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Indian shares rise; banks up as RBI cracks down on bad debt


By Jessica Kuruthukulangara

Indian rose on Monday as lenders such as State of gained after the central asked banks to start banktruptcy process against 12 large loan defaulters, raising hopes that reduction of bad debt will start to quicken.

The Reserve of urged lenders to initiate bankruptcy proceedings against a dozen companies, including Essar Steel, Bhushan Steel Ltd and Monnet Ispat and Energy Ltd, sources with direct knowledge of the matter said.

The RBI said it had identified the 12 defaulters last week, but did not publicise their names.

"There is a general feeling that non-performing asset (NPA) levels will come down after the RBI order to resolve NPAs of the country," said RK Gupta, managing director at Taurus Asset Management.

The broader NSE index was up 0.37 percent at 9,623.65 as of 0644 GMT, while the benchmark BSE index was 0.47 percent higher at 31,201.69.

The PSU Index gained as much as 0.79 percent, with top lenders State of up as much as 0.7 percent and Canara Ltd rising as much as 1.8 percent.

Loan defaulters that are facing bankruptcy proceedings however fell.

Lanco Infratech Ltd was down as much as 8.5 percent to 2.15 rupees, a record low, after it said it was one of the companies that had been identified by the RBI to start bankruptcy proceedings.

of Monnet Ispat and Energy Ltd fell as much as 19.9 percent.

The Pharma Index was down as much as 1.08 percent as ongoing quality concerns raised by the U.S. Food and Drug Administration pressured pharma

Cipla Ltd, the biggest drag on the pharma index, was down 2 percent.

(Reporting by Jessica Kuruthukulangara in Bengaluru; Editing by Biju Dwarakanath)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)