Sunday, August 31, 2014

RBI Should Do To Reform Bank


I completely disagree with opinion of RBI Governor that volume of Bad loan in Public Sector banks is a matter of concern but is not scary. Perhaps he is guided by NPA figures which PS banks are publishing in their balance sheet. Bank officers who work in the bank know very well that what is appearing in balance sheet is not real but a false story about bank's health .

Financials published by banks are manipulated and fraudulently and ornamentally decorated. Volume of bad loans is much more in fact. Top management of PS banks have let loose a reign of terror in their respective banks and created fear psychosis among junior level officers who in turn somehow or the other conceal the health of bad loan accounts and use various good or bad tools to treat even bad accounts as standard loan accounts. They are using same culture which they used to conceal bad loans before introduction of CBS technology.

Officers working in branches are afraid of action if they declare any bad loan account as Non Performing Assets. They have been taught to use method of restructure, rephase, ever greening of loan etc to keep the account always in standard category. A loan sanctioned for three to five years remain in good health even after lapse of seven to ten years. They are never taught to ensure proper diagnosis at proper time on th merit of each case. On the contrary they are given target for declaring amount of slippage for a year. They assign recovery target as the do for credit and deposits. They know very well in most of the cases bank officers are achieving targets by window dressing .

 Mr. S. K. Jain CMD Syndicate banks became ready to sanction Rs.100 crore to Bhusan Steel only to save this account from slipping into NPA category. Same methods are used in almost all branches of all banks to keep bad account in good colour.One branch manager may sanction additional loan even  in the name of different firm of the same defaulter to enable the defaulter to clear overdue in bad loan account.  Bank officers somehow or the other recover critical amount in some cases and postpone the sickness to next quarter. In this way , clever bankers are simply postponing the burden of action against defaulters to next officer who will come after his transfer .

Senior officers sitting at administrative officers similarly guide junior officers to somehow or the other come out of default and reduce its volume to such an extent that it does not slip into NPA in current quarter and so they manage the thing in next quarter. But none at any level makes efforts for permanent solution and do not make effort for recovery of bad loan before it is too late. Process of recovery and legal recourse to recover the bad loan from defaulters is so much delayed that clever borrower either sell off the assets or divert the money to some other place or the suit in court become diluted and time barred. Majority of officers pass on days till his transfer or retirement. They bother safety of their service and not safety of banks they work for.

I have therefore no doubt that volume of NPA if honestly declared , the level will reach upto 20 to 30 per cent of total advances  in each bank . Not only this , bank officials are not ready to reform and improve  quality of  even fresh credit decisions and hence they  add  new loans also into NPA category within one to two years of sanction of loans. This is why slippages are more than what is recovered in cash or written off.

Most of Branch Managers somehow or the other try that a few instalments are deposited by borrower at least till  the time he is transferred to other branch or they give long moratorium period to start repayment so that their tenure remain safe and volume of NPA does not increase till their tenure.  This is why slippage increases as soon as new incumbent joins as Branch Manager after transfer of existing BM.

RBI carry out forensic audit of a branch when some big exposure comes to light but do not like to take proactive step to go deep into the matter. If they carry out forensic audit of all branches of all banks , I think RBI will without delay admit the bitter truth that level of NPA in banks is not less than scary.

I therefore strongly believe that RBI will have  to give top priority not only in recovery of bad loans from bad borrowers but will also have to ensure that bank officials stop lending to bad borrowers to serve their self interest .

RBI will have to ensure that bank officers are paid respectable salary and respectable growth in career without any discrimination. Greed for money is root of bad lending and it can be stopped and reduced only by giving respectable wage hike and ensuring timely Bipartite Settlement.

RBI will have to stop flattery and bribery based promotion and recruitment . RBI will have to stop issue of whimsical and arbitrary transfer orders by top officials in favour of good officers.

RBI will have to look into the files of top officials to know how by evil ways and means they have got the elevated post doing injustice with hundreds of others.

RBI cannot solve the problems of bad debts only by bifurcating the post of CMD into Chairman and Managing Director or by diluting the stake of share of GOI in bank's equity.RBI will have to strike at the root from where the plant of corruption and bad lending emanates and will have to punish senior officials who irrigate and inculcate bad culture in low level and mid level offices.  

RBI will have to take all possible steps to turn bad culture into good culture in not only in lending decisions but also in recruitment, promotions and postings.

RBI will have to deal with shortcomings and inefficiencies of legal machinery where cases filed  by bankers for recovery of dues from defaulters remain pending for decades .RBI will have to stop exploitation of banks by politicians .

RBI will have to tell the politicians and banks that the loan sanctioned by bank is not the charity but have to be repaid by borrower come what may.

RBI will have to bring to task inspectors, auditors and vigilance officers who by taking bribe provide certificate of goodness to bad officials.

And so on..........................................

Important News 31st August 2014

SEBI, RBI mull fund-raising restraint on wilful defaulters -Hindu Business Line

New Delhi, Aug 31:  
Putting its weight behind RBI in dealing with ‘wilful defaulters’ of bank loans, capital markets regulator SEBI is considering barring such entities from raising funds through stocks and other securities.
 
“Work is going on this front... We can say that you (wilful defaulter) can not raise the money from the markets,” SEBI Chairman UK Sinha said.
To tighten the regulatory noose around wilful defaulters, the Reserve Bank has suggested to the Securities and Exchange Board of India that such entities should be prevented from raising funds through capital markets.
 
To facilitate such restrictions on entities found to have ’wilfully’ defaulted on bank loans, the Reserve Bank is exploring ways to share details of these defaulters with SEBI on a real time basis.
“My own feeling is that we should go along with RBI on this, but the process will take some time,” Sinha told PTI.
 
“There is a difference between NPA and wilful defaulter.
Wilful defaulter means that the bank has already come to a finding and the process has gone to a certain level before someone being called a wilful defaulter,” he added.
 
As per RBI’s proposal, such defaulters can be barred from raising funds through capital markets, as also through issuance of securities or other avenues under the jurisdiction of SEBI.
 
Currently, the information about wilful defaulters of bank loans are shared with SEBI and others, including credit information agencies like CIBIL, on a quarterly basis.
The proposal has come against the backdrop of spiralling bad loans in the banking system, especially fuelled by increasing number of wilful defaulters.
 
Sharing details on real time basis can better equip SEBI and other agencies to ensure that wilful defaulters identified by banks do not have an opening to raise further funds from gullible investors through the securities market.
Going by estimates, the amount of non-performing assets (NPAs) in the system is worth about Rs. 2 lakh crore.
 
Both RBI as well as the government have raised concerns about high levels of bad loans in the banking system especially at a time when the economic growth has been below 5 per cent in the last two financial years.
Generally, a ‘wilful default’ refers to failing to pay back the loan despite the entity having capacity to honour the said obligations.
Non-repayment of loans aggregating to Rs. 25 lakh and above by such entities are considered as ‘wilful defaults’
 
Banks and financial institutions have been advised to examine all cases of wilful defaults of Rs. 1 crore and above for filing of suits as well as consider criminal action wherever instances of cheating/fraud by the defaulting borrowers have been detected, according to RBI.
The RBI has asked them to strengthen their internal credit appraisal systems to minimise the risk of default.
 
Besides, the Bank Employees Federation of India also said recently that many corporates were defaulting on their loans.
 
Counterfeiters lapping up Rs. 100, 1,000 notes: RBI -Hindu Business Line
 
Mumbai, Aug 31:  
Currency counterfeiters appear to have started focusing more on the Rs. 100 and Rs. 1,000 denominations, even though the traditional favourite Rs. 500 bills continue to be the most to be faked by numbers, the Reserve Bank has said.
The banking system detected over 2.52 lakh pieces of counterfeit notes of Rs. 500 denomination in FY14 against the 2.81 lakh the year before, while the number of Rs. 1,000 denomination fake notes rose to 1.10 lakh as against the 98,459 in the preceding year, it said.
 
Detection of Rs. 100 denomination fake notes increased by 10,000 pieces during the fiscal to 1.18 lakh pieces, the RBI said in its recently released annual report.
“During 2013-14, the detection of counterfeit notes of Rs. 1,000 and Rs. 100 increased by 11.8 per cent and 9.8 percent respectively, whereas that of Rs. 500 denomination decreased by 10.3 per cent,” the central bank said in its annual report.
 
The data, however, exclude the detection by the state police and various other law enforcement agencies, it said.
The share of the banks in detecting fake currency has been steadily climbing as 95.9 per cent of the total detections were done by the banks, it said, adding that only 4.1 per cent of the detections were by the RBI
.
“To instill confidence of the public in banknotes in circulation and with a view to controlling and mitigating the risk of financial loss as also loss of reputation, banks have been advised to re—align their cash management in such a manner so as to ensure that cash receipts in denominations of Rs. 100 and above are not put into re-circulation without the bank notes being machine processed for authenticity,” the regulator said.
 
Meanwhile, the RBI has said there has been a sizeable jump in the expenditure on security, printing and distribution of the currency notes between July 2013 and June 2014, as against the year-ago period.
During FY14, the central bank spent Rs. 3,210 crore on the account as against the Rs. 2,870 crore in the previous fiscal.
 
“With a view to obviating the need for making repeated logistical and security arrangements for transportation of bank notes, thereby reducing the costs, as also for ensuring speedy movement of treasure, a scheme of direct remittance of bank notes from note printing presses to currency chests is being progressively pursued,” it said.

Friday, August 29, 2014

Wage Revision No Achhe Din

From S.Srinivasan

Dear friends
Ganapati pappa morya , 10 bipartite lavkar aan  !
Oh Ganpati My Lord, return soon next year!
 quickly  settle our 10 bipartite!
 
 Amidst the chants of ‘Ganapati Bappa Morya’, almighty, the elephant-headed God has arrived today. . The country shall celebrate his  arrival, with great pomp and show, but we, the ban k employees of India have lots of complaints, sorrow and pleas for you.

We see HIS arrival as our saviour, our messiah, and true to HIS  name as ‘Vighnaharta’.

But we have  narrate to HIM now , what  shall not be very pleasing; but we believe that Ganesha  being the large-hearted God will hear all our grievances and  provide respite and relief to us from our ordeals facing the 10 wage revision negotiations .

Try To Read this article named 'Forget Wage Revision'
We seek each day as we are faced with choices and decisions about all kinds of things. What is the best path for me to take?  What should my decision be? These are dilemmas we often find ourselves confronted with. Our puranas   teaches us that any action rooted in Dharma or righteousness, expressed as unconditional love towards all beings, is an action worth standing up for. If action stems from weakness. fear, jealousy or any other negative emotion, such an action is best avoided. the 25  negative emotions Conflict, Loneliness, Anxiety,Disgust,Grief, Self-abuse Unsupported ,Humiliation, Overwhelm or overload ,Worthless,Lost,anger, envy, pride, greed, attachment ,jealousy , malice, losing control over ego, Frustration, Disappointment, Hurt, Guilt, Inadequacy etc.  amongst us drown out the voice of wisdom.
Lord Ganesha called as vignaharta symbolises remover of all obstacles, remover of bad fate. It is a festival symbolic of victory of good over bad
The form of Ganesha is one that unites humanity with the rest of creation. The human world and the animal world. That symbolizes strength and intelligence. The myths that go along with the origin of this unique form involve a story between Shiva and Parvati. Yet it is important to go behind the myth and understand its deeper meanings.

Ganpati has four hands. One is held out in the ‘abhay’ mudra which bestows fearlessness. Yet to acquire fearlessness, we need to unite as a community. The idea of Sri Lokmanya Tilak to make this a social event was to create this unity amongst people.

The vehicle of Ganesha is the mouse. Why the mouse? The mouse has ability to break down substances into their tiny parts. We need to develop an intelligent mind that is capable of understanding things in detail, which enters into the depth of matters. 
 
Ganesha also carries snake around his waist, which is a symbol of the energy which resides in all human beings. This energy can be used both beneficially or for destructive purposes. The position of the snake at the navel of the murti is a symbol of ‘vyaan’ an aspect of Vayu – the element of air within the body.

There are several verses praising the glory of Sri Ganesh. Learn them, understand them and sing them with your own voices. This will bring you the grace you seek.



You Cannot Expect Respectable Wage Hike from Tainted IBA Members


Lord Ganpati is connected to the natural cycle. When we bring this small mud idol home, we offer it all our love and devotion. This idol which collects our positive thoughts and energies is then returned to the earth, either through the rivers or even at home, it carries our goodwill to others and to our environment. We then are united through the earth, the waters and through our goodwill. We need to bring this awareness back into the way we perform our rituals.

May we pray to Sri Ganesha that we receive the intelligence to make the right choices in our lives. To choose the right quantities of the appropriate substances. Ganpati is not about competing with each other. May we pray that we be able to return to simpler and more natural ways of being, and in doing so we are able to reconnect with Nature. Being educated is different from being cultured. Being cultured involves taking responsibility. True devotion can never be quantified by outer displays. It is the one thing that takes us deeper within to our own inner joy.





 
We pray the Vighnaharta’-to clear all obstacles standing   in the way of successful culmination just wage revision for bank employees at the earliest.
 
With the hope that prayer of over 8 lac employees in 80000 branches of India will be answered favorably by the ‘Vignaharta’, I have written these articles in defence of our stand of 25% hike which  is just and sacrosanct under the title
 
AFTER 100 DAYS OF NEW GOVERNMENT

NO KHUSHI, STILL GHAM!

FOR BANK EMPLOYEES
 
 
Justification I:
 
 I shall be only obliged to you upload the articles in your sites which has wide acceptance, acknowledgments among the bank employees. 
 
Wishing you and your readers a purposeful meaningful Ganesh Chaturti , Sankatahara Chaturthi  and join the chorus  Maharashtrians in invoking the blessings of the Sankatahara - Sankata (means problems) and Hara (means killing or removing) in their traditional style 
 
Ganapati pappa morya , 10 bipartite lavkar aan  !
 
Meaning- Oh Ganpati My Lord, return soon next year!
Quickly settle our 10 bipartite!
From: S.Srinivasan
Retried Bank Unionist.

Police arrest four over alleged $39 mln bank fraud-DNA

Police in India's financial capital have arrested four people alleged to have siphoned off money from accounts held in multiple banks, mostly state-owned, in the latest scandal involving public sector lenders in Asia's third-largest economy. The economic offence wing of the Mumbai police is looking for six more suspects, a deputy police commissioner told reporters on Thursday, adding that the alleged fraudulent withdrawals total about 2.38 billion rupees ($39.3 million).

The case comes hard on the heels of an alleged more than 4 billion rupee fraud at branches of state lenders Dena Bank and Oriental Bank of Commerce, which authorities are investigating separately. In another incident, the head of state-run Syndicate Bank was arrested this month over allegations that he was seeking bribes to favour debtors. State-run banks have in recent years reported bad loans growing faster than their private sector peers, while in some cases there have been allegations of corruption.

In the latest case, funds from eight accounts held in branches of seven state-run banks - Bank of India , Punjab National Bank, Vijaya Bank, State Bank of Bikaner and Jaipur, UCO Bank, Central Bank of India and Dena Bank - were withdrawn illegally, the police official said. There was one case of fraud at a Mumbai branch of private sector lender Dhanlaxmi Bank, the official said.
Shares in Dhanlaxmi had fallen 4.7 percent on earlier local media reports that named the bank as one of those involved in the case.

 No bank executives have yet been named in relation to the alleged fraud. Dhanlaxmi Bank Chief Executive P.G. Jayakumar declined to comment, as did a spokesman for Punjab National Bank. A Dena Bank spokesman said the latest case related to the fraud previously reported by the bank, without elaborating. Dena Bank said last week that 2.23 billion rupees had been "surreptitiously transferred" out of the bank. The other state-run lenders could not be reached immediately for comment

Thursday, August 28, 2014

CBI And ED Traps Many Banks

CBI registers two PEs in Syndicate Bank case-Indian Express


The Central Bureau of Investigation (CBI) has started two new enquiries into role of middleman Pawan Bansal, an accused in the Syndicate Bank bribery case in alleged easing of loan conditions and credit facilities for corporates from UCO Bank and Bank of Maharashtra.

CBI sources said the enquiries will look into alleged irregularities in the extension of credit facilities by UCO Bank and Bank of Maharashtra in the borrowers account facilitated by Pawan Bansal of Altius Finserve, an accused in the Syndicate Bank bribery scandal, and his associates.

The agency had arrested Bansal in a bribery case related to Syndicate Bank CMD SK Jain who was arrested for allegedly taking a bribe of Rs 50 lakh for increasing credit limit in violation of banking rules.

During Bansal’s interrogation he revealed his role in facilitating similar arrangements for other corporates.

Bank credit: CBI to probe irregularity charges -Hindu Business Line

New Delhi, August 28:  
The Central Bureau of Investigation (CBI) has registered two preliminary enquiries (PE) into the alleged irregularities in providing credit facilities to corporates by two public sector banks, UCO Bank and Bank of Maharashtra.
 
“These PEs will look into alleged irregularities in the extension of credit facilities by UCO Bank and Bank of Maharashtra in the borrowers’ account facilitated by Pawan Bansal of Altius Finserve, an accused in the Syndicate Bank bribery scandal, and his associates,” a CBI official said.
 
Earlier this month, Bansal was arrested along with then Chairman and Managing Director of Syndicate Bank SK Jain in a bribery case.
 
A PE is registered when a complaint is received or information is available which may, after verification, indicate serious misconduct on the part of a public servant but is not adequate to justify registration of a regular case (RC) under the provisions of the Code of Criminal Procedure (CrPC).
 
A PE may be converted into an RC as soon as sufficient material becomes available to show that prima facie there has been commission of a cognizable offence. When the verification of a complaint and source information reveals commission of a prima facie cognisable offence, a regular case is to be registered as is enjoined by law
 
During the interrogation of Bansal, CBI had got to know about his role in facilitating similar arrangements for corporates with other banks, agency officials said. The CBI has alleged that in order to expedite results, one of the accused companies Prakash Industries had earlier agreed to pay huge sums of money to Bansal for utilising his services and it was agreed he would take care of further payments to Jain.
 
EOW files nine FIRs in fixed deposit fraud case at public sector banks
 

The scam has grown bigger and a number of public sector banks have been defrauded, says additional commissioner of police (EOW) -LIVEMINT


BY Khushboo Narayan And  Vishwanath Nair 

The economic offences wing (EOW) of the Mumbai police on Thursday said it has filed nine first information reports (FIRs) against several individuals, including some middlemen, for allegedly perpetrating a fixed-deposit fraud involving a number of public sectors banks.

"The total amount that has been siphoned off in this fraud is over Rs.700 crore. We are in the process of registering 10 more FIRs," said Rajvardhan Sinha additional commissioner of police (EOW).

A deputy commissioner of police (DCP) at EOW said the agency along with the Central Bureau of Investigation (CBI) is coordinating on a probe involving multiple cases of fraud related to bank fixed deposits in the city perpetrated by the same individuals. He declined to be named.

"We met with the officials of CBI for coordination today," said the DCP of EOW. He declined to be named.

These individuals and middlemen in collusion with bank officials carried out fixed deposit scams at public sector banks including Dena Bank, UCO Bank, Bank of India, Vijaya Bank, Oriental Bank of Commerce, Central Bank of India, Punjab National Bank, State Bank of Bikaner and Jaipur and Dhanalakshmi Bank, according to the agency.

"Dhanalaxmi Bank has been defrauded of Rs.141.8 crore while Dena Bank of Rs.45.23 crore," said the DCP of EOW.

According to EOW officials, the perpetrators of the crime approached entities like South Indian Education Society, Mumbai Metropolitan Regional Development Authority, PG Group of Companies and Sant Rohidas Charmakar Mahamandal among others to open fixed deposits with public sector banks through middlemen.

In return, these entities were promised a higher rate of interest on the FDs. Once a fixed deposit was opened through the RTGS facility, the perpetrators gave a fake FD receipt to the entities and retained the original receipts with themselves, said Sinha explaining the modus operandi of the fraud. "These individuals/ middlemen then opened an account in the name of these entities with forged signatures for transferring the overdraft amount. This fixed deposit money was later siphoned off," said Sinha.

So far, EOW has arrested four people involved in the fraud and is in the process of arresting six others. The EOW has also arrested the alleged mastermind of the scam Mohammed Fashiuddin, promoter of the Showman Group.

"We are also investigating the role of the bank officials involved in the fraud," said Sinha.

According to a senior official at Central Bank of India, the bank is yet to receive any communication from the EOW. Similarly, an official at UCO Bank stated that no intimation had been received by the bank from the law enforcement agency.

"The EOW has not gotten in touch with the bank’s head office regarding any investigation yet, but it did verify some branch-level transactions," said a senior official at Dhanlaxmi Bank.

Calls made to officials of other banks went unanswered.

CBI has also registered cases regarding fixed deposit frauds at some branches of Dena Bank and Oriental Bank of Commerce adding up to nearly Rs.400 crore. On 20 August, financial services secretary G.S. Sandhu had stated that the finance ministry is conducting forensic audits at Dena Bank and Oriental Bank of Commerce after details of the irregularities came to light.

On the same day, Oriental Bank of Commerce said in a filing to the stock exchanges that it detected irregularities in transactions worth Rs.180 crore involving the Jawaharlal Nehru Port Trust (JNPT), which had filed a complaint with the CBI in February.

The bank has reported the matter to the Reserve Bank of India (RBI) and the department of financial services of the finance ministry, and initiated departmental action against the erring officials, the bank said in its statement.

Dena Bank also issued a statement on 20 August on a similar fraud. The bank’s Malabar Hill branch in Mumbai received term deposits from various entities and government organizations between 30 January and 5 May. The term deposits amounting to Rs.256.69 crore were pledged to the bank by the same signatories to obtain overdraft facilities of Rs.223.25 crore.

"The funds were surreptitiously transferred out of the bank by creating fake overdraft facility, resulting in a fraud on the bank and the concerned entities/govt organizations," Dena Bank said in a separate filing to the stock exchanges. The bank "has suspended the erring branch manager and transferred the staff of the concerned branch", it said. The amount being investigated by the CBI is outside the EOW’s estimation of Rs.45.23 crore.

On Thursday, the PSU Bank Index on NSE fell 1.79% while the benchmark NSE Nifty was up 0.23%. Shares in Dena Bank fell 2.99%, Vijaya Bank fell 0.77%, UCO Bank fell 1.5%, Oriental Bank of Commerce fell 2.58%, Syndicate Bank fell 2.53%.

The investigation by the EOW and CBI comes on the heels of an alleged bribery scandal, earlier this month, involving Syndicate Bank and some companies.

 
 


FIR Against Officials Of Vijaya Bank ,IOB, BOI, BOB

Mumbai EOW, CBI uncover Rs 1,000 crore banking fraud at Dena Bank, IOB, other PSBs-Business Standard-28th August 2014

The mastermind of the fixed-deposits scam is reported to be Mohammed Fashiuddin of the Showman Group
 
The Mumbai Economic Offences Wing on Thursday said it had uncovered a large scale banking racket involving multiple persons who conspired to perpetrate widespread fraud at Dena Bank and Oriental Bank of Commerce, as well as some other banks.

Read about Scam in Dena Bank And Oriental bank


 The quantum of the fraud, part of which is being investigated by the Central Bureau of Investigation, is likely to be close to Rs 1,000 crore, sources said.

The criminal syndicate allegedly also carried out large-scaled Fixed Deposit scams at other public sector banks, including UCO Bank, Syndicate Bank, Bank of Baroda, Vijaya Bank, and Dhanalakshmi Bank.

Read about Scam in Syndicate Bank

 The EOW has registered 10 FIRs against several individuals as well as officials of public sector banks. The mastermind of the scam is reported to be Mohammed Fashiuddin of the Showman Group. So far, four of the accused have been arrested. Searches and raids are ongoing at offices and homes of some of the accused.

Also Read Scam After Scam

 The role of officers at Bank of India, Indian Overseas Bank,, and Dena Bank is being investigated. Among the institutions who were victims of the fraud are the MMRDA and SIES Trust.

Read About Scam In Central bank

 The amount involved in case of Vijaya Bank is Rs 5 crore. The bank has completed its investigation in the matter and the report has been submitted to a committee of general managers. The committee will study the report and refer it to the Vigilance Department for further action, if required, the sources said. However, no official of the bank has been found guilty as yet, they added.

 
http://www.business-standard.com/article/companies/mumbai-eow-uncovers-rs-1-000-crore-banking-fraud-at-dena-bank-iob-114082800228_1.html

CBI Registers Case Against Firm For Over Rs. 139 Crore Bank Fraud

CBI has registered a case against Bengal India Global Infrastructure for allegedly cheating Central Bank of India of over Rs. 139 crore by availing loans on forged documents.

The company allegedly entered into a criminal conspiracy with the directors of Bholanath Ingots, Gouri Iron Steel Pvt Limited, Subhlabh Steels Pvt Limited and B K Newatia, chartered accountant Partner of Jaykishan chartered accountants, CBI spokesperson said here today.

"It is alleged that they availed credit facilities from Central Bank of India on the basis of false and forged documents and diverted the funds for the purpose other than for which the same was sanctioned and thereby cheated and defrauded the Central Bank of India to the tune of 139.05 crore," she said.
The agency today carried out searches at 15 places in Kolkata and Durgapur in West Bengal in connection with the case, the spokesperson said.


 
Read About Latest Scam In UCO Bank

Read About T N Bhasin IBA Chairman

Read About Irrgularities In Corporation bank

Fixed deposit scam of Rs 1,000 cr: Mumbai EOW files FIRs-Hindu Business Line

Mumbai, Aug 28:  
The Economic Offences Wing (EOW) of the Mumbai Police on Thursday filed 10 first information reports (FIRs) against several officials of state-run banks and individuals for an alleged fixed deposit fraud of more than Rs. 1,000 crore.
 
According to reports, the fixed deposit scam was undertaken by certain individuals in collusion with bank officials at several public sector banks including Dena Bank, UCO Bank, Indian Overseas Bank, Syndicate Bank, Bank of Baroda, Vijaya Bank, Oriental Bank of Commerce and Dhanlaxmi Bank.
 
The perpetrators of the crime misused the cash credit facilities available against fixed deposits of entities like South Indian Education Society, Mumbai Metropolitan Regional Development Authority and Jawaharlal Nehru Port Trust to raise loans, reports said further.
So far the agency has arrested six people involved in the fraud including the alleged mastermind of the scam Mohammed Fasihuddin, promoter of the Showman Group.
The agency is also investigating the role of bank officials involved in the fraud.

Also read following link

Irregularities In Andhra Bank

Forensic Audit of United Bank

Read about Forensic Audit of Allahabad bank


You may Read latest news on this site too,Click here And mak it a Default page






Wednesday, August 27, 2014

CBI Books Central Bank Officers

CBI books Electrotherm for cheating Central Bank of Rs436 crore-Live mint

Company requested credit to enable it to supply steel and iron to an other firm in Tanzania, CBI says
 
New Delhi: The Central Bureau of Investigation (CBI) on Tuesday said that it had registered a case against the directors of Ahmedabad-based Electrotherm (India) Ltd and officials of state-owned Central Bank of India for entering into a “criminal conspiracy” and cheating the bank to the tune of Rs.436.74 crore.
 
The case was registered on a complaint filed by the Central Bank of India. “It is further alleged in the complaint that the company requested for credit to enable them to supply steel and iron to one other firm in Tanzania,” CBI said in a statement.
 
A CBI official identified the Tanzania-based company in question is Kamal Alloys Ltd. CBI said that one of the directors in Electrotherm was also on the board of Kamal Alloys.
The agency conducted searches at nine places on Tuesday in Ahmedabad, Gandhinagar, Vadodara and Kutch in Gujarat.
 
Electrotherm “did not submit any proof of delivery of the material and defaulted on the loans taken”, the agency said. CBI further said that “standby Letters of Credit (were) opened by the bank to facilitate trade in machinery and coal devolved.” The bank had to make payment when Electrotherm did not pay the company it had taken the material from.
 
CBI has also alleged that Electrotherm made “false representations” to “induce the bank to extend credit facilities” to itself.
 
A company spokesperson could not be immediately reached for comment.
This is the latest in a string of cases involving public sector banks that CBI has begun investigating in the recent past.
 
De-stressing banks is no short-term process-Sri Anand Adhikari --Business Today
 
A week after the Central Bureau of Investigation (CBI) pounced on Syndicate Bank Chairman and Managing Director S.K. Jain, a branch manager of Central Bank of India in Jabalpur, Madhya Pradesh, was convicted by the CBI special court in a bribery case. The branch manager R.R. Das, who has retired now, has been sentenced to three years imprisonment and has been fined Rs 5,000. Das actually demanded a bribe of Rs 5,000 from a customer for clearing the 'Kisan Credit Card' loan of Rs 80,000. Das was caught red-handed by the CBI on receiving a tip off from the customer. Das' conviction came after seven long years. He has a right to contest the conviction in higher courts.
 
This is not an isolated case of bribery in a PSU bank. There are dozens of such cases handled by the CBI every year where the bribery amount is as low as Rs 5,000. The officers involved are often branch managers to senior managers. Imagine the waste of human resources and also of CBI's time in taking such cases to their logical conclusion. The arrest of Syndicate Bank 's Jain, however, is an exception. And it is not just a coincidence that the new government under Prime Minister Narendra Modi is now committed to wiping out corruption from the system. Modi, who often says Na Khaunga, Na Khane Dunga (neither will I take bribe, nor will I allow anyone to take it), has reportedly given a free hand to the agency (CBI) to go after the high and the mighty without any fear.
"A message has been clearly sent out that bribery and corruption are unacceptable, particularly with custodians of public money," says Nikhil Shah, Senior Director at Alvarez & Marsal India, a firm that specialises in turning around stressed cases.
 
There are some who smell political vendetta in all this. Jain's relative, who was also arrested by the CBI in the bribery case, is former Congress spokesperson Vineed Godha. " Syndicate Bank is a small bank-one-seventh the size of the SBI. CBI should have gone after bigger banks," says a banker on the condition of anonymity.
 
But whatever the critics may say, the arrest of a CMD of a PSU bank in a bribery case will act as a deterrent to those officers who take the depositors money for a ride.
 
The PSU bankers are already under scrutiny for a higher share of non-performing assets (NPAs) in their books as compared to their counterparts in private and foreign banks. With a 76 per cent lending share, the PSU banks contribute 85 per cent to the overall NPAs , as on March 2013.
Clearly, the disproportionate share of PSU banks points to poor governance structure, lax credit appraisal systems, near absence of concept of risk and also corruption. These systemic issues are directly linked to the way CMDs are appointed, the short tenures, musical chairs at top management, etc. While the government (be it the Congress or BJP) as a single largest shareholder of PSU banks will always play favourite to appoint a CMD, the stability at the top or fixed tenure will surely go a long way in bringing out a change.
 
The previous Congress-led UPA government had already made a beginning in the country's largest bank, the State Bank of India (SBI), by setting in motion a gradual road map for a five-year fixed tenure for Chairman. Arundhati Bhattacharya, who assumed the role of Chairperson last October, has a fixed three-year tenure. Bhattacharya's successor, in October 2016, will have a four-year tenure, while all chairmen thereafter will get five years.
 
"The new policy change will also allow all the four MDs to compete for the Chairman's post irrespective of their residual service on the date of the retirement of the Chairman," Bhattacharya told Business Today in an exclusive interview last month. The government should also replicate the fix tenure in all other PSU banks for effective leadership.
 
The P.J. Nayak Committee on reviewing the governance of PSU boards has suggested splitting the post of Chairman and MD. The bifurcation will allow an outside professional of eminence to come as a Chairman. "This change will improve the governance, board deliberations and bring fresh thinking to deal with risks," says M.D. Mallya, former chairman of Bank of Baroda. The private sector banks such as ICICI Bank and HDFC Bank have separate Chairman and MD. Take, for instance, K.V. Kamath, who is ICICI Bank's Non-executive Chairman, and Chanda Kochhar, who is the MD and CEO of the bank. Today, large borrowing proposals go to a credit committee at the headquarters where the CMD, executive directors and senior general managers take a call. "The splitting of CMD post will help in a focused role of a Chairman looking after the larger issues than sitting on a credit committee," says Mallya.
 
There are some banks such as SBI which are proactively reviewing the concept of risk in lending and also tightening, but the PSU pack as a whole needs a lot of prodding. The RBI has also come out with a new framework for containing NPAs to force banks to take early action. On his very first day, the new RBI Governor Raghuram Rajan had said: "The system has to be tolerant of genuine difficulty while coming hard on mismanagement or fraud." The RBI has introduced a new prudential framework from April this year for early detection of stressed assets. The regulator has asked banks to create a new asset classification called 'Special Mention Accounts' to identify early signs of stress based on stress indicators. The purpose is to increase the accountability of bankers.
 
There has been a shift in the banks's approach in addressing stressed assets. They are moving towards using the services of external professional management agencies who can provide transparent oversight and objectively drive operational improvements to increase the borrowers's cash flows. "While used extensively in markets like the US and UK, it is a relatively new concept in India. The banks who have used this route in India have seen tangible value created in their stressed assets," says Shah of Alvarez & Marsal. SBI had engaged the services of Alvarez & Marsal to help them in restructuring cases.
 
The RBI has also set up a credit central repository for information of large borrowers of banks. P. Rudran, MD & CEO at Asset Reconstruction Company (India) Ltd, says in a multiple lending, the credit information from a borrower doesn't come together-such as drawing power, utilisation of funds, monitoring of loans, default if any, non-fund facilities availed by borrower, etc. "The repository will help lenders to know all the credit information at one place. This will help in knowing the credit worthiness of a borrower," says Rudran.
 
Therefore, if a large borrower defaults, the information will be shared with other lenders on a quarterly basis. This measure will not only reduce the banks's leverage, but also keep the bad borrowers away from the banking system. A PSU banker narrates a case where a private sector bank took exclusive security (against the loan) from a corporate borrower, which the other bank didn't know. "We are now fighting with the borrower in a CDR (corporate debt restructuring) forum. The repository will help in knowing all the information well in advance," says the banker.
 
S. Ravi, a Non-executive director on the board of IDBI Bank, says: "The turnaround time for restructuring a stressed assets should be faster." Today, a lot of time is wasted as every lender in a consortium (lending) has to go back to head office for approval. "If the patient is on the death bed, you need to act fast," says a banker. The matter again lands at the doorstep of PSU bankers. And then there are limited DRTs (debt recovery tribunals), lack of faster bankruptcy laws, etc. A lot needs to be done to fix the structural issues at the PSU banks. "The positive action in the PSU space is happening too late. Don't expect any result too soon," remarks a private banker.
 

A Game of Shadows-Business Today-28th August 2014

The recent bribe-for-loan scandal involving Bhushan Steel and Syndicate Bank could just be the tip of the iceberg. The systemic rot runs much deeper.
 
 
Appearances can often be deceptive. A few months ago, all seemed well at Bhushan Steel. Indeed, in May, the steelmaker shifted its corporate office to a palatial building at Bhikaji Cama Place in New Delhi, an upscale commercial destination in the capital. It is a new 12-storey structure within the complex of the luxury hotel Hyatt Regency. But barely four months later, the company found itself at the centre of a storm that has rocked the banking sector.
On August 7, the Central Bureau of Investigation (CBI) arrested Bhushan Steel's Vice Chairman and Managing Director Neeraj Singal for allegedly offering a bribe of Rs 50 lakh to Syndicate Bank Chairman and Managing Director Sudhir Kumar Jain for extending its credit limit. Jain had been arrested five days earlier. Significantly, Bhushan Steel is already neck deep in debt and owes around Rs 40,000 crore to 51 banks, including State Bank of India (SBI), Punjab National Bank and others.

When Business Today visited the company's corporate office a few days ago, we were told that the senior management had stopped coming to work. A white Jaguar parked outside the main entrance to the lobby was in stark contrast to the nazar battu (a mask-like object supposed to ward off the evil eye) hanging about 15 feet above on the building façade. The huge visitors' lobby wore a deserted look. The silence at the corporate office was at odds with the hubbub at Bhushan's factory in Sahibabad Industrial Area, one of its three manufacturing units. Every two minutes, a big iron gate opens up to allow trucks to enter or exit the factory premises.
 The movement of trucks, mostly carrying scrap, is being supervised by security guards round-the-clock. "The incident is an aberration. The company has not defaulted so far," says a senior employee at the factory.
There is a dire need to strengthen the vigilance departments within banks, says CBI director Ranjit Sinha.Meanwhile, the company's lenders have planned to tighten the noose on the steelmaker. A consortium of banks last week decided to appoint three directors on Bhushan's board and conduct a forensic audit of its books, besides asking the company to sell its non-core assets to generate equity.

An email seeking an appointment with Bhushan Steel Chairman Brij Bhushan Singal went unanswered.
So how can a loss-making, debt-laden company manage to get additional loans? In the past three quarters till June 2014, Bhushan Steel has posted net losses. Its debt-to-equity ratio was 3.47 at the end of 2013/14; in contrast, the average debt-to-equity ratio of top five steel companies is just 1.7. "The Syndicate Bank CMD was extending credit limits to companies like Bhushan Steel even though it was not proper. Such cases appear to be quite rampant. There is a dire need to strengthen the vigilance departments within banks. If we come across more specific instances, we will examine them," says Ranjit Sinha, Director, CBI.

The CBI is also probing the role of middlemen in the scam. The involvement of Pawan Bansal, the mastermind in the Syndicate Bank scam and the man behind boutique investment bank firm Altius Finserv, has once again turned the spotlight on debt syndication agencies.
Indeed, for a long time, banks have not acknowledged the role of middlemen in manipulating the system. Following the recent incident, PSU banks such as Indian Bank and Andhra Bank have finally acknowledged their murky dealings and come down heavily on them. The Indian Bank has reportedly barred middlemen from entering its offices while Andhra Bank wants the borrower to accompany the middlemen during bank visits. Recently, Reserve Bank of India (RBI) Governor Raghuram Rajan said that "a good middleman acts as a broker. But if the point of a middleman is to pay bribes, that is obviously not okay. Its part of the whole set of governance issues that we need to look at."

This is a rare occasion when policymakers and bankers have accepted the presence of middlemen in the system. Last year, the CBI arrested a deputy managing director of SBI for colluding with a former official of the bank to sanction a Rs 400 crore loan to a Delhi-based company. Reportedly, the ex-employee was caught with Rolex and Omega watches, part of the kickbacks for the loan.

The [sensationalisation of the Syndicate Bank case] creates a pervasive kind of environment where trust is totally lost, which is not the right thing, says SBI chairperson Arundhati Bhattacharya.Former bank officials are generally employed by loan syndicate companies. Performing investment banking and consultancy functions and much more, these middlemen operate in a highly unorganised space, with no guidelines or RBI rules governing them. Even as the exact number of such companies is not known, observers point out that anyone who has any connections with bankers, secretaries or politicians and some financial background can pass himself off as a loan syndicator. "No licence, qualification or experience is required to set shop.

However, chartered accountants, former bankers from PSU and private sector banks and MBAs from low-rung institutes generally make the fit," says a mid-level officer working for a Delhi-based loan syndicate company. All interviews with executives of loan syndicate companies were off the record.

In most cases these syndicators scout for businesses looking to raise debt. With a large number of players in the market, the ones with a proven track record and connections to boast of, understandably, bag bigger deals. "The cut-throat competition among loan syndicators not only leads them to undercut their fees but also go to great extents to facilitate loans for clients," confirms another loan syndicator.

Click here to EnlargeThe promoter signs an 'engagement letter' with the loan syndicate company and pays a management fee, also called success fee, to the syndicator. The fee varies from 0.5 to 5 per cent of the loan amount after the approved loan sanction letter is facilitated by the middleman. Depending on the size of the syndicate company, roles of officials are well defined: some in the team solicit or scout for the business, others are masters at liaisoning with different departments, ministries and agencies. However, in some cases the roles overlap as well.

Industry insiders reckon that in three out of four loan approval requests, the services of middlemen are availed of and are especially sought after by companies with a turnover of Rs 500 crore to Rs 2,000 crore. From making plain-vanilla project reports mandated for every loan proposal to preparing intricate Credit Monitoring Analysis (CMA) reports that reflect the financial health of the company, the syndicates work in close association with the bankers to get the necessary approvals.

A mid-size promoter explains the dynamics. "The middleman unofficially shows the books to the banker and agrees upon a pre-decided amount for the loan, which the promoter eventually applies for," he says.
Loan syndicators point out that the policy framework is such that it leaves a lot of room for maneuverability. For example, portions of balance sheets are selectively highlighted to show the company in sound health while preparing the CMA report. There are a lot of grey areas and plenty is left to subjectivity. There are no RBI guidelines on the essentials of the CMA.
Collateral valuations can easily be manipulated even if they are prepared by external agencies. In the techno-economic viability (TEV) report for every new project, costs can be inflated, and loans can be taken against incorrect projections. Inflated project costs work to the advantage of promoters who avoid pumping in their own equity.
They are mandated to put in 30 per cent of the cost as equity in order to get 70 per cent debt from the bank. "Most promoters give an impression that they are utilising their share of 30 per cent equity whereas the entire project or operations is run on bank's money," says a middleman. CBI's Sinha also pointed to cases of siphoning off bank loans through over-invoicing of equipments, especially in the power sector. Eventually, a number of such loans turn into NPAs.

In lieu of speedy loan sanctioning, especially for over-leveraged companies, the middleman negotiates a percentage of kickback for the bankers. "No deal comes through without an obligation angle or kickback in case of an over-leveraged company," confirms a middleman. "We know where our file is, with which agency, officer and at what level. We accordingly network to move the file."

Kickbacks can range from cash, money transfer in foreign accounts via the hawala route to foreign holidays, luxury watches and solitaires. In the case of willful defaulters, the amount of kickback ranges from four to seven per cent of the loan amount as against 0.5-2 per cent in other cases.
 Depending upon the amount of the loan and the financial condition of the company, the middleman either pays kickback from his own success fee or seeks graft from the businessman. In a perfectly legitimate activity the promoter pays one time finance charges to the syndicate after he facilitates the loan. The cash kickbacks and gifts are shown as business promotion expense in his books. The big cash deals however happen in black.

Bankers often can't be blamed for sanctioning more than the due amount to promoters if TEV and CMA reports are manipulated. "These are all technical reports. How is the banker expected to know technicalities? He would go by the report and take a credit call on the basis of the papers presented to him," says a middleman." According to experts, the big problem is when the bankers, in order to show a good record, suggest ways to promoters to white-wash bad loans. "At one end, he has to deploy deposits to generate income. On the other hand, when such cases emerge and the bankers go slow on credit, they are pulled up," says a PSU banker.

The practice of paying off debt by taking fresh loans is common among overleveraged companies. This 'evergreening' of debt is rampant and the RBI governor has already voiced his concern about the practice. "The natural and worst way for a bank management with limited tenure to deal with distress is to 'extend and pretend' to evergreen the loan, hope it recovers by miracle, or that one's successor has to deal with it. The natural incentive for a promoter to deal with distress is to hold on to equity and control despite having no real equity left," Rajan had observed at a banking seminar last November. "Not all bankers and promoters succumb to these natural incentives but too many do," he added.

Bank loans are classified as non-performing when the borrower fails on repayments after 90 days. Gross NPAs for the banking sector rose to 3.85 per cent as on March 2014 from 3.26 per cent in the previous year, as per ratings agency Care Ratings. Even as there is no clear consensus on a direct link between corruption in banking and a jump in NPAs, it exposes the vulnerability of the banking system.

PSU banks, with a 76 per cent share of lending, contributed 85 per cent to the overall NPAs as on March 2013. "Ten per cent of NPAs are related to corruption," estimates a partner at a law firm. The government is worried. Finance Minister Arun Jaitley recently said "some recent incidences have been disturbing. I only hope that they are a drop in the ocean".

Arundhati Bhattacharya, Chairman, State Bank of India, says bribes-for-loans cases are exceptions. "The [sensationalisation of the Syndicate Bank case] creates a pervasive kind of environment where trust is totally lost, which is not the right thing," she says.

Naina Lal Kidwai, Chairman, India and Director, HSBC Asia Pacific, says graft cannot be the prime reason for growing NPAs. "In most cases, it is just used to speed up a proposal rather than getting a loan sanctioned. Most NPAs are on account of slowdown in the infrastructure sector which has been marred by bottlenecks," she asserts.

mosimageThere are some who smell a political vendetta in the scandal involving Bhushan Steel. Jain's relative, who was also arrested by the CBI in the bribery case, is a former Congress spokesperson Vineed Godha. "Syndicate Bank is a small bank, one seventh the size of SBI. The CBI should have gone after bigger banks," says a banker on condition of anonymity.

The problem, according to experts, began during the 2008 downturn when stimulus packages were announced by the government to revive the economy. The banks began to lend generously resulting in piling up of NPAs and stressed assets. As per a PwC report, the total banking credit outstanding as on March 2013 was Rs 57.90 trillion (one trillion is 100,000 crore) out of which stressed assets (a combination of gross NPAs and restructured assets) are Rs 5.91 trillion - 10.2 per cent of the total credit outstanding. In other words, the rot on the Indian banking sector's books tote up to over 5.5 per cent of the country's GDP.

Some companies that have gone through corporate debt restructuring in recent time includes Hotel Leelaventure, Suzlon, HCC, Bharati Shipyard, GTL Group, 3i Infotech and KS Oils. Pankaj Agarwal, Vice President at Ambit Capital, says these stressed accounts can be classified into three categories. "Genuine cases impacted by the economic slowdown, diversion of funds by the promoters to other ventures which have been impacted by the slowdown, and promoters siphoning off the funds for personal use."

Analysts say the problem of stressed assets has swelled on account of promoters unable to raise fresh equity through the capital market to pay off their debts. Sources say the government is seriously considering implementing the P.J. Nayak committee report released in May this year. The report has called for an overhaul of state-run banks. It suggests splitting the post of chairman and managing director, and also points out how appointments to the board is a politicised process.

The Nayak committee report also picks holes in the law governing the public sector banks. It says that the Bank Nationalisation Act of 1969 is too primitive and irrelevant to cope with the needs of corporate governance. Private sector banks, on the other hand, are governed by the Companies Act, which stipulates stricter norms.

Senior banker Rana Kapoor, President of industry body Assocham, agrees that solutions to the current problems lie in strengthening the corporate governance structure. "Right now, the CMD takes care of both policy and implementation aspects. A single person should not become a power centre." Private sector banks such as ICICI Bank and HDFC Bank have separate chairman and managing director positions. At ICICI Bank, for instance, K.V. Kamath is the non-executive chairman and Chanda Kochhar is MD & CEO.

Even as some feel the splitting up of roles is a step in the right direction, it can only work well if the chairmen are not political appointees. "If the appointments are politicised it will not solve any purpose. The chairmen's post has to be in good hands. In private sector banks, chairman, MD and CEO are different with well defined roles," says Krishnamurthy Subramanian, Assistant Professor at the Indian School of Business and a member of the Nayak committee.
"Also, there are independent board directors. A lot of governance and processes comes through the board. If the board is not strong there is temptation to indulge in such practices."

Banks are now also using the services of outside consultants to restructure loans. SBI, for instance had engaged the services of Alvarez & Marsal. "It's a relatively new trend and Indian banks have been benefiting from it," says Nikhil Shah, MD, Alvarez & Marsal.

To minimise the risk for the banking sector, the central bank has also proposed to cut the exposure limits of banks to a group of borrowers from the present 40 per cent to 25 per cent of a bank's capital. The RBI has also set up a credit central repository for information on large borrowers of banks. However, a lot also will depend on the macroeconomic outlook as well. If the Indian economy revives, the business environment improves and the stock markets rally, it could come as a shot in the arm for indebted corporates.

Meanwhile, even as the government and the RBI plan to implement the Nayak committee's recommendations, businessmen are already sceptical about the move. A Delhi-based businessman says this move will only slow down the approval process and make securing of the loans costlier. "Now we will have to grease more hands. This certainly will not end graft."
 
 
 
 
 
 

Tuesday, August 26, 2014

Scam In Bank or Bank In Scam

Regulators like RBI and SEBI and owners like Government of India were sleeping for decades. They never bothered for what was going on in pubic sector banks. Officials of RBI , Team of Chartered Accountants, Team of vigilance officers and teams of bank's internal auditors mostly used to be victim of bribery and gifting culture extended to these high profile persons when they used to visit their banks for audit , inquiry and inspection.

Post of ED and CMD used to be auctioned in lacs of rupees and these EDs and CMDs then used to promote such culture in their banks. Large scale corruption in loaning , large volume of frauds and lacs of public complains against banks could not pull out these dignitaries from hibernation . All officers who have been assigned the task of protecting banks normally used to sleep and enjoy. It will not be an exaggeration If one say so.

Draupdi Chirharan used to take place and protecting agencies used to sleep or preach sermons. Banks continued to be looted by bank officials, business men and politicians in nexus with all these regulating agencies who are supposed to be watchdog for banks and who are supposed to be protectors of bank.
  


 I salute Chairman of United Bank who boldly resigned from the post of CMD of United Bank when she found foul game being played in all higher offices and that in her own bank . It is she who scarified the lucrative post of CMD and ignited fire in banking arena. It is she who could speak about volume of NPA in UBI and awakened the officials of RBI and CBI and ministers from their deep slumber and opened the eyes of media pesonnels.

Still there is no doubt to me that all so called big banks are having volume of bad debts concealed and they continue to get blessings from their mentors. It was for the first time that RBI, to get rid of public revolt and media questions ordered forensic audit of United Bank. It is different and Unfortunate that under pressure of senior officials, ministers and politicians , they somehow or the other , again put carpet on findings of forensic audit and just made mockery of word "Forensic Audit" .
??Since then RBI has ordered forensic audit against Allahabad Bank, Syndicate Bank, Dena Bank, Oriental Bank and now against U Co Bank. Very soon they will order forensic audit of Central Bank, Punjab National Bank, State Bank and gradually to all public sector banks. But ultimately perhaps nothing will happen to real culprits.

 

Because if all culprits are exposed, then they will unite together and call for forensic audit of RBI, Government of India, CVC , CVOs, CAs who used to give good health certificates to all these banks every year despite existence of volume of serious irregularities and deep rooted corruption in almost all banks and in almost all branches.

Not only this they will stop credit growth and puncture dream of GOI of achieving GDP growth of 8 to 10 percent in India. In the past also clever bankers pleaded to keep banks above CVC and CBI and outside the jurisdiction of CVC and CBI. Clever bank officials never accept the ground reality but put entire blame on Global recession and blame the system to hide their evil tasks and they plead so cleverly that no one doubts .
??

India is great in culture of certificates and culture of banners and hoardings. Whenever there is any complain from media or public or from customer or shareholders , regulators will ,as a rhetoric and to follow a well established culture issue a letter to the concerned bank and ask for certificate that there is no merit in public complain.

When cobra Post exposed fraud in KYC compliance, all these so called protectors flocked together to put carpet on findings of Cobrapost. One can find numerous hoarding in bank speaking about corruption less banking and saying as if "Honesty is really the best policy" for bankers.

They as a ritual take oath in every November on Vigilance Day and publicise it in newspapers to earn false name and fame in public domain.??In the same way , whenever people of India writes against corrupt officials of any bank, a team of corrupt top officials will join together to provide shield to brother trapped and leave no stone unturned to free him from charges of corruption.

They will manage all certificates and destroy all files, papers and documents which may harm them in future to prove that charges of corruption against alleged officers are not founded, biased ,false and baseless.

This is why none of top officials have ever been punished during last two decades though starting from Harshad Mehta scam several stories of bank scam have come to light It is the culture not only in banks but in all departments of Government that a most corrupt officer or the most inefficient and unskilled officer is entrusted task of investigation whenever pressure comes from above to inquire into charges of corruption levelled against senior officer of the bank. ??

Now CBI have boldly come out against corruption in banks ( not against politicians )after getting powers from Supreme Court. It is CBI which has unearthed the story of bribery in Syndicate Bank and then taken action against other banks too. Before that GOI never gave permission to CBI to proceed against any corrupt officer as if banks are free of corruption.

The obvious reason is that entire government run by Congress Party and UPA was made of corrupt politicians. And hence action was never taken against any corrupt official or any politician despite so much hue and cry made by Team Anna , Ramdeo Baba and other social wings against Coal scam, CWG scam, 2G scam or several other such serious nature scam. Even in coal scam and 2G scam , the then ruling party never accepted that there was any illegality. They thought it better to order hundreds of inquiry against people associated with Team Anna or Team Ramdeo.

Now Supreme court has proved and accepted that there was no legality in allotment of coal mines. Similarly CBI and Supreme court in coming days will prove that there is hardly any loan ,specially in high value loans which are without game of bribery.Not only role of bribe and gift is behind all corrupt dealings, but role of woman and wine have also played big games.



I had several times written in blog that great Prime Minister Manmohan Singh will prove to be disaster for the country and corruption will never end as long as Congress Party will remain in power. I hope now under NDA government led by Mr. Narendra Modi , level of corruption will come down to a great extent . I am fully confident that Mr. Modi , PM and Mr. Jaitley FM will not provide shield to any corrupt top official and politician and allow CBI to perform without any hurdle and without any fear of action from GOI. I however suggest GOI to put CBI also under surveillance of ROW or IB or CVC or some other powerful agencies.

It is not enough for RBI to order Forensic audit, it is the duty of RBI and GOI to ensure time bound action against all erring officials and all erring politicians who promoted bad culture in banks even if persons like Mr. Chidambram or Mr. Mukejee are found on wrong track and required to be punished for giving illegal orders on phones to various ED and CMDs of banks and other PSUs. Once actions starts pouring on top guns, there is no doubt that corruption in lower level will gradually come down.

Last but not the least , To save banks from disaster ,GOI and RBI will have to stop loan waiver culture . They will have to stop culture of bribery and flattery in recruitment and promotion to strike at the root of all malady. GOI will have to completely separate loan and Charity from each other. Charity game from bank which is basically a lender has damaged the culture of lending and to a great extent responsible for rise in corruption and rise in bad debts in PS banks. Act of loan and act of charity can go together.


I like to reiterate here that case of S K Jain CMD syndicate bank trapped by CBI in bribery is only tip of the iceberg. There are hundreds of senior officials who are still away from CBI net . There are several officials who have reached top position only by using wealth, wine and woman. It is proper to point out here that Mr. Jain was trapped by CBI for accepting bribe for sanctioning a loan of Rs.100 crore to Bhusan Steel, a company which got success in getting sanction of loan amounting to Rs.40000 crore by not one or two banks but by 35 banks. Further is not isolated cases of Bhusan Steel only whose Rs.40000 crore is likely to be bad , but there are several such cases which either already turned NPA or are almost on the verge of it.

It is not isolated case of S K Jain whose marks were inflated by Interview panel and who got full marks in Annual appraisal Reports b his appraiser and by reviewing authority despite several cases of irregularities and corruption associated with Mr. Jain as because name of Mr Jain was recommended by some Minister for the post of CMD. In public sector banks . all promotions right from scale I to III or from II to III or from III to IV and so on takes place on the basis of recommendation on officer possesses and on the basis of power of lobby he or she is associated.

There are many trade union leaders in many banks who act as middlemen between Interview panel members and promotion aspirants. Culture of changing marks in Annual Interview marks and giving full marks in Interview is nothing new in banks. This is normal phenomenon in all promotion processes taking place in banks. 'Ye mera admi hai' , 'ye netaji ka admi hai', 'ye GM or DGM sir ka najdiki hai' etc are common terminology which are tagged with flatterer officials and people predict success of such officers in promotion process much before result is out. For higher post, officers use the services of ministers, IT bigwigs,RBI big bosses etc.

Bank management always talk of merit oriented policy but in fact they never give respect to merit. There are hundreds of thousands of officers who have been sidelined like Ashok Khemka by Harayana government. There are many officers who have left taking part in promotion process and decided to lead a peaceful life in remote centres and spend time at corner tables kept for such officers who do not follow the current of corruption. Many officers decide to resign when torture and injustice cross the limit. Frequent transfers of such officers is not new phenomenon in banks as Mr. Ashok Khemka was subjected to by state government in Haryana to keep High command Sonia Happy.

I therefore always say that power of promotion and transfer is the root of bribery and flattery.



CBI registers two PEs in Syndicate Bank case-Indian Express


The Central Bureau of Investigation (CBI) has started two new enquiries into role of middleman Pawan Bansal, an accused in the Syndicate Bank bribery case in alleged easing of loan conditions and credit facilities for corporates from UCO Bank and Bank of Maharashtra.

CBI sources said the enquiries will look into alleged irregularities in the extension of credit facilities by UCO Bank and Bank of Maharashtra in the borrowers account facilitated by Pawan Bansal of Altius Finserve, an accused in the Syndicate Bank bribery scandal, and his associates.

The agency had arrested Bansal in a bribery case related to Syndicate Bank CMD SK Jain who was arrested for allegedly taking a bribe of Rs 50 lakh for increasing credit limit in violation of banking rules.

During Bansal’s interrogation he revealed his role in facilitating similar arrangements for other corporates.

Bank credit: CBI to probe irregularity charges -Hindu Business Line

New Delhi, August 28:  
The Central Bureau of Investigation (CBI) has registered two preliminary enquiries (PE) into the alleged irregularities in providing credit facilities to corporates by two public sector banks, UCO Bank and Bank of Maharashtra.
 
“These PEs will look into alleged irregularities in the extension of credit facilities by UCO Bank and Bank of Maharashtra in the borrowers’ account facilitated by Pawan Bansal of Altius Finserve, an accused in the Syndicate Bank bribery scandal, and his associates,” a CBI official said.
 
Earlier this month, Bansal was arrested along with then Chairman and Managing Director of Syndicate Bank SK Jain in a bribery case.
 
A PE is registered when a complaint is received or information is available which may, after verification, indicate serious misconduct on the part of a public servant but is not adequate to justify registration of a regular case (RC) under the provisions of the Code of Criminal Procedure (CrPC).
 
A PE may be converted into an RC as soon as sufficient material becomes available to show that prima facie there has been commission of a cognizable offence. When the verification of a complaint and source information reveals commission of a prima facie cognisable offence, a regular case is to be registered as is enjoined by law
 
During the interrogation of Bansal, CBI had got to know about his role in facilitating similar arrangements for corporates with other banks, agency officials said. The CBI has alleged that in order to expedite results, one of the accused companies Prakash Industries had earlier agreed to pay huge sums of money to Bansal for utilising his services and it was agreed he would take care of further payments to Jain.
 
EOW files nine FIRs in fixed deposit fraud case at public sector banks
 
 
The scam has grown bigger and a number of public sector banks have been defrauded, says additional commissioner of police (EOW) -LIVEMINT


BY Khushboo Narayan And  Vishwanath Nair 

The economic offences wing (EOW) of the Mumbai police on Thursday said it has filed nine first information reports (FIRs) against several individuals, including some middlemen, for allegedly perpetrating a fixed-deposit fraud involving a number of public sectors banks.

"The total amount that has been siphoned off in this fraud is over Rs.700 crore. We are in the process of registering 10 more FIRs," said Rajvardhan Sinha additional commissioner of police (EOW).

A deputy commissioner of police (DCP) at EOW said the agency along with the Central Bureau of Investigation (CBI) is coordinating on a probe involving multiple cases of fraud related to bank fixed deposits in the city perpetrated by the same individuals. He declined to be named.

"We met with the officials of CBI for coordination today," said the DCP of EOW. He declined to be named.

These individuals and middlemen in collusion with bank officials carried out fixed deposit scams at public sector banks including Dena Bank, UCO Bank, Bank of India, Vijaya Bank, Oriental Bank of Commerce, Central Bank of India, Punjab National Bank, State Bank of Bikaner and Jaipur and Dhanalakshmi Bank, according to the agency.

"Dhanalaxmi Bank has been defrauded of Rs.141.8 crore while Dena Bank of Rs.45.23 crore," said the DCP of EOW.

According to EOW officials, the perpetrators of the crime approached entities like South Indian Education Society, Mumbai Metropolitan Regional Development Authority, PG Group of Companies and Sant Rohidas Charmakar Mahamandal among others to open fixed deposits with public sector banks through middlemen.

In return, these entities were promised a higher rate of interest on the FDs. Once a fixed deposit was opened through the RTGS facility, the perpetrators gave a fake FD receipt to the entities and retained the original receipts with themselves, said Sinha explaining the modus operandi of the fraud. "These individuals/ middlemen then opened an account in the name of these entities with forged signatures for transferring the overdraft amount. This fixed deposit money was later siphoned off," said Sinha.

So far, EOW has arrested four people involved in the fraud and is in the process of arresting six others. The EOW has also arrested the alleged mastermind of the scam Mohammed Fashiuddin, promoter of the Showman Group.

"We are also investigating the role of the bank officials involved in the fraud," said Sinha.

According to a senior official at Central Bank of India, the bank is yet to receive any communication from the EOW. Similarly, an official at UCO Bank stated that no intimation had been received by the bank from the law enforcement agency.

"The EOW has not gotten in touch with the bank’s head office regarding any investigation yet, but it did verify some branch-level transactions," said a senior official at Dhanlaxmi Bank.

Calls made to officials of other banks went unanswered.

CBI has also registered cases regarding fixed deposit frauds at some branches of Dena Bank and Oriental Bank of Commerce adding up to nearly Rs.400 crore. On 20 August, financial services secretary G.S. Sandhu had stated that the finance ministry is conducting forensic audits at Dena Bank and Oriental Bank of Commerce after details of the irregularities came to light.

On the same day, Oriental Bank of Commerce said in a filing to the stock exchanges that it detected irregularities in transactions worth Rs.180 crore involving the Jawaharlal Nehru Port Trust (JNPT), which had filed a complaint with the CBI in February.

The bank has reported the matter to the Reserve Bank of India (RBI) and the department of financial services of the finance ministry, and initiated departmental action against the erring officials, the bank said in its statement.

Dena Bank also issued a statement on 20 August on a similar fraud. The bank’s Malabar Hill branch in Mumbai received term deposits from various entities and government organizations between 30 January and 5 May. The term deposits amounting to Rs.256.69 crore were pledged to the bank by the same signatories to obtain overdraft facilities of Rs.223.25 crore.

"The funds were surreptitiously transferred out of the bank by creating fake overdraft facility, resulting in a fraud on the bank and the concerned entities/govt organizations," Dena Bank said in a separate filing to the stock exchanges. The bank "has suspended the erring branch manager and transferred the staff of the concerned branch", it said. The amount being investigated by the CBI is outside the EOW’s estimation of Rs.45.23 crore.

On Thursday, the PSU Bank Index on NSE fell 1.79% while the benchmark NSE Nifty was up 0.23%. Shares in Dena Bank fell 2.99%, Vijaya Bank fell 0.77%, UCO Bank fell 1.5%, Oriental Bank of Commerce fell 2.58%, Syndicate Bank fell 2.53%.

The investigation by the EOW and CBI comes on the heels of an alleged bribery scandal, earlier this month, involving Syndicate Bank and some companies.