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Friday, October 31, 2014

Bank Should Also Follow Austrity Drive Of Prime Minister

In Modi govt's new austerity drive, no front-end cabins, 5-star lunches for bureaucrats-Financial Express 30th Oct 2014

The Narendra Modi government has issued a set of austerity measures, including bans on first class air travel and hosting conferences in five star hotels, and a bar on reviving posts that have been vacant for more than a year, with the stated objective of cutting down non-plan spend by up to 10 per cent. The measures are in line with steps that were announced by the previous government. 
 
“Such measures are intended at promoting fiscal discipline, without restricting the operational efficiency of the government. In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources,” Ratan Watal, expenditure secretary, said in a missive.

With fiscal concerns on the forefront for the last few years, the finance ministry has been routinely issuing such guidelines, the last being in September 2013.

In 2014-15, the Centre has pegged its fiscal deficit at 4.1 per cent of the GDP. But it is facing an uphill task as it had already touched 75 per cent of the target in the first five months of the fiscal despite a significant cooling in global crude oil prices. While the finance ministry is set to begin pre-Budget consultations for 2015-16 from next week, it had also met financial advisers on Wednesday to take stock of spending by different ministries.

“For the year 2014-15, every ministry/ department shall effect a mandatory 10 per cent cut in non-Plan expenditure,” said the finance ministry listing out a number of steps for the purpose.

Non-plan expenditure consisting of payments including those on subsidies, interest and salaries is pegged at Rs 12.19 lakh crore this fiscal. However, government officials said that many of the guidelines are symbolic in nature and result in minimal savings.
While first class air travel has been barred, officials have also been advised to exercise economy in booking tickets and have been encouraged to use video-conferencing instead of making trips where ever possible. Officials would also not be permitted to get free companion tickets for domestic or international travel.

The missive has also advised against creation of new posts and has said that posts that have been vacant for more than a year should not be revived. Similarly, it has also barred purchase of new vehicles, adding that these would be allowed only to meet the operational requirement of defence and paramilitary forces. 
 
Further, officials have also been told to avoid hosting conferences in five star hotels except ministerial bilateral and multi-lateral meetings. The finance ministry has also asked the departments to avoid bunching up expenditure in the last quarter to ensure that there is no wasteful spending.

http://www.financialexpress.com/news/in-modi-govts-new-austerity-drive-no-frontend-cabins-5star-lunches-for-bureaucrats/1303218/0

It is praise worthy that Mr. Naendra Modi Prime minister has issued guidelines to all offices to cut short spending  on meeting, tours and travel, and on gifts. Bank officials in public sector banks will take lessons from directives issued by government on austerity and try to follow the same in banks too. It is well known that  meeting of top officials, Branch Managers, Regional Heads or even Marketing Officers are conducted in 3 star or five star hotels and some times meetings are organised at tourist spot so that participants may enjoy the days of meeting lavishly without focussing on real agenda of the meeting.

There are examples when business plan meetings are organised at Lonawala  or Kashmir or at Gangtok and lacs of rupees are spent on entertainment including drinking costly wine. It happens at all level, at Regional level meetings or Zonal or central office level meetings. Huge expenses thus incurred on such meetings but usually are shown as expenses on meeting details of which will never include expenses on wine or other enjoyments. Banks in general book erosion in profit or book loss but do not hesitate in spending lavishly in meetings and tours.

Officials travel from one place to other by plane and stay in five star hotels. Not only this , it is also true that if a top ranked officer of a bank has to attend wedding or birthday function of his relatives, he or she will arrange an official work and in record they are on official duty but in fact they are on personal visit. Such tours are managed even for travelling abroad. I am fully confident that now in view of changed culture of central government under the leadership of Narendra Modi , Bank management will also take required step to reduce avoidable expenses and take part in austerity drive launched by great Mr. Modi.

Now when technology is in advance stag , they can conduct all meting through video conferences or chatting arrangement through phones and mobiles. I hope , leaders of various trade union associated with bank staff will also take care of it and make efforts to reduce load of expenses on bank balance sheet .

Thursday, October 30, 2014

Double Taxation And Black Money

DOUBLE TAXATION AVOIDANCE AGREEMENT-
By    pannvalan 
 
What is ‘Double Taxation’?
 
Any income, if subjected to taxation twice is double taxation.  This income could be salary or remuneration for the services rendered.  Or, it could be fees or charges.  Or, it could be interest on deposits/investments made.  Or, it could be profit on sale of fixed assets or movable assets like shares, gold etc.
 
Following are some examples of double taxation.
  1. Income earned by a citizen in one country, when remitted back to his home country is taxed there again. 
  2. Capital gains made by a citizen of one country, by selling his shares of a company located in another country.
  3. Profit on sale of immovable properties situated in a foreign country made by a resident citizen.
  4. Corporate Profits are subjected to tax and when the same (or a part of it) distributed as dividends to the shareholders is taxed again in their hands as their personal income. (After the Dividends Distribution Tax was introduced in India in 2007, this tax is also paid by the companies themselves and the individual shareholders do not pay any tax on their dividend income).
  5. Profit of a Partnership Firm is taxed and the applicable tax is paid by the firm.  Then the retained profit is credited to the individual partners of the firm, in the agreed ratio as mentioned in the ‘Partnership Deed’.  Suppose this money (share of profit) is treated as the personal income of the partners and taxed again, it amounts to double taxation.  However, as per Sec.86 of Income Tax Act, 1961, income/profit subjected to tax in the books of a Partnership Firm and the tax is paid by the firm will not be taxed again, when it is apportioned between the individual partners.
 
What is ‘Double Taxation Avoidance Agreement’ (DTAA)?
 
A country enters into a treaty with another country, in order to encourage enterprise and intellectual capital of both the countries.  This is done through DTAA.  In terms of DTAA, income of a person subjected to taxation in one country (the alien country/country of residence) is not taxed again in another country (home country/country of origin).  This is the most common feature of DTAA.  However, in some exceptional cases, the individual is required to pay tax to the country where his income was earned.  This is called ‘Withholding Tax’.   Usually, ‘withholding tax’ is deducted at source.
 
Then, the country which received the tax payment issues a ‘Tax Credit’ to the individual and it will be accepted as a valid ‘Tax Credit’ by the country of his residence, at the time of computing the total taxable income of the individual and his tax liability in his home country.
 
According to the tax treaty between India and Mauritius, capital gains arising from the sale of shares are taxable in the country of residence of the shareholder and not in the country of residence of the company whose shares have been sold. Therefore, a company resident in Mauritius selling shares of an Indian company will not pay tax in India. Since there is no capital gains tax in Mauritius, the gain will escape tax in both the countries altogether.
 
As on date, India has entered into DTAA with 88 countries.
 
Why is DTAA most talked about today, in India?
We are all aware that there are a lot of debates and discussions going on in the print and electronic media during the past few days about repatriation of black money stashed away in foreign banks (tax havens).  Both UPA and the present NDA government have submitted an affidavit to Supreme Court stating that if we disclose the information relating to individuals having bank accounts in countries with which we have DTAA, it will amount to breach of confidentiality of the persons concerned and will be viewed as violation of the terms of DTAA between two countries.  It will hamper further flow of information from these countries.  Then, India cannot succeed in its mission of unearthing huge black money lying abroad.  Mere accusation like “Assets disproportionate to the known sources of income” will not be accepted as a valid reason for sharing the information by the other countries with India.
 
My Understanding is –
 
  1. Tainted money and Ill-gotten wealth stashed away in foreign banks are not covered by the confidentiality clause.
  2. Especially when it can be proved that the money was earned through illegal means by tax evasion, corruption, arms trade, terrorism finance etc., the countries are bound to offer full co-operation to the investigating agencies and the countries to find out the true origin of such money.
  3. When a person does not respect the laws of the country where he lives and amasses wealth without disclosing it to the law enforcement agencies, he automatically loses the cover of secrecy available to protect his true identity.
  4. If it can be proved that the black money lying in the banks could be used for dreadful activities like financing and promoting of terrorism networks across the world, procurement of arms that may be used for overthrowing elected governments, manufacture and trade of psychotropic substances etc., every country will come forward to disclose the true identity of the individuals having deposit accounts.
  5. So, once we receive the information from other countries, we must investigate and establish that the money actually belongs to our country and not the individual depositors.  This task is not an easy one and it is the most challenging part of the whole process.  As soon as the charge-sheets are filed before Indian courts, the foreign countries will be prepared to co-operate with us further, so as to reach the logical end i.e. punishing the culprits and confiscating their wealth.
  6. However, it must be our endeavour to target the really huge money first.  Then, we may come to catch the small fish.
 
 
Date: 29-10-2014                                                                                                    pannvalan 

Role Of Media Men And Black Money ----By Danendra Jain

Media men on TV especially ABP News, Aaj Tak and NDTV tried their best to malign BJP government and Prime Minister Mr.. Narendra Modi using Supreme Court approach on Black Money. The were rebuking participants of BJP in each Debate as if they (media men) were inspectors in Thana and BJP personnel were thieves caught red handed.

I admire participants on behalf of BJP who more often than not remain cool minded, maintain peace and not get provoked by absurd, prejudiced, improper, inappropriate , abusive and irrelevant logic submitted by participants of other parties and sometimes also by some media experts who are called experts on the subject.

(I laugh when such media men give their improper logic on matter related to banking also. Media men who do not know ABC about banking do not stop maligning any bank or praising any bank in their whimsical and arbitrary style. Volume of bad debts in PS banks is rising quarter after quarter, but media men sometimes praise CMD on progress said to be achieved by a bank and sometimes malign a bank with their prejudiced eyes. I get astonished when media men advocate increase in salaries of executives and CEOs of public sector banks and demand to make it equivalent to their counterpart in private banks. I get shocked because they think it better to keep mum on demands made by junior bank staff  who have been fighting for respectable hike in their pay for last two years.)

I praise BJP participants because they try to put facts and figures without any biased attitude even though media men who organise debate push them in corner and give them minimum time and even though media men wilfully do not stop frequent abruptions and disturbance posed by participants of Non-BJP parties. These media men allow uninterrupted time to Non-BJP precipitants and crate all disturbances when BJP men start responding. This is media style torture.

.Media men have perhaps , why perhaps they have certainly forgotten their duty towards country. Their role to expose truth of any and every act of the government and that of opposition parties without any prejudices is rarely followed by media men .They should not try to brush ruling party with their ill-conceived or ill-motivated ideas and conspiracies, and should not try to put their views forcefully in the mouth of BJP to please their mentors in previous ruling party or to leaders in Aam Admi Party.

After much hue and cry by media men on many Television channels and Crocodile Tears shed by leaders and spokesmen of Congress Party on Black money name disclosures , Supreme Court has vindicated the stand of BJP and the court thought it fit not to disclose names of account holders enlisted in list obtained from foreign banks to give due respect to sanctity of various international treaties and to enable the government move in direction which will enable India to procure more and more name of account holders from other tax heaven banks.

Supreme Court did nothing new on 29th October and simply handed over the sealed envelopes submitted by ruling party to SIT which contained the same list which was already handed over to SIT by BJP when they formed it in June 2014.Court punctured the hope of various media men created in minds of viewers by their illogical stand and who created a hype on black money.

I also tried a lot through my little blogs to enlighten on issue of black money but failed to do anything. It is only court which can save India from dirty men of Television channels and journalists who consider them above all dignitaries of Government of India. I get disheartened when TV channels like NDTV or Aaj Tak or ABP news which telecast debate to malign BJP and which do not keep the sanctity of Free Journalism are awarded with prize.

This is India where more often than not evil doers are promoted in majority of government department , PSUs and banks. Similar is the position of media men who are also victim of flattery and bribery like public servants. This is a great curse on democracy. I hope all right thinking persons and NGOs will take steps to correct the attitude and approaches of journalists in India. I hope media men will now stop mudslinging and making remarks sarcastically against BJP participants at least on Black money issue in views of latest stand taken by Supreme Court.

Last but not the least , media men , leaders of NON-BJP parties and some blind supporters of Non-BJP parties tried their best to malign the image of Narendra Modi in particular and Bhartiya Janta Party in general by using secular or communal card for last almost a decade. But the common men who understand the truth better and who can decide and choose the best among the available options of politicians during election times though it wise to vote Modi and BJP for power.

Some so called experts of Media men try to divide the society on communal or caste by portraying the probability of victory of any candidate on the basis of population based on caste and community. It is They who always talk of caste and community but always put blame of BJP for dividing the society. During last Parliamentary election, BJP and its leaders almost avoided talking on caste and community but media men always tried to forcefully introduce their prejudiced ideas in the mouth of BJP participants during almost all TV debates on some selected TV channels. 

Black money: Centre gives apex court list of 627 account holders -Hindu Business Lin 30.10.2014

J Venkatesan 

New Delhi, Oct 29:  
The Centre on Wednesday submitted a sealed cover to the Supreme Court containing a list of 627 Indians holding black money in bank accounts abroad along with a status report on the investigation conducted against them.
 
The three-judge Bench of Chief Justice HL Dattu and Justices Ranjana Desai and Madan B Lokur, which had hardened its stand on Tuesday against the Centre for non-disclosure of all names, decided not to reveal the names.
 
The Bench made it clear to Attorney-General Mukul Rohatgi that it did not intend to open the three envelopes submitted by him and asked the Registry to send them to the Special Investigation Team. It directed that the envelopes should be opened only by SIT Chairman Justice MB Shah and Vice-Chairman Justice Arijit Pasayat, for a further probe in respect of the 627 names.
 
The Bench also empowered the SIT to evolve its own procedure in accordance with law after hearing the grievances and difficulties of the Centre with regard to treaties with various countries and the submissions of petitioner Ram Jethmalani and his counsel.
Earlier Rohatgi told the court that the first document contained details of correspondence, treaties and agreements India had signed with France and other nations where the money was said to be stashed; the second contained the 627 names; and the third gave the status report on the investigation in these cases.
 
Rohatgi said that more than half the people in the list of 627 were Indian nationals while the rest were Non-Resident Indians. He said that most people named in the list had their accounts with HSBC Bank, Geneva.
The Attorney-General added that the details of account holders with entries dated up to 2006 were supplied by the French government to the Centre in 2011. He said that the information was stolen from HSBC Bank in Geneva and reached France from where the Government got the information.
 
The AG said the income-tax law had been amended to extend the period of limitation for launching a prosecution, and that the investigation should be completed by March 31, 2015. He said the Centre was not interested in protecting anybody and would follow the court’s orders.
 
When the CJI asked the AG whether the Government was pressing the application seeking modification of the orders, the AG said he was not doing so.
The Bench asked the SIT to submit a status report on the probe by November 30 and posted the matter for further hearing on December 3.
AAP’s intervention petition

Meanwhile Arvind Kejriwal of the Aam Aadmi Party, through his counsel Prashant Bhushan, filed an intervention application stating that he had personal knowledge of some of the names having black money stashed in foreign bank accounts and was also in possession of the statements made by such persons before income-tax authorities.
Bhushan told the court that at the time of raids of their premises, these persons had confessed to holding black money in foreign accounts and also disclosed the modus operandi of how the ill-gotten money was transferred from India to their foreign accounts, and further, how this money was brought back through hawala transactions.
 
Kejriwal said that though the Government had revealed eight names, the list did not contain the names of the three who had given statements. He said he was placing all such names/information, obtained through a whistleblower, before the court so that a thorough investigation could be ordered and effective steps taken to check such illegal transactions of black money. The Bench said it would consider the application on December 3.

PTI reports:
SIT report will be submitted on time: MB Shah

Investigations against over 600 people accused of stashing money abroad illegally are going on and a status report will be submitted on time, said MB Shah, chief of the Special Investigation Team (SIT) on black money.
 
“We have already filed the first report (on black money) in August. Certainly I am hopeful about it (timely submission of the second report),” he said on Wednesday.
On a day the Attorney General submitted a list of 627 names having accounts in HSBC Bank, Geneva, to the apex court, Shah told a news channel that the list was already known to the team.
 
“Investigation is going on. Without investigation it is very difficult to say that a person is guilty or that person has done something wrong. A person is required to be heard first,” he said.
Shah, a retired Supreme Court judge, said investigation in these cases is not easy. “It is not easy because when a department also issues a notice, it takes time. The concerned parties and assessees’ replies take time,” said the SIT chief.
 

No Improvement In Bbank's Health

Outlook for Indian banking system remains negative: Moody's

Moody's Investors Service says that its outlook on India's banking system is negative, reflecting its view that high leverage in the corporate sector could prevent any meaningful recovery in asset quality over the next 12-18 months. ''The negative outlook on the Indian banking system pertains mainly to the public-sector banks, which represent more than 70% of total banking-system assets,'' says Gene Fang, a Moody's vice president and Senior Credit Officer.

''These banks have experienced higher growth rates in nonperforming and restructured loans, as well as greater weakening in profits, than private-sector banks, and these trends are unlikely to improve for public-sector banks,'' adds Fang. ''Going forward, India's corporate sector will remain highly levered, representing an obstacle to a cyclical recovery in asset quality.''

The report-whose outlook expresses Moody's expectation of how bank creditworthiness will evolve in this system over the next 12-18 months-looks at India's banking system in terms of five factors: Operating environment (which is classified as stable); asset quality and capital (deteriorating); funding and liquidity (stable); profitability and efficiency (deteriorating); and systemic support (stable).

While Moody's expects economic growth will pick up moderately, growth remains constrained by the high interest rates needed to contain inflation. Moody's base-case forecast is for GDP growth of 5.0% for the fiscal year ending March 2015 (FY2015) and 5.6% for FY2016, compared with 4.7% in FY2014. According to Moody's report, India's broad corporate sector is highly levered, with a debt-to-equity ratio of more than 3.0x.

 In particular, corporates engaged in infrastructure projects face both structural and cyclical challenges. Without a stronger economic recovery, significant deleveraging will only occur beyond the horizon of this outlook. And although the new government of Prime Minister Narendra Modi may formulate some policies within the 12-18 month horizon of this outlook, it will take longer to see an impact on the real economy.

Profitability will also remain under pressure as banks continue to provide for problem loans. This is particularly problematic for public-sector banks, which have lower pre-provision margins and greater asset quality problems. However, funding and liquidity will remain stable, given high domestic savings rates and a low reliance on market funding.

Moody's expects that a high degree of support from the Indian government for bank creditors will remain in place over the outlook horizon. The Reserve Bank of India issued a set of recommendations aimed at compliance with the Financial Stability Board's ''Key Attributes of Effective Resolution Regimes'' by 2015.

However, the Indian government in practice will likely opt for other resolution mechanisms, such as assisted mergers, instead of ''bail in''. If senior creditors of an ailing public-sector bank were required to absorb losses, this could easily risk contagion of financial distress to other public-sector banks, given their similar business models and credit characteristics.

Moody's rates four private-sector and 11 public-sector banks in India that collectively account for 67% of system assets. The negative outlook on the Indian banking system is consistent with the negative rating outlooks on the bank financial strength ratings (BFSR) of 10 of the 15 rated banks. -


Public sector banks hiding bad loans’ size: Ex-CVC-ET

NEW DELHI: Restructuring of loans on easy terms may not be the best solution to tackle the bad loans of public sector banks (PSBs), former central vigilance commissioner Pradeep Kumar said, and expressed concern that state-run banks were probably suppressing the size of the "real crisis involving NPAs (non-performing assets)".

For over two years, the CVC has been pursuing several cases of NPAs, many of which are suspected to be the result of an organized fraud, and has played a key role in referring some of the cases to the CBI for criminal investigation. He has conducted detailed vigilance inquiries into some of the biggest bank loan defaults, and has recommended disciplinary action against dozens of bank officials.

"Willful defaulter is a process. There are two types of things happening — one is the declaration of someone as a willful defaulter, the other is restructuring of loans. Restructuring of loans is taking place with easier conditions. Both are of concern. NPAs are getting suppressed — the RBI has taken note of it," Kumar, who retired this weekend, told TOI in an interview. "There is a lot of corporate restructuring happening, but even then loans are not getting alright," said Kumar.

The former CVC's comments come at a time when sources in the CBI and other investigating agencies are also pointing out that PSU banks may be suppressing the extent of bad loans in the sector.

Kumar said, "It comes as a concern when the banking sector is taken for a ride by corporates in connivance with bank officials. There have been a number of cases of bank frauds and that is an area we are looking into closely."



The former CVC said bank officials must act responsibly and have to be accountable for their actions. Kumar said the appointment of bank directors have to be fair and transparent "as they are ultimately responsible for all large decisions of the banks".

A senior investigator recently said banks were reluctant to declare loans as frauds despite overwhelming evidence because of its implications — for its senior staff and the balance-sheet.

CVC inquiries have revealed several cases — Winsome Diamonds which has an NPA of Rs 6,500 crore, Biotor's Rs 1,100 crore and Mahuaa TV with almost Rs 1,800 crore. The government has taken several steps to tame the problem of bad loans. It is also amending laws to help banks recover their dues and stop the fund flow to suspect companies.

http://timesofindia.indiatimes.com/business/india-business/Public-sector-banks-hiding-bad-loans-size-Ex-CVC/articleshow/44146242.cms

Former CVC is right: There is a cancerous growth in Indian banks – hidden NPAs-First Post


The comments of former central vigilance commissioner (CVC) that state-run banks were probably suppressing the bad loans on their books by restructuring these loans with easier conditions is highly critical and gives a hint on how frightening the actual bad loan situation can be in India’s banking system.
“NPAs (non-performing assets) are getting suppressed—the RBI(Reserve Bank of India) has taken note of it,” said Pradeep Kumar, former CVC, in an interview with Time of India on Friday.
What Kumar said is something which every stakeholder in the banking system — the bankers, the companies, the regulator and the finance ministry (which effectively controls 70 percent of the banking industry through public sector banks) knows very well for long, but has conveniently ignored for their own interests.

For several years now, the banking industry, in particular state-run banks, have been subjected to severe, frequent misuse by a nexus of crony capitalists, corrupt bankers, middlemen and politicians.
This typically happened in two stages.
First is when the loan is being sanctioned. The nexus is at work then in the case of companies, which originally didn’t merit the loan. The banker is bribed or influenced by the politician or the firm through the expert middleman, who seal the deal for the beneficiaries.
This happens typically in state-run banks, where officials lack accountability, power, autonomy in their functions and are prone to flouting rules when bribed or pressurized by those with money power.
Logically, a company which secures the loan through this mechanism wouldn’t be able to honor its repayment obligations for long since in the first place, the firm didn’t deserve the loan. If it did, there was no need to trigger the nexus to operate.
Two, when the crores of money thus lent and not repaid by the unworthy borrower are about to turn an NPA, the nexus again returns to work and push the banks to offer additional assistance/ relaxation to the same faulty borrower through some easier terms (slashing lending rates, extending repayment period, offering a moratorium and taking a haircut), commonly known as loan restructuring.
This is something, again, the company doesn’t deserve, since loan recast facility is originally intended for companies in genuine trouble not cronies.

As Firstbiz has argued in the past (here and here), there are strong reasons to believe that a sizeable chunk of the current stressed asset mess is attributable to criminals in the banking system.
If one take a closer look at the major bad loan cases that have been now investigated for charges of wilful defaulting/ criminality/ fraud such as Rs 7,000 crore loan owed by Vijay Mallya-led Kingfisher Airlines, Rs 6,500 crore loan of Winsome Diamonds and Rs 40,000 crore of Bhushan Steel, Rs 2,500 crore loan owed by Mumbai-based Tayals and several other similar cases, one needn’t take much effort to understand how the current pile of publicly stated bad/ restructured loan happened.

Bankers have been well aware of several cases going into loan recasts without merit but kept silent until recent past for fear of their jobs and for the sake of their own career development/ post-pension vocation programmes.

A change in this scenario happened only in the last 2-3 years, when the lead lenders at the corporate debt restructuring (CDR) forum took up the issue with the RBI seeking change in rules to prevent companies from misusing the system.

But that’s about companies. What about banks themselves misusing credit recast facility to rescue a non-meritorious firm? That’s what the former CVC has highlighted now.
If indeed banks were honest in stating the actual status of many of their loan accounts and showed the guts to call a spade a spade, the actual figure of bad loans would have been much higher than the Rs 2.5 lakh crore gross NPAs disclosed by them till June.

As RBI governor Raghuram Rajan said in the post monetary policy presser on last Tuesday, banks shouldn’t postpone the bad loan problem for tomorrow and instead deal with it today, because “tomorrow will be worse”.

But that’s precisely what banks have done all these years. The total chunk of loans restructured in the banking system is about Rs6 lakh crore (Rs 3 lakh crore through CDR and the rest through bilateral route).
Only a thorough investigation can reveal how much of this chunk is actually hidden NPAs. Identifying the problem is critical to find remedies. A Firstbiz estimate shows about 14 percent of the loans given by banks until June is under the stressed asset category. That’s not a good signal for an aspiring economy like India.
Bad loans make banks weak.
If banks fail to detect or pretend not to have them on their books, that can be even more fatal for the whole economy at a later stage. Banks are the backbone of an economy and the managers of public money. Hence, safeguarding them should be the utmost priority of the policymakers.

As Firstbiz noted earlier, the only way out to come out of the current situation plaguing India’s private sector banks is to privatise them and change them as better governed institutions.
Putting good money after bad and understating the financial health do not often happen in private sector banks like in the case of state-run lenders.
Hidden bad loans are like cancer. The problem with the cancer is, if left undetected, it lives merrily with the victim for a considerably long period, before manifesting one day with its full might.
That day comes with a cost


http://firstbiz.firstpost.com/biztech/former-cvc-is-right-there-is-a-cancerous-growth-in-indian-banks-hidden-npas-103154.html


Tuesday, October 28, 2014

Join Dharna At Jantar Mantar And Modi's House





Collection of News from Facebook group Namely WE BANEKRS are given above and are As follows

While it is a welcome sign that PM meets CEOs of Public Sector Banks, the meeting will be good for the employees if the following additional points are discussed by the top level executives of Banks with the receptive and thinking Prime Minister.

1. Settlement of Pending revision of wages, Set up of Pay commission instead of dealing the same through IBA, which is indifferent to the sufferings an
d aspirations of the employees and delays the matter abnormally.

2. Expectations of Government and Bank from Employees

3.Facilities to be given by them for fulfilment of the expectations.

4.Expectations of the employees and their commitment to the ideals of Public Service.

To sum up, ways and means making the public sector banks efficient in service and rewarding to the employees, who are prepared to work hard and fulfil the needs of the society in the changing economic scenario.
 
जरा सोचिये, खुद से सवाल कीजिये:

१. क्या आप अपने वेतन और कार्य की दशा से संतुष्ट हैं?

२. क्या आपकी यूनियन आपकी आशाओं और आकांक्षाओं के अनुरूप वेतन वृद्धि और बेहतर सुविधाएं दिलाने के लिए वचनबद्ध है और उसी के लिए राष्ट्रीय स्तर पर वार्ता कर र
...ही है?

३. क्या आपकी यूनियन की कार्यपद्धति पूर्णतया पारदर्शी है और आपको आपकी मांगों के सम्बन्ध में चल रही वार्ता से पूरी तरह अवगत करवाती है और आपके प्रश्नों का जवाब देती है?

यदि उपरोक्त प्रश्नों के उत्तर न में हैं-तो फिर क्या सोच रहे हैं ? वो कौन है जो आपकी मांगें पूरी करवाएगा? आपके साथ न्याय करेगा?

वो और कोई नहीं स्वयं आप हैं. नयी यूनियन बनाना समाधान नहीं है-अगर आप ये सोच रहे हैं कि सरकार या फिर आईबीए या फिर कोई और बिना कुछ किये धरे आपके साथ न्याय करेगा तो फिर आप मुगालते में हैं. जो अपनी सहायता खुद नहीं करता, जो अपनी आवाज खुद नहीं बुलंद करता-उसकी सहायता कोई नहीं करता. यूनियन का मतलब झंडे डंडे नहीं है, यूनियन का मतलब स्वयंभू नेता भी नहीं है. यूनियन का मतलब अन्याय, उत्पीड़न और शोषण के खिलाफ एक होकर आवाज़ बुलंद करना है, पुरज़ोर संघर्ष करना है और तब तक करना है जब तक न्याय की प्राप्ति नहीं हो जाती. इस मायने में आप यूनियन हैं, मैं यूनियन हूँ, हम सब यूनियन हैं, हमारी एकता यूनियन है.

इससे पहले कि देर हो जाए, इससे पहले कि आपके अधिकारों का सौदा हो जाए, इससे पहले कि आपके सपने नीलाम हो जाएँ, उठिए, जागिये, पूरी की पूरी व्यवस्था को बदलवाने के लिए तत्पर हो जाइए.
आपको बस इतना करना है:

१. अपने कार्यस्थल पर अपने साथियों से वर्तमान दयनीय स्थिति पर चर्चा कीजिये, उन्हें झंडे डंडे वाली यूनियन की मानसिकता से ऊपर उठकर समग्र बैंक कर्मियों के हित में संघर्ष के लिए तत्पर हो जाने पर राजी कीजिये. हो सकता है पहले प्रयास में आपको सफलता न मिले लेकिन निरंतर प्रयास के जरिये आप अपने कार्यस्थल के सभी साथियों को एक जुट करने में जरूर सफल होंगे. अगर आपने इतना कर लिया आपने पहली बाधा पार कर ली.

२. आप जिस भी यूनियन या संगठन के सदस्य हैं, उसके स्थानीय नेता से संपर्क स्थापित कीजिये और उससे यूनियन की भावना से ऊपर उठकर संघर्ष में भागीदारी और नेतृत्व करने का आग्रह कीजिये, अगर वह आनाकानी करे या असमर्थता जताए तो फिर उससे आपके नेतृत्व में भाग लेने और आपका साथ देने का अनुरोध कीजिये.

कोई भी संघठन एक दिन में नहीं बन जाता, हम संघठन निर्माण की प्रारंभिक अवस्था में हैं, आपके अपेक्षित सहयोग और भागीदारी से हम इस आंदोलन को क्रांति में बदल सकते हैं-क्या बैंक कर्मियों के मान सम्मान और स्वाभिमान की खातिर आप इस पूरी की पूरी व्यवस्था बदलवाने के लिए क्रांति हेतु तैय्यार हैं? यदि हाँ, तो अपनी योग्यता, साहस, बहादुरी, दृढ निश्चय, निष्ठा, समर्पण और कुछ कर गुजरने के जज्बे के साथ इस आंदोलन रुपी यज्ञ कुण्ड में आहुति डालने के लिए अपने साथियों के साथ २ नवंबर को ११ बजे जंतर मंतर दिल्ली पहुंचना अभी से सुनिश्चित कर लें.

आहुति बाँकी यज्ञ अधूरा
अपनों के विघ्नों ने घेरा
अंतिम जय का वज्र बनाने
नव दधीच हड्डियां गलाएं
आओ फिर से दिया जलाएं
— with Kamlesh Chaturvedi.

Monday, October 27, 2014

Faulty Promotion Process Of ED And CMD

Why not any of General Manager, Executive Directors and CMD of public sector banks and financial institutes has been suspended till date even though many of them have been found to be involved in Bribe based lending scam exposed by CBI or media or bank staff themselves?


Why properties of corrupt officials of banks who caused loss of crores of rupees not seized till date and how did the get safe retirement during last decade even if they were found involved in bad lending?


 

Why not RBI officials or Finance Minister have been punished for choosing wrong ED and Corrupt CMD for a bank?

Why GOI did not think it wise to peep into promotion process which took place for ED and CMD during last ten years of UPA rule? 






No purpose will be served only by cancelling the selection board if government of India chooses not to punish members of Interview board who violated norms and who for vested self interest decided to chose bad candidate for the top post like ED and CMD of Bank?

 
CMD of Syndicate bank was caught in bribe-lending, CMD of Indian bank, Corporation Bank, Bank of India and many other public sector banks have also been found to be guilty of committing serious irregularities in the past and several others have been allowed to retire from bank safely even if they were corrupt, some of them have been given job in other Financial Institute even after retirement with many records of corruption in the past. 

A few years ago , CBI charged several high rank officers of bank and LIC housing Finance Company of lending huge money to real estate builders after taking bribe. Several banks have been charged of wrong lending in case of 2G spectrum related case .Even Supreme Court has passed adverse remarks against bankers.

If RBI and GOI could have taken lesson from above episodes and took corrective steps in real sense and true spirit , they could have stopped assets of banks moving from good to bad and bad to worse.




Unfortunately they have done nothing in the past in real sense. They only played drama and put carpet on all cases of corruption related to top officials and ministers.
 


In such position how one can imagine that interview processes taking place in these banks for promoting an officer from one scale to higher scale may be true , justified and without involvement of bribery flattery and favouratism.


 


When ED and CMD of a bank are corrupt , it is but natural all processes taking place in respect of recruitment, promotion, purchase of goods and services and sanctioning or
loans are doubtful . Usually flattery and bribery are two keys for an officer to get success in such promotion processes . It is open secret.
 
When top bankers are corrupt there is no doubt that a culture of corruption is wide spread in that bank in particular and in PSU banks in general. Still RBI, Ministry of Finance and government of India as a whole is silent on taking punitive action. It is only because Dirty Ganga emanates and originates from Ministry and RBI only.


 


Had it a been a clerk or a simple officer, top management could have suspended him immediately.

GOI and IBA deny wage hike to bank staff saying that banks have no paying capacity knowing very well that junior staff are not at all responsible for any big loss caused to bank by poor assets. Executives of some banks have also pleaded separate pay revision for executives .


Is Finance Minister not responsible, accountable and punishable for selection of wrong and corrupt ED and CMD for a bank?


Why General Manager rank officers alleged to be involved in corruption and charged by CBI are allowed to continue in their post or even promoted is a million dollar question?


 


It speaks how much deep rooted is the cancer of corruption in the banking system in particular and in government departments in general.


Banks ask for equivalent or even more amount of collateral security and guarantors even for financing a few lac or a few crores of rupees to common business men. But they think it safe to finance hundreds and thousands of crores of rupees to big corporate houses, telecom companies, power makers and distributors, real estate builders.


Why?


Government of India has decided to change the constitution of selection process but has not strike at the root of corruption?
 
Government has not stopped the dirty selection process of promotion going on for a decade and more for internal promotion in these banks.
 
It is the culture of bad promotion and ill-motivated posting which has resulted in current sickness of PS banks.
 
It is the humiliation given to senior officers by promoting juniors based on flattery and bribery which has caused rise in stressed assets to a great extent.


 


Still GOI is silent on this issue though several complains have been sent in last few years to MOF and RBI and several cases have been lodged in various courts of the country. Clever chiefs of banks spend crores of rupees in putting hindrances and delaying judgement from court of law and they leave no stone unturned to ensure withdrawal of cases by building pressure on petitioners and ensure abortion of Justice before it comes from Temple of Justice.



It will be foolish to imagine of reforming PS banks by carrying out little surgery . Need of the hour is carry on thorough scrutiny of all processes and punish the guilty in all cases so that clear message is conveyed to all government officials, bankers and other concerned officials that corruption at any level will not be tolerated.

It must be kept in mind that stray cases of corruption at high level which came to light in last few years are just indicative . Actually there are hundreds and thousands of such cases. By mistake one or two cases of corruption are exposed when the corrupt officer commit some  mistake . Otherwise game of corruption is normally played very cleverly,safely and cautiously. Obviously corruption at top level is all pervasive and cancer of corruption has engulfed entire banking system.


To read full news click on following link

http://importantbankingnews2.blogspot.in/2014/10/selection-of-ed-and-cmd.html

Bank Scam Is Bigger Than All Scams

Ten times of money what Government has lost in Coal Scam or 2G Scam is likely to be lost in bank lending scam which is slowly and gradually coming to light. CBI, CVC and GOI all are moving very slow on exposure of ill-motivated lending undertaken by bank officials in nexus with top politicians of UPA government during last decade.

This is because big corporate houses are involved in bank scam and they are using their money power and political powers to delay the proceeding on bank scams at all levels.

RBI ordered forensic audit of United Bank, Central Bank, Indian Bank and many other banks but till date has not brought white papers on the findings of auditors and course of action they are planning to take or have taken till now.

Bigger banks like SBI or PNB or BOB may have bigger scams if some powerful body takes initiative to discover the same.

I am submitting below my Blog of October 2013 to refresh the views on bank scam.

It is astonishing that Prime Minister and PM office has confirmed that allocation of coal mines to Hindalco was fully and undoubtedly on  merit basis and strictly  as per the prevailing policy. They loudly and openly claim that Nothing wrong had occurred in allocation of coal mines to Hindalso or other corporate houses and the same has been asserted by Congress Party High Command and gang of ministers working under Prime Minister.

 But his Yesman Sri Salman Khursid in a bid to gain good , better and best  wishes from PM says that PM was not in a position to read all lines and all papers and documents before signing on allocation papers related to Hindalco or any other corporate allottees. It means he has tried to focus and prove that though the decision taken in favour of Hindalco was wrong ,PM in person  may not be held responsible for the same because it was not humanly possible for PM to read all lines before signing on the same.He justifies indirectly the action of CBI of filing FIR and thus trapping of Secretary Mr. Parekh and Kumar Mangalam whose images are as untarnished and unblemished as that of clever PM Manmohan Singh.

He , Mr. Salman Khurshid means to say that his PM’s secretary Mr. Parekh may be involved in conspiracy as alleged by CBI but his boss PM is innocent , PM should be exonerated and considered as honest and above board. he further says that PM only singed as a rubber stamp. Similarly when PM withholds any proposal or declines, he is misguided by Secretary or the proposal was recommended by state government or recommended by BJP. In his opinion or as per wishes of Congress Party ,PM and his ministers and his other colleagues are innocent, CBI may be wrong just as CAG was termed wrong in 2G scam.

If we take lessons from what Mr. Khurshid has tried to place logic in support of PM,  the Nation has to redefine the role and function of PM and that of cabinet working under him. Further In such position there is no need to select an educated and talented person for the post of PM and a lady like Rabri Devi may be selected as PM because he or she has not to apply his or her mind before taking any decision or signing any paper. He or she has to read the message as drafted by party high command.

But on the contrary when people of India praises any decision of the government or the volume of  growth , or so called rise in GDP or concocted fall in crime the credit must go to PM and his government.

Here I would like to submit one illustration of bank loans. Big amount of loans are sanctioned usually by a Regional Head or a Zonal Head or ED or CMD and only small amounts of  loans are sanctioned unilaterally by a Branch Head. 

When CMD or ED accepts some bribe or extraordinary gift in cash or in kind for him or for his friends and relatives, he will make a phone call to Zonal Head or Regional Head . As soon as phone call comes, entire work force in Regional Office and Branch become active and loan proposal is prepared in such a way that higher office sanctions the same without raising any eye brow or without asking for reply on any query. This happens in the same way when  party High Command or PM or nay ministers desire any work to be done or any contract work has to be allotted to any contractor.All rules and laws may be violated by subordinates when instruction orally pour in from top bosses . Juniors are always ready to honour all wrong or right orders in fear of action in way of transfer or rejection in promotion process.

If any Branch official or RO officials submits negative points of the proposals and incorporate some financial and factual reality which may cause hurdle in sanctioning, they are fired and threatened on phone to modify the proposal suitably and if some dare officer does not listen to their advice , he has to be hanged , he has to be transferred to the most critical remote place or he has to be rejected in promotion or he has to be trapped in any false and fabricated case in the same way as Mr. Khemka is being served one after other charge-sheet by Harayana Government. 

Similary ,on the contrary  if any CMD or ED or GM or DGM does not want to sanction a loan forwarded by RO or a Branch of a bank or when they do not get any personal gain from such sanction they will not hesitate in raising hundreds of queries which may not be replied by a simple Branch official without inviting any repercussion from top officials.You may term this culture as reign of terror or culture of flattery and bribery. But such thing happen usually in all offices and all government departments.

When above loan is sanctioned and after a year or two the same loan goes bad, the accountability and responsibility will be fixed on junior officers. CMD or ED who were fully instrumental in sanction of loan to bad person will be nowhere in blame list and will be awarded with several prices for loan growth in that bank. When high value loan is sanctioned , credit goes to top bosses for credit growth and when loan is declared as bad , subordinates are accused and punished . 

This is  small illustration of how high values loans and high value decisions are taken by top ministers and top officials in India and when it is proved that there was corrupt dealing , they will punish juniors or else say that if action is taken against such high profile persons , people will avoid taking any decision and country will suffer.Some of clever ministers are accusing CBI and expressing apprehension that if such FIRs are filed , people will not take any good decisions. 

If a scam master or an corrupt officers with ill motivated plan takes a bad decision he is termed as positive minded and creative minded and on the other if someone dares challenge ill-motivated decision , he is punished such as Khemka, or Arvind Kejriwal or Ramdeo or Balkrishna , a disciple of Ramdeo. If corrupt officers and ministers are accused and if court suggests action against them , our clever minister accuse even Apex court of indulging in Judicial activism.Entire system comes forward in support of corrupt officer and corrupt minister and on the contrary none dares speak if some honest officer like Khemka is punished for none of his fault.

I therefore not at all surprised by statement made by  Mr. Salman Khurshid in favour of PM or any supporting statement given by Manish Tiwari or other spokesman of Congress Party.

The deep rooted flattery and bribery culture has place for corruption and corrupt officials and corrupt ministers only.

It is possible only in India that a secretary is accused of conspiracy in coal allocation case related to Hindlaco but the PM who verbally and through his sign approved the decision is considered as innocent .

I hereby do not mean to blame PM or any other person, neither I mean to declare any person innocent without an honest investigation by investigating agency or police or by court  , but I feel government should not interfere in the course of action taken by any court or CBI , if at all they want to save the country from the clutches of criminal and corrupt officers and ministers.Law is same for all , same for PM and that for his secretary, same for CMD of a bank and that for his junior officers.

Lastly it may be true that coal allocation was done in the overall interest of  the country without any malicious intention,then in such case ,  if PM or PMO feel that PM is innocent in coal scam, they should openly say that CBI is wrong , Supreme Court is wrong in ordering investigation in coal allocation files , Congress Party spokesmen should say openly and admit that PM's secretary Mr. Parekh is blameless and FIR filed by CBI against Mr. Parekh and Mr. Kumarmangalam is ill-motivated and wrong from all angle of consideration. 

Coal scam: Will PM read every page before signing files, says Salman Khurshid

by Zee Media Bureau/Supriya Jha 

New Delhi: Defending the Prime Minister Manmohan Singh in connection with the alleged irregularities in the allocation of Talabira coal blocks to Hindalco, External Affairs Minister Salman Khurshid backed the PMO statement and said that the PM was not supposed to go through the nuances of the file before signing it. 

"A file comes to the PMO, and then the office analyses the file and sends it to the Prime Minister…Do you expect the PM to read each page before signing it? I have been a minister. If things work like this, nothing will be accomplished?” Khurshid said. 


Khurshid’s comments come a day after the Prime Minister’s Office issued a statement defending the ceding of the Talabira-II and III coal blocks in Odisha to Hindalco. 

The PMO’s statement in turn was prompted by former coal secretary PC Parakh’s remarks after he was named in the 14th FIR filed by the Central Bureau of Investigation wherein he said that if he was a conspirator in the case, then the PM should be “third conspirator” as he was the one who took the final decision. 

Refuting any irregularities in the allocation of the coal blocks, the PMO said that the approval of the allocation of the coal blocks to industrialist Kumar Mangalam Birla’s company was appropriate. 

The PMO statement said, “The Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him.” 

The PMO added that the case was under investigation by the CBI and “no impediment is being placed” on the investigating agency which may have a bearing on the case. 

The entire furore was triggered after the Central Bureau of Investigation (CBI) in its latest chargesheet registered FIRs against industrialist Kumar Mangalam Birla and his company and former Coal Secy PC Parakh in connection with the allocation of Talabira-II and III coal blocks in Odisha to Hindalco for its 650MW captive power plant in its integrated aluminium project in Sambalpur and for a 100MW captive plant for the expansion of its Hirakud aluminium plant in Odisha. 

Reacting to CBI’s FIR, Parakh had said, “There is KM Birla who made the representation, he is one conspirator. I, who examined the case and made a recommendation, I can be another conspirator and the Prime Minister, who as the Coal Minister, took the final decision, is the third conspirator”. 

“If there is a conspiracy, then there are different members in this conspiracy,” Parakh had said. 

I
http://zeenews.india.com/news/nation/will-pm-read-every-page-before-signing-files-salman-khurshid-on-coal-allocation_884438.html


PM admits he cleared coal block allocation to Hindalco



The Prime Minister's Office on Saturday ended its silence on the latest and possibly most explosive development in Coalgate by acknowledging that Manmohan Singh put his stamp of approval (on October 1, 2005) on the allocation of a coal block to top industrialist Kumar Birla's Hindalco. At the same time, it vigorously rebutted the Central Bureau of Investigation's claim of illegality, saying the PM stood by the decision as no wrong had been committed.

Taking what is being seen in political and bureaucratic circles as an uncharacteristically strong stand, the PMO said, "The PM is satisfied that the final decision in this regard was entirely appropriate and based on merits of the case placed before him."

The PMO statement comes after retired coal secretary P C Parakh — booked along with Birla for alleged criminal conspiracy and misconduct, and corruption - said that if CBI thought there were irregularities, then the PM ought to be "accused No 1" for giving his approval.

With the opposition baying for his resignation, Singh's move to forthrightly own up to having sought a reassessment of Hindalco's case after a representation by Odisha chief minister Naveen Patnaik appears intended to cap a politically debilitating controversy.

But by doing so, Singh, who at the time held charge of the coal ministry, accepted he was the "competent authority" who signed off on the coal allocations in the 2006-09 period - under CBI's lens — when he held charge of the portfolio. On whether the PM would be ready to be questioned in any Coalgate case, as suggested by senior minister Kamal Nath, a PMO spokesperson declined comment, saying CBI was yet to make such a request.

The PMO said it didn't wish to impede the CBI's investigation, but justified altering the screening committee's earlier decision to award the coal block in question to public sector companies Neyveli Lignite Corp (NLC) and Mahanadi Coalfields Ltd (MCL) by relying heavily on Patnaik's backing to Hindalco.

In accommodating Hindalco as the third partner in a joint venture, PM also waived a violation in guidelines to enhance the firm's share by arguing that NLC and Mahanadi were "sister PSUs" and Neyveli's share could be made good from Mahanadi's 70% allocation.

It invoked the "federal framework" to say Patnaik's views had to be accommodated, and claimed that public sector claimants had not been disadvantaged.



Countering criticism that private sector Hindalco had been favoured, PMO said the coal requirements of the two PSUs, who also sought the blocks, were protected in a separate arrangement.

Neyveli Lignite was originally allotted Talabira II coal blocks in Sambhalpur by the screening committee headed by then coal secretary P C Parakh as the panel held that Hindalco had failed to utilize a previously allocated block. The committee also said Hindalco had been provided adequate coal linkages from MLC, which it had failed to utilize. It was felt NLC and Mahanadi could together develop Talabira II and III to extract an additional 30 million tonnes of coal.

The coal ministry altered the screening committee's decision and gave Hindalco a 15% stake in a joint venture with NLC and Mahanadi, said the PMO, after considering representations from Birla and Patnaik, which were referred to it by the PM.

PMO said while the original recommendation was being processed by it, the PM received a letter dated 17.8.2005 from the Odisha CM saying that the state government assigned "topmost priority" to allocating Talabira II to Hindalco. Singh noted "please get a report from the coal ministry" on the letter.

Birla in his letter also sought the linkage and officials said he explained that Hindalco had not been able to use its previous allocation as a bauxite lease for its aluminium plant had not materialized.

Coal ministry resubmitted the file on 16.9.2005 proposing that Talabira II and III be mined as a single entity by the JV. Mahanadi's holdings would be proportionate to the extractable reserves in Talabira III or 70% of annual production.

The coal ministry told the PM that the total requirement of coal from the blocks by the main contenders was 503 million tons. The ministry said the claim of Orissa Sponge Iron Ltd would be accommodated elsewhere and Mahanadi was made a partner along with Hindalco and NLC.

Neyveli could not be dropped as it was a central PSU backed by the screening committee. In its account, PMO has leaned on the Odisha CM's "clear preference" for Hindalco in the "interest of creating more employment and growth of the state's manufacturing sector."