RBI: Action against banks involved in wrongdoing soon
Press Trust of India : Srinagar, Fri May 10 2013, 04:55 hrs
The Reserve Bank of India (RBI) on Thursday said it has completed investigations against banks following the Cobrapost expose and will take action if they are found guilty of violating prudential banking norms.
"We have done investigations, we have prepared an internal report. There are processes to be followed to take investigations to its logical closure... The first is action against individual institutions who are involved in practices which are not consistent with the banking regulation and prudential banking", RBI Governor D Subbarao said at a press conference after the RBI's central board meeting here.
The central bank, Subbarao further added, has already taken systemic action to deal with the problem and many of them were announced in the annual policy document unveiled last week. As far as individual banks are concerned, he said, "we got to follow procedure" before deciding on imposing penalty on them for violating the prudential banking norms.
Subbarao further said, "If you go through policy documents that came out last Friday, there were initiatives which are by way of systemic action to address some of the deficiencies that have come to notice as a result of investigations."
Indian Bank suspends employee
Chennai: State-owned Indian Bank on Thursday said it has suspended an official who is accused of wrong doings by an online portal in an expose. The bank has also initiated the exercise to bring all operative accounts with it under KYC norms.
Indian Bank chairman and managing director TM Bhasin said that the bank has placed under suspension R Manohar, assistant general manager at the South-Delhi branch, for giving "hollow" advice. "He has given 'hollow' advice... by hollow advice he has given wrong information. And since he has given such wrong advices, we took a call on suspending him," Bhasin said.
Cobrapost exposes 10 more banks
NEW DELHI: Investigative website Cobrapost has released further secret tapes to show alleged money laundering by more banks.
In the third part of its tapes, Cobrapost claimed that it has recorded officials of Bank of India, Central Bank of India, Bank of Maharashtra, Allahabad Bank and Bank of Baroda, all major public sector banks, as well as IndusInd Bank, ING Vysya Bank, HDFC Bank , ICICI Bank and Axis Bank, among private sector banks. Officials of these banks allegedly offered to help a corrupt politician invest his black money into banking accounts and various insurance products.
In part one of its expose, Cobrapost had claimed that officials of ICICI Bank, HDFC Bank and Axis Bank were willing to assist a corrupt politician to convert his corrupt money. In the second part, Cobrapost had unveiled secret tapes of 23 banks and insurance companies offering to help launder money. Among the 23 were SBI and Life Insurance Corporation among others.
"The RBI continues to act as a protector, and not as a regulator or enforcer. The RBI is loathe to admit that there exists a massive money laundering racket in our financial institutions across the board, flourishing under its very nose, simply because if it were to admit to this deep-rooted malaise, it would strip the RBI of its halo as 'one of the best banking regulators' in the world," Cobrapost said.
New videos allegedly show bank officials offering to help the assistant of a corrupt politician to exploit the banking channels to route dirty money into the banks and insurance products.
The latest tapes covered 10 banking institutions, including HDFC Bank, ICICI Bank and Axis Bank, which were already covered in the first part of the Cobrapost expose. In the third part, more officials of already named banks figure.
"The videos, across the large spectrum of such illegal activity, clearly prove that this is not simply the design of some criminally oriented officers, or for that matter, some young, front-office executive succumbing to performance pressures. It proves without doubt that this corruption is endemic, and spread through the Indian banking and insurance system," a Cobrapost statement said.
Cobrapost sting raises disturbing questions
BY
Aniruddha Bahel, the editor of Cobrapost, told a news conference in Delhi today, May 6, that the second part of the investigation called Operation Red Spider, clearly proved that senior officials of various banks actively encouraged deposits of black money which was later converted into insurance instruments or laundered through various shady accounts.
The first part of Operation Red Spider released a month back had showed that banks like ICICI bank were involved in taking black money and laundering it. Cobrapost had secretly recorded most of these conversations in what turns out to be a massive sting operation. Bahal said that their investigative reporter. posing as a politician's agent with a lot of cash, was welcomed into various banks by concerned managers and methods of laundering black money explained to him.
After the first expose, ICCI bank and RBI moved quickly to say that there was no major violations. The hurry to give clean chits to various banks was what forced Bahal to come out with the second part of his investigations.
"The optimism aired by the central bank’s top honchos that Indian banking system is “safe and secure” is nothing but a naïve interpretation of the reality of the day: Our economy is overwhelmingly grey than it is white," Bahal said.
"As to the sweeping statement of the RBI Deputy Governor that “Allegations do not mean flouting norms,” we can only hold the various provisions of Prevention of Money Laundering Act of 2002 as mirror to what he claims to be “transactional issues and have nothing to do with money laundering”. Section 3 as defined in the Act 2002 emphasizes: Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering," Bahal said in his report on www.cobrapost.com
Almost all public sector banks including SBI, Canara Bank, Punjab National Bank,and LIC officers have been exposed in the latest sting operation.
In one such recorded evidence the senior manager of LIC is quoted as saying: No one no income tax notice comes here, crores of rupees are invested. Only recently I got Rs 25 lakh invested for another fellow. "
In one such recorded evidence the senior manager of LIC is quoted as saying: No one no income tax notice comes here, crores of rupees are invested. Only recently I got Rs 25 lakh invested for another fellow. "
"Cobrapost has captured on video-tape these money laundering practices, and the graphic evidence that it has produced is enough to prove beyond doubt that the malaise runs deep. The investigation finds that all these financial institutions and their managements are systematically and deliberately violating several provisions of the Income Tax Act, FEMA, RBI regulations, KYC norms, the Banking Act and Prevention of Money Laundering Act (PMLA). The utter disregard they show to the implications of such gross criminal practices for the country and its economy proves that they are driven by their desire to boost their bottom lines," the statement said.
The various clips that Cobrapost has obtained only shows the deep rot within the banking system. Managers at various levels accept black money and launder it through various methods. This is done to meet targets and boost bottom lines. While one arm of the government runs is struggling to net black money, the banking arm of the government has been encouraging the hoarding and use of black money. A lone investigative reporter could walks in to major banks all over the country and discusses laundering operations. At no point was he asked for Id or credentials and everyone agreed to take in the money without the required documents.
The parallel black money economy has grown to such an extent that no major transaction in possible without a black money element, thus severely affecting tax collections and doing deep damage to the economy.
After such an exhaustive documentation of money laundering practices the government can no longer protect the senior officials of various banks and the LIC.
Govt banks' profits shrink on higher NPA provision, rise in cost=Business Standard 9th May 2013
PNB net dips 20%, Indian Bank slips 15.4%, Union Bank of India sees just 2% rise in profit
Higher provisioning and increase in the cost of funds have eaten into the profitability of public sector banks, as Punjab National Bank (PNB) and Indian Bank reported drops in net profit for the quarter ended March, while Union Bank of India (UBI) reported a flat growth in the bottomline.
PNB’s net profit declined 20.6 per cent to Rs 1,131 crore during the fourth quarter of FY 12-13, against Rs 1,424 crore in the previous year, as it made higher provisioning for non-performing assets. Announcing the result, K R Kamath, CMD, said the bank made Rs 1,722 crore provisioning in Q4, 2012-13, 13.9 per cent higher than Rs 1,512 crore in the previous year’s Q4.
Net NPA of the bank rose to 2.35 per cent of advances in 2012-13 against 1.52 per cent a year ago. The bank’s gross NPAs rose to 4.27 per cent against 2.93 per cent a year ago.
Despite the fall in net and operating profits, PNB shares rose 4.57 per cent at Rs 783.45, as the bank declared higher dividend and NPAs came down sequentially in Q4. While gross NPAs came down to 4.27 per cent in Q4 from 4.61 per cent in Q3, net NPAs fell 2.35 per cent from 2.56 per cent over the period. Provision coverage ratio also improved to 58.83 per cent from 55.97 per cent in this period.
“On the asset quality front, PNB saw an improvement (contrary to market expectations). The bank reported sequential improvement in gross NPA levels by around four per cent. The bank prudently chose to increase its provision coverage ratio over earnings and thereby increased its provisioning expenses by 44 per cent year-on-year,” said Vaibhav Agrawal, vice-president, (research-banking), Angel Broking.
Another state-run lender Indian Bank has reported a drop of 15.4 per cent in net profit to Rs 292.12 crore for the quarter ended March 31 as compared with Rs 345.41 crore, due to higher provisioning, according to the bank management.
T M Bhasin, chairman and managing director, Indian Bank, said provisioning during the last quarter was around Rs 390 crore, while for the whole year, it was Rs 704 crore, towards pension, gratuity fund and provision towards NPA.
Mumbai-based public sector lender Union Bank of India reported a two per cent increase in net profit at Rs 789 crore for the March quarter due to lower margins.
Net interest margin of the bank came down to 2.89 per cent in the fourth quarter from 3.16 a year ago.
“Growth in profits is lesser because margins were under pressure, as cost of funds didn’t come down despite shedding bulk deposits,” said D Sarkar, chairman and managing director, UBI. He said credit growth was not as expected. Yield on advances also came down, and with higher cost of funds created pressure on NIMs, according to Sarkar.
PNB’s net profit declined 20.6 per cent to Rs 1,131 crore during the fourth quarter of FY 12-13, against Rs 1,424 crore in the previous year, as it made higher provisioning for non-performing assets. Announcing the result, K R Kamath, CMD, said the bank made Rs 1,722 crore provisioning in Q4, 2012-13, 13.9 per cent higher than Rs 1,512 crore in the previous year’s Q4.
Net NPA of the bank rose to 2.35 per cent of advances in 2012-13 against 1.52 per cent a year ago. The bank’s gross NPAs rose to 4.27 per cent against 2.93 per cent a year ago.
Despite the fall in net and operating profits, PNB shares rose 4.57 per cent at Rs 783.45, as the bank declared higher dividend and NPAs came down sequentially in Q4. While gross NPAs came down to 4.27 per cent in Q4 from 4.61 per cent in Q3, net NPAs fell 2.35 per cent from 2.56 per cent over the period. Provision coverage ratio also improved to 58.83 per cent from 55.97 per cent in this period.
“On the asset quality front, PNB saw an improvement (contrary to market expectations). The bank reported sequential improvement in gross NPA levels by around four per cent. The bank prudently chose to increase its provision coverage ratio over earnings and thereby increased its provisioning expenses by 44 per cent year-on-year,” said Vaibhav Agrawal, vice-president, (research-banking), Angel Broking.
Another state-run lender Indian Bank has reported a drop of 15.4 per cent in net profit to Rs 292.12 crore for the quarter ended March 31 as compared with Rs 345.41 crore, due to higher provisioning, according to the bank management.
T M Bhasin, chairman and managing director, Indian Bank, said provisioning during the last quarter was around Rs 390 crore, while for the whole year, it was Rs 704 crore, towards pension, gratuity fund and provision towards NPA.
Mumbai-based public sector lender Union Bank of India reported a two per cent increase in net profit at Rs 789 crore for the March quarter due to lower margins.
Net interest margin of the bank came down to 2.89 per cent in the fourth quarter from 3.16 a year ago.
“Growth in profits is lesser because margins were under pressure, as cost of funds didn’t come down despite shedding bulk deposits,” said D Sarkar, chairman and managing director, UBI. He said credit growth was not as expected. Yield on advances also came down, and with higher cost of funds created pressure on NIMs, according to Sarkar.
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