News On Saturday Holiday, Fraud And Health Of Bank

RBI chief wants PMO to act against bank frauds worth Rs 17,500 crore-Hindustan Times -24.04.2015
RBI chief Raghuram Rajan has written to the prime minister’s office seeking “concerted” action in the country’s 10 biggest bank frauds allegedly involving prominent real estate, media and diamond firms that are being probed by the CBI, officials told HT.

Rajan listed the scams pegged at about Rs 17,500 crore and outlined their dates, the reasons cited by banks for delays in their investigation and the status of the cases obtained from the CBI, said sources.

“All these high-value frauds have taken place in the last 10-15 years,” said a senior official from the department of financial services (DFS), a finance ministry wing. “Investigations by the CBI are on in the listed cases.”

Analysts say such frauds have triggered a rise in non-performing assets, which stood at Rs 2,60,531 crore for public sector banks last December. The top 30 defaulters accounted for more than a third of these bad loans.

The bank accounts cited by the RBI belong to Winsome Diamond and Jewellery, Zoom Developers, Tiwari Group, Surya Vinayak Industries, Deccan Chronicle Holdings, First Leasing Company of India, Biolor Industries, Surya Pharmaceuticals, Prime Impex / Prime Pulses and a person identified as Shivraj Puri, sources said.

“We have no comments to offer,” Alpana Killawala, the central bank’s spokesperson, told HT.
The PMO has told the DFS secretary to examine the scams and take it up with the cabinet secretary. It has also asked all concerned agencies to pursue the cases “vigorously”.

“The PMO asked the DFS to suggest a mechanism for coordinating and pursuing large-value banking frauds including structural changes that may be required in fraud reporting and coordinating arrangements apart from suggesting regulatory changes where necessary,” sources said

The PMO last month asked for the setting up of a high-level committee to formulate a set of standard operating procedures to be followed by all agencies for a robust anti-fraud banking mechanism.

Facebook News which appears to be correct is reproduced below9 ( PNB officers association)

IBA Circular regarding 2nd and 4th Saturday Off for Banks in India
Following is the Original Copy of IBA ( Indian Bank's Association ) regarding negotiation between Bank Union and IBA regarding 2nd and 4th Saturday
Holiday for Banks in India under NI act.
...

Our Verdict : With so many rounds of negotiations finally we have seen that some conclusion has been arrived or at least some positive have come for the poor public sector bankers, by going through this circular dated 21 April 2015, we can say that sooner or later there will be 2nd and 4th Saturday off for bankers then exact date is not known but we can assume that it may happen from June or July 2015.

Regarding the issue on number of Holidays , it seems that IBA wants to reduce the number of holiday under NI act for bankers but this seems to be a tough nut to crack as the holidays available to banker under NI act are lesser as compared to State / Central government employees presently. And these days the holidays or festivals are becoming more of a political tool , we assume that hardly there will be any reduction in the existing holidays for banks and one or the another state government announcing holiday on Festivals and Birthdays of old prominence leaders in days to come we may see even increase in the number of festival holidays for banks state wise.

Banks Set for Cost Rises on New Loan Provisioning Rules-NDTV 25.04.2015

India's banks could see their lending-related costs rise by up to a fifth as a recent rule change means they must make bigger provisions for restructured debt, crimping their profits at a time when consumers and firms are starting to borrow more.

This could make banks cautious about lending, hurting an economy that is emerging from its weakest growth since the 1980s. The stricter provisioning norms may also affect the recovery chances of troubled borrowers as more loans are classified as bad instead of attempts to restructure them.

The Reserve Bank of India (RBI) ended last month what it called a period of "forbearance", dating back to the financial crisis. During this time, problematic loans that were being restructured required provisions amounting to only 5 per cent of their value, instead of 15 per cent for the loans classified as "bad".

"If an account needs to be restructured, then they would have to provide for that as if it were a non-performing loan. So the credit cost is going to go up," said Ananda Bhoumik, a senior director at ratings agency India Ratings and Research.

Brokerage Macquarie estimates credit costs for the state-run lenders, including State Bank of India and Punjab National Bank, who dominate the Indian banking landscape, will rise from 1.18 per cent of their total loans in fiscal year 2013-14 to 1.3-1.4 per cent through 2016-17.

The state-controlled banks not only have a higher percentage of poor quality loans of their total loans than privately owned banks such as HDFC Bank and ICICI Bank, they are also under-provisioned.

Macquarie expects gross non-performing loans for state-owned banks to increase 40 to 50 basis points to 6.2 per cent in the current financial year as they won't have the flexibility to classify loans as restructured.

No reprieve

After the 2008 financial crisis, the RBI had allowed banks to treat restructured loans differently, in order to put distressed projects back on track. But critics say banks have been using the window to avoid classifying loans as bad.

Despite the central bank flagging the rule change well in advance banks were hopeful of a reprieve until almost the last minute.

As it started to become clear that the RBI was in no mood to relent, banks rushed to take advantage of the lower provisions, likely causing a spike in restructured loans in the March quarter, analysts and bankers said.

Among the largest was Pipavav Defence and Offshore Engineering's more than $1 billion debt, cleared for restructuring just days before the window closed.

"The restructured portfolio will go up very substantially," said state-owned Andhra Bank's chairman, C V R Rajendran, referring to the fourth quarter as a "peak".

Unseasonal rain could impact banks' profitability: India Ratings-Times of India

COIMBATORE: The asset quality of India's agricultural credit could be significantly impacted by crop damage due to untimely hail and rain in March 2015, according to India Ratings and Research.

The NPL (non-performing loans) ratio of the agricultural loan portfolio could double for some banks, though the reduction of overall return on asset may be muted at between 4 bps-6 bps or 0.04%-0.06%, which is about 10% of the profitability of government banks, the agency said.

The unseasonal rain followed one of the weakest and most deficient (12%) monsoons that the country had experienced in 2014-15, which has heightened the impact. Agricultural loans grew 16% in 2014-15 and have contributed 25% to incremental credit growth since March 2014

With delinquencies in the agricultural loan portfolio likely to rise, they would add to the already stressed assets of banks (10.6% of loans on 31 December 2014), India Ratings said. States highly impacted by these excess rain make up a significant portion (37%) of the overall agricultural credit extended by banks in 2013-14.

India Ratings estimates that system-wide agricultural NPLs as a percentage of total agricultural advances will rise to 16.9% by 2015-16 from 13% in 2013-14 as a direct result of the unseasonal rain. The gross NPL ratio on total advances for the banking system will increase by 40 bps or 0.4%, the agency said. This will translate into a profitability impact of 2 bps-3 bps (0.02%-0.03%) on system-wide post tax return on assets, according to India Ratings.

The impact of the unseasonal rain will be felt with a lag, as NPA recognition policies for agricultural loans (one or two crop seasons past due) differ from those of corporate or retail loans (90 days past due). India Ratings, which is part of the Fitch Group, expects the profitability impact to be felt in the second half of 2015-16.

Governmental support through subsidies may not significantly benefit banks as the amount of support (Rs 2,500 per acre) to be provided is marginal compared with the extent of the losses (Rs 20,000 per acre). Also, it is unlikely that the support money will be used by impacted farmers to repay bank loans.

Reserve Bank revises norms for priority sector lending-The Hindu

The Reserve Bank of India (RBI), on Thursday, said that medium enterprises, social infrastructure and renewable energy would form part of priority sector in addition to the existing categories.

 

“The distinction between direct and indirect agriculture is dispensed with,” the RBI said.

The revised guidelines are operational with immediate effect.

However, it said the priority sector loans sanctioned under the earlier guidelines would continue to be classified under priority sector till repayment/maturity/ renewal.

 

It prescribed a target of 8 per cent for the small and marginal farmers within agriculture. RBI asked banks to achieve this in a phased manner, that is, 7 per cent by March 2016 and 8 per cent by March 2017.

A target of 7.5 per cent has been prescribed for micro enterprises, which also has to be achieved in a phased manner, that is, 7 per cent by March 2016 and 7.5 per cent by March 2017.

 

There is no change in the target of 10 per cent for weaker sections, it added

Foreign banks, with 20 branches and above, already have priority sector targets and sub-targets for agriculture and weaker sections, which are to be achieved by March 31, 2018, as per the action plans submitted by them and approved by RBI. The sub-targets for small and marginal farmers and micro enterprises would be made applicable post 2018 after a review in 2017, the RBI said.

 

Foreign banks

“Foreign banks with less than 20 branches will move to total priority sector target of 40 percent on par with other banks by 2019-20, and the sub-targets for these banks, if to be made applicable post 2020, would be decided in due course,” it added.

Bank loans to food and agro processing units will form part of agriculture. Export credit up to 32 per cent will be eligible as part of priority sector for foreign banks with less than 20 branches.

For other banks, the incremental export credit over corresponding date of the preceding year will be reckoned up to 2 per cent.

The loan limits for housing loans and MFI loans qualifying under priority sector have been revised.

RBI said the priority sector non-achievement would be assessed on a quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis as at present.

My Blog dated August 8, 2012 Is Reproduced below

Fraud and Manipulation Is Deep Rooted Culture

Culture of fraud is deep rooted in Indians. Fraud and manipulation are at the root of all successes barring a few exceptions. If a person enters into any government service by paying bribe or by using the source of some VIP or by using any unfair means as per demand of the situation, he is bound to promote fraud culture, he is bound to apply all tools to earn money and power by same brand of illegal means to gain money power, positional power and finally to become a attractive figure in the society. Similarly if a businessman or a trader has to pay bribe for starting and continuing a business he will tend to use unfair means to earn more and more wealth to perpetuate the corrupt culture.

This is why Banks incurred loss of about Rs.2000 crore in 2010, Rs.4000 crores in 2011 and Rs.2500 crores from January 2012 to June 2012 due to fraud committed by bank employees or by bank customers .It is important to mention here that these figure represents only those cases of frauds which caused loss to bank by amount more than Rs.1.00 in one cases. If the amount lost by bank in petty frauds i.e. cases involving less than one crore rupees , total loss caused by frauds to banks will be much more than banks appear to suffer loss due to bad assets.

As a matter of fact volume of fraud by number and by amount involved will go on increasing until the government stops mal practices prevalent in recruitment, promotion and transfers of services in banks and other government offices. Loss by frauds or by bad assets may be reduced to minimum not merely by strengthening control mechanism but by striking at the root of corruption wherefrom it originates.

It is also true that after the exposure of fraud of Mr. Harshad Mehta or Mr. Telgi or Mr. Raja or Mr. Kalamadi , the perception about loss has completely changes. Now a days loss of one crore or ten crore rupees by fraud or by bad lending caused to any bank or any organization is treated as very small crime and treated in a very casual manner. This is why CBI has instructed banks not to report the cases of fraud to CBI if the value involved is less than three crore rupees.

 As a matter of fact government does not want to punish the evil doers but want to punish those who raise voice against the evil doers. This is why the person who report the cases of fraud with the system or who report the incident of corruption or any crime is taken to task not only by the evil doers who are exposed but by the protecting agencies like police , CBI  top officials and ministers forming part of the  government. 

Government did not try to understand the exposure made by Team Anna and neither they thought it fit to frame strong Lokpal but they left no stone unturned to torture key members of Team Anna on flimsy grounds and puncture the movement.CBI or nay top officials who try to precipitate real criminal by their devoted and sincere investigation are transferred to remote places so that the prime evil doers are saved from further exposures. Similarly judges in courts and top officials in all departments are removed from the post if they make efforts to reveal the truth of the system.

CBI does not get time to devote on cases related to ministers and VIPs but have enough time to trap Bal Krishna , disciple of Ramdeo Guru and they got success in sending him to jail without loss of much time.CBI did not not think it fit even to penalize Passport officer in the same way as Bal Krishna was.

It is the tradition and it is the strategy of the top ranked officials to save bad persons and to punish good persons. This is why they do not like to act and respond on anonymous complains, anonymous emails or anonymous message even if they contain serious facts of fraud and manipulation with the system. Top officials try to investigate who are sending anonymous complains to expose the truth but never tries to look into the truth hidden in such messages. Police starts torturing the person who go for lodging FIR against any VIP because they know it is VIP who may help them in trouble or when their misdeeds are exposed by media or any crusader or any whistle blower.

This is why honest speakers do not want to speak the truth of frauds or any crime incident to police or CBI or any investigating agency. Everyone knows that the people who speak against criminal are to face the torture of the system.

Further government also makes all efforts to weaken the capacity of police, CBI , Court and all agencies which are meant to provide justice and punish evil doers .Government will never provide adequate manpower and infrastructure to these protecting agencies so that they may not pursue the cases of fraud or any crime to its logical conclusion.

This is why lacs and crores of cases against actual criminals, evil doers and fraud committers are pending in Indian courts and in topmost offices of CBI or CVC and on the contrary lacs of innocents accused of crime are languishing in jail waiting justice by court or by CBI or CVC.

It is pity that an officer who is entrusted to prevent corruption is not provided proper infrastructure whereas those who are master in fraud and crime are provided all support and all infrastructures.

It is further disheartening that in the current era of information and technology when most of the works are done online and on computers, adequate policies and tools are not developed to prevent misuse of technology. More disheartening is the fact that all departmental heads and the government in general look into academic qualifications of the person, his flattery quality and his appearance before recruiting him or and before elevating him or her to higher post attracting higher responsibilities. Character of the person has either become the last point or has become NO-POINT at all levels. This is why I usually say that the culture of fraud and manipulation is deep rooted and the culture of flattery and bribery irrigates and promotes the same.

If at all government want to reduce level of corruption prevalent in government offices, they have to fight it out on all fronts

• Ensure Quality education (Stop Giving jobs of teachers on recommendation of VIP or through bribe).
• Ensure honesty in recruitment, promotion and positing in all offices and in all departments (stop recruiting inspectors on payment of bribe).Stop promotion of flattery culture.
• Ensure timely punishment to evil doers after quickest investigation into all types of allegation and all acts of fraud including that in Human Resource Department. Punishment to evil doers should send a message to all that if they commit crime they will face the same consequences.
• Ensure all protection to those who expose the fraud, who informs the facts of crime and who tries to awaken the system of persisting irregularities.

Unfortunately, most of the key posts are manned by corrupt persons and hence they make all efforts to close the files of evil doers if willingly or unwillingly the evil works of him or her is exposed by any person or any group or by media. Who will then bell the cat?

The greatest tragedy of our country is that there are hundreds of sympathizers of a person whose evil works are exposed and who are likely to be punished. There are hundreds of well wishers who make all efforts to save such evil doers from punishment. On the contrary there are none to save an innocent person who is wrongly or under a conspiracy by a team of evil doers is falsely alleged of evils and who is punished for none of his or her fault.

There are persons in all offices who ridicule and who laugh at a person who advocate honesty and who try to ensure justice or try to punish who perpetuate reign of injustice.

after the launch of reformation era in 1991 when banks were given complete freedom to recruit and promote strictly as per their choice in the name of merit and recruit and promote fully based on their  whims and fancies they forgot to verify the credentials of officers and staff joining the bank. 

Before that, banks used to get credentials of a new recruit got verified by two valued persons of his locality. Now these banks ask for police report which is obtained by payment of a few pieces of five hundred rupee notes. This is why persons with doubtful integrity has entered into various banks and they managed timely and before time promotions by managing their bosses by offering what bosses liked , it may be any of WWW or all three WWW. 

Due to this ,persons of bad integrity not only entered into bank but could reach upto even highest level and that is why volume of fraud and bad assets have gone unchecked and now appears to be beyond control and have crossed all prudential limits set by RBI or GOI

 

http://importantbankingnews2.blogspot.in/2015/03/bank-fraud-rs11022-crore-breaks-all.html