit growth (noun) – credit offtake; it refers to the growth/increase in the amount of credit that banks lend to the companies, individuals, etc.
spur (verb) – stimulate, give the incentive to, encourage, prompt, galvanize.
streamline (verb) – efficient, well run, well organized.
seek (verb) – ask for, request, appeal; try to obtain.
consensus (noun) – an idea or opinion that is shared by all the people in a group.
lender (noun) – financial institution (bank) which lends money.
entail (verb) – necessitate, require, demand, call for.
hold/carry weight (phrase) – be most important, be influential, be significant, matter, count.
perhaps (adverb) – maybe, possibly.
tardy (adjective) – late, delayed, behind schedule/time.
gambit (noun) – plan, measure/scheme, strategy.
jump-start (verb) – to help/support something (which is dull at present) to improve quickly; energize, motivate, stimulate, inspire, galvanize.
credit flow (noun) – availability of credit.
accompany (verb) – coincide with, coexist with, go along with, appear/occur with.
recapitalisation (noun) – it is a type of corporate reorganization involving substantial change in a company’s capital structure, especially by replacing debt with stock.
likelihood (noun) – probability, chance, prospect, possibility.
pool (verb) – combine, join, unite, merge, put together.
acquisition cost (noun) – the all-inclusive cost to purchase an asset.
a tad (adverb) – rather, quite, fairly, moderately.
optimistic (adjective) – reassuring, favourable, encouraging, promising, hopeful.
hesitant (adjective) – uncertain, undecided, dubious, sceptical, reluctant.
take a jab at (phrase) – make a mockery of; make (something) to look foolish/absurd; to criticize.
sour/bad loans (noun) – non-performing assets (NPAs), stressed assets/loans; an account where the principal and/or interest remains overdue for a period of time.
owing to (phrase) – because of, as a result of, on account of, due to.
beg the question (phrase) – raise a point; invite question.
calibre (noun) – standard, grade, quality.
outdo (verb) – surpass, exceed, outclass.
entity (noun) – organization, establishment.
bang (non) – value.
bang for the buck (phrase) – get the best value for your money.
sink (verb) – decline, drop, fall.
pre-empt (verb) – forestall, anticipate, get in before.
moral hazard (noun) – In economics, moral hazard occurs when an entity has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs.
pose (verb) – constitute, present, create, cause (a problem or danger or risk).
self-proclaimed (adjective) – self-confessed, declared, acknowledged, admitted.
sustained (adjective) – continuous, constant.
culmination (noun) – climax, end, conclusion.