Bank May Now Conceal Fraud Even Above One Croren Rupees

15 NOV, 2012, 10.04PM IST, PTI 

Banks need not report attempted frauds of above Rs 1 crore to RBI (Times of India )

MUMBAI: The Reserve Bank today asked banks to discontinue the practice of reporting attempted fraud cases involving Rs 1 crore or above to its Fraud Monitoring Cell.

"On a review and as a part of rationalisation of process and procedures ... the practice of reporting attempted fraud cases of Rs 10 million and above to Reserve Bank of India, Fraud Monitoring Cell, Department of Banking Supervision, Central office may be discontinued from the date of the circular," RBI said in a notification today.

However, the banks should continue to place the individual cases involving Rs 1 crore and above before the Audit Committee of its Board, it added.

As per the existing guidelines, banks are required to report cases of attempted fraud, where the likely loss would have been Rs 1 crore or more had the fraud taken place, to the Fraud Monitoring Cell of the RBI within two weeks of the banks coming to know that the attempt to defraud the bank had failed or was foiled.

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/banks-need-not-report-attempted-frauds-of-above-rs-1-crore-to-rbi/articleshow/17232875.cms

16 NOV, 2012, 05.00AM IST, SHILPY SINHA,ET BUREAU 

Center mandates state-run banks to recover bad loans to get funds

(from Economic times )

MUMBAI: 

The cash-strapped finance ministry has made it compulsory for banks to meet bad loan recovery target for fresh capital investment, a move that could improve the profitability of lenders and reduce bad loans in the future.

The government has mandated state-run banks to recover at least 20% of their written-off loans to receive any capital this fiscal, said two bankers familiar with the directive. This was conveyed to bankers recently, they said preferring anonymity.

"The government is giving thrust to recovering more than lending," said the head of recovery at a state-run bank who did not want to be identified. "The government had said that we must have a recovery target of 20%-30%. Capital investment will depend on the recovery."

Bad loans are a source of worry for the banking sector, with accounts such as Kingfisher Airlinesand Deccan Chronicledefaulting. Besides, more than Rs 3.25 lakh crore in loans may be restructured, of which a fourth may turn bad if economic growth does not improve.

"Performance of PSU banks, compared to their private-sector peers, has highlighted the need to work towards recovery," said Saurabh Tripathi, Partner and Director, BCG. "Government's decision to link capital infusion to recovery is trying to incentivise banks to beef up recovery capabilities."

The total written-off assets of PSU banks was at Rs 2,300 crore in 2011-12, RBI data showed. At the same time, PSU banks recovered Rs 47,800 crore while the gross NPA was at Rs 1.17 lakh crore.

P Chidambaram on Thursday said the government in the next two weeks will finalise the investment plans for banks, but the total will be capped at the budgeted Rs 15,000 crore.

In a bid to improve recovery, many banks have added staff to their recovery cells. 

Banks are taking steps to meet the set target by forming recovery cells. Also, to meet regulatory capital requirements, public sector banks need Rs 17,000 crore in this fiscal year. Recovery ratio- loans recovered during the year as the percentage of gross NPAs outstanding- improved to 59.8% in 2011-12 from 56.8% a year before. 

In the October policy, RBI flagged concerns over rising NPAs.

Indian banks hit by slowdown, government to infuse capital: Chidambaram

NEW DELHI: The slowdown in economic growth has hit the performance of Indian banks, resulting in a sharp increase in bad loans, finance minister P Chidambaram said Thursday, adding that the government would soon infuse capital into the lenders. 

"NPA (non perfoming assets) has increased. This is the reflection of the slowdown in the economy, and reflection of some sectors which are under stress," Chidambaram said at a press conference after meeting heads of public sector banks and financial institutions. 

Chidambaram said non-performing assets (NPAs), or bad loans, of the public sector banks increased by 0.98% at the end of the second quarter of the current financial year from the level of September-end 2011. 

The finance minister s

aid the sectors like infrastructure, steel, construction, textiles, food processing and telecom were in stress and largely responsible for the increase in NPAs of the public sector banks. 

"These are the natural reflection of the slowdown of the economy," he said. 

Chidambaram said the government would work out a strategy to assist the industries which are in distress. 

"If the economy improves and growth improves, these sectors will recover, but in the meanwhile we will have to do some handholding and try to help these sectors recover," he said. 

Chidambaram said most public sector banks required infusion of additional capital and the government would take a decision on this in a couple of weeks. 

He said top three banks which required immediate infusion of capital were - Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. 

"We have a budgetary provision and will allocate the capital to the banks," he said. 

In the union budget for 2012-13 announced in March, the government has made a provision of Rs.15,000 crore for infusion of capital in the public sector banks. 

On the issue of new bank licences, Chidambaram said he had written to the Reserve Bank of India (RBI) to initiate the process of issuing guidelines. 

"We have written to the RBI and hope that the RBI will pick up the thread and finalise the guidelines and start receiving the application," he said. 

The finance minister said the Banking Regulation Act would be amended either in the winter session of parliament, which starts from Nov 22, or in the Budget session next year. 

"We are only formalizing them by amending the Banking Regulation Act. And I have assured the RBI that Banking Regulation Act will indeed be amended, hopefully in the winter session. If not in the winter session, then in the Budget session," he said. 

The finance minister expressed the hope that India's economic growth will rebound soon. "Slowdown in the economy is not a permanent slowdown. It is a temporary slowdown."