Friday, December 19, 2014

Good And Bad News For Bank And Bankers

NPA relief: Banks to offer Goa mining industry one-time settlement scheme-Firstbiz

State Bank of India has approved the one-time settlement (OTS) scheme for its borrowers from the beleaguered mining industry in Goa.

This is expected to pave way for other financial institutions to settle the long-pending bad debt of those who are in a lurch due to the halting of mining in the state.

The scrutiny committee of the state's Economic Development Corporation (EDC) yesterday recommended the Goa government to go ahead with the OTS offered by SBI to its borrowers, a senior EDC official said.

The bank has proposed 30 percent waiver on principle loan amount to the truck owners and 40 per cent to the barge owners, he said.

The bank has also offered to waive 100 per cent interest on the loans procured by the truck and barge owners from September 30, 2012, when iron ore exports had stopped following the Supreme Court order vis-a-vis illegal mining in the state, he said.

The truck, barge and mining machinery owners reeling under the debt were earlier offered subsidy up to 35 percent on their loan amount by the Goa government.
The government had asked the banks to provide relief through OTS as assets of these borrowers had turned into NPA.

The loans of 8,000 trucks, barges and machinery owners are feared to turn into bad debt, and the state government has estimated the total loan exposure of the mining dependent people to be about Rs 1,000 crore.

The other lenders like Lokmanya Cooperative Society, Syndicate Bank, Bank of India, IndusInd Bank and Canara Bank have also submitted their OTS, which would be vetted by the scrutiny committee before recommending the government to go ahead with it, the official added

My Comments: 

STATE bank of India has announced waiver and settlement scheme for borrowers of GOA related with mining. Sacrificing considerable amount on exposure of Rs.1000 in projects related to mining in Goa by State Bank of India is total arbitrary, discriminatory and suicidal step.

It violates the spirit of uniformity in treatment to all borrowers of the country. Allowing relief to one sector of borrower and borrower of one state and depriving borrowers of other sector and other areas in the country.
Further if SBI gives relief to bad borrowers , other Public sector banks will also have to sacrifice their good money for bad borrowers. Good borrowers will also stop repaying their loans. SBI management and RBI who condemned act of Government of Andhra Pradesh which announced and implemented loan waiver scheme as promised before election by ruling party are following the same bad culture .

SBI thus sacrifices huge amount of public money to please Government of India which ultimately harms the repayment culture , adversely affects the profit of the bank, affects the prospect of wage hike of bank staff, decrease capacity of bank to increase manpower as per need and then it increases work load on existing bank staff.

It is just like distribution of public money in charity as per whims and fancies of ministers and top officials of bank management which ultimately reduces value of dividend payable to share holders and interest payable to depositors.

Greatest loss is that it spoils repaying culture and all types of borrowers all over the country start wilfully avoiding repayment of loan and expects relief from bank and government of India on bad accounts called as Non Performing assets. Bank officials also avoid making effort for recovery of overdues from defaulters and prefer writing off loans or sacrificing huge volume of loan and interest to serve their self interest and to show their mentor ministers that they are loyal to GOI . This promotes and propagates a culture of flattery and bribery and all junior officers start serving their self interest by serving bosses at the cost of their organisation. In this way bad officers who sanctioned loans to bad person after taking bribe are also acquitted from punishment.

Obviously Such nexus among bad borrowers, bad top officials of bank and bad ministers of Government ultimately harm the future of lac of bank staff, crores of depositors and taxpayers, and lastly the stake holders of bank. And it is the duty of bank staff, depositors, taxpayers, stake holders in bank to protest such misuse of public money by bank management and government of India.

Enforcement Directorate issues Rs 608 crore notice to Tamil Nadu bank, Standard Chartered-DNA
Enforcement Directorate (ED) has issued an over Rs 608 crore showcause notice to a Tamil Nadu based Mercantile bank and leading foreign bank Standard Chartered for alleged foreign exchange violations in an illegal transfer of shares case of 2007.

The agency's Chennai office on Thursday issued a Rs 334.32 crore notice to Standard Chartered bank Mumbai while it slapped a Rs 274.03 crore notice to the Tamilnad Mercantile Bank Limited (TMBL) under the provisions of the Foreign Exchange Management Act (FEMA).

The case dates back to 2007 when the RBI detected that certain non-resident investors had acquired shares of TMBL from resident Indian shareholders in violation of set guidelines and subsequently asked the ED to probe the deal under FEMA laws.

"The ED conducted investigations and identified that Tamilnad Mercantile Bank, its the then Chairman, Directors, Company Secretary have all contravened the provisions of FEMA in transferring 46,862 shares of their bank to foreign entities in May 2007 without the prior approval of RBI and further allowing similar transfer of shares to foreign entities in December 2011 and June 2012 without the permission of RBI. The total amount of contravention (by TMBL) was identified as Rs 274.03 crore," ED's Special Director (South) K R Uday Bhaskar said in his order.

The order further said the probe also "identified contravention of FEMA by Ms Standard Chartered bank Mumbai in the opening and operation of an escrow account for the purpose of the said transfer to foreign investors.

"Standard Chartered bank was also found to have contravened the provisions of FEMA in taking custody of immovable properties in India and shares of TMBL for providing collateral/guarantee to a loan availed by the foreign investors in the Mauritius branch of Standard Chartered bank.
"The contravention of Standard Chartered bank was identified to be Rs 334.32 crore," the order said.

The order said the agency is also "proposing" action against the then Chairman of TMBL, MGM Maran as he had "facilitated the transfer from Indian investors to foreign investors and accordingly received consideration from the foreign investors to the tune of USD 6.85 million in his overseas account at Singapore" which is against FEMA laws.
All the parties have been asked to respond to the agency's notice within 30 days following which legal action would be initiated against them. 

Bill in Lok Sabha to enable Regional Rural Banks to raise funds from market-Economic Times
NEW DELHI: Government today introduced in the Lok Sabha a bill to raise the  authorised capital of Regional Rural Banks (RRBs) to Rs 2,000 crore while  enabling them to mop up funds from the capital market.

The Regional  Rural Banks (Amendment) Bill, 2014, which was tabled by Finance Minister Arun  Jaitley, seeks to raise the authorised capital of the RRBs from Rs 5 crore to Rs
2,000 crore.

Under the proposed dispensation, the share capital of the  RRBs could be split into 200 crore equity shares of Rs 10 each. As per the existing Act, the Rs 5 crore  share capital of RRBs is split into 5 lakh shares of Rs 100 each.

The  changes in the RRB Act, are aimed at "strengthening the capital base and improve
their overall capabilities".

The amendment envisages that the capital  of government entities will not come down below 51 per cent in the RRBs.  As per the statement of Objects and Reasons, the amendment seeks to  "make provision for  

My Comments:
Government of India is likely to allow Regional Rural Banks to garne money from stock market by  public issue (IPO). This is another step of Government to handover banks to private sector and allow sick RRBs to loot money from innocent investors. Health of most of Regional Rural Banks is pathetic , poor and critical. These banks are sitting on huge load of bad debts.
If CBI peeps into their balance sheet and looks into every loan accounts ,it will be proved that there are 80% bad accounts and hardly 20% good accounts. The culture of loaning and hiding bad loans through fresh loans to serve old bad loans is damaging the fundamentals of such banks along with other PS banks.
Evergreening culture helps RRBs to keep loan accounts standard for long period and then tapering in CBS system help in concealing bad loans.
It will not be therefore an exaggeration to say that majority of these banks are on the verge of collapse and sponsor banks are silent spectators as regulators are. People who will invest in shares of these banks, will have to suffer loss in near future.

Govt flays lobbying for top posts at PSU banks-LiveMint-19.12.2014

( read my comment given below)

In a circular issued to banks, financial institutions and insurance firms, the department has warned officials against making unauthorized visits
New Delhi:

The finance ministry is keen to discourage lobbying for top posts in state-owned banks.
Even as it is finalizing appointments for top posts in state-run banks, the department of financial services has moved to restrict the entry of bank officials to its premises.
In a circular issued to banks, financial institutions and insurance companies last week, the department has warned officials against making unauthorized visits.
Since the government owns a majority stake in state-run banks, officials from such banks are regular visitors.
“The department has been witnessing large scale unauthorized and irregular visits by officials and employees of banks, financial institutions and insurance companies in the recent past… It has also been reported that some bank/financial insurance officers have attempted to reach out to DFS officers in the hope of seeking personal favour,” the circular said.
Mint has reviewed a copy of the circular.
The finance ministry is in the process of finalizing appointments of bank chiefs in state-run banks and will start the process of appointing executive directors in state-run banks towards the end of this month.
These appointments have come under scrutiny after Syndicate Bank’s chairman and managing director S.K. Jain was arrested in a bribes-for-loans scam and the Central Bureau of Investigation (CBI) has since widened its enquiry to UCO Bank and Bank of Maharashtra.
Subsequently, the finance ministry scrapped the appointment process started by the previous United Progressive Alliance (UPA) government and initiated a fresh appointment process.
The government is currently in the process of appointing chairmen and managing directors at eight state-run banks.
The government is also expected to conduct interviews for posts of executive directors for at least 14 positions.
The circular directed all officials to seek prior appointments and meet officials only above the joint secretary rank as far as possible, and only visit the ministry when they have legitimate work.
In the aftermath of the bribes -for-loans scam, finance minister Arun Jaitley promised to strengthen the governance practices at banks.
The finance ministry has proposed that only qualified people be appointed as independent directors.
It has also moved to separate the post of chairman and managing director and give fixed tenures to bank chiefs.
The finance ministry’s circular “indicates that it wants to stem lobbying and go about the appointment process in a (more) fair and transparent manner than what was followed in the past,” said an analyst at a broking firm who did not want to be identified.
The appointment of competent officials to the key posts would go a long way in improving the image of state-owned banks, this person added.
My Comments
It is a good news for the health of public sector bank that Ministry of Finance has issued guidelines to stop frequent visit of several bank officials to Ministries and government departments  to stop perhaps corruption in appointment, promotion, posting and sanctioning of loans to big corporate houses. Only God knows whether such guidelines will actually be put in effect in true spirit or not.
It is well known to all and  open secret that majority of posting of top officials, promotion of officials and recruitment of officials in bank  ,more often than not take place not on the basis of merit or performance but only on the basis of recommendations of some high profile dignitaries or on payment of some bribe to recruiter or panel members of Interview board which decides on matters related to promotions and who decides o files pertaining to posting and transfers of top officials directly or indirectly through some middlemen. Same culture percolates down in all banks where majority of promotion of officers from one scale to higher scale takes place on the recommendations of some VIP or the other or after payment of some bribe to person who can play positive role .Many high profile businessmen who have good liasoning with top officials of banks also play crucial role in promotion, posting and recruitment of bank officers and there is role of money in most of such cases.
I do not know good guidelines preaching sermons on ethics will swim or sink in banking system. Such guidelines swim in offices like banners or lost in air, Hardly one in thousand employees read it carefully. Such guidelines sink in files and rest dusted in some corners But it is bitter truth that such guidelines are issued periodically but never put in force .
It is important to mention here that each top management of each public sector bank has existing guidelines for bank employees not to use outside agencies or individuals to get favour in transfers , postings and promotions. But the culture of recommendation never stops and majority of posting and promotion takes place only on the basis of recommendation of some or the other top officials. 
Similarly every year in the month of November , all bank staff has to take oath that they will not indulge in corrupt practice in execution of their day to day work and in sanction of loans and advances or in purchase of goods and services but everyone in India knows that majority of loans are sanctioned on the power of bribe and commissions only.
This is why I say that guidelines issued on ethics are normally ignored in all offices and they swim or sink in all offices. But I have no doubt that if corruption in promotion, posting and recruitment  is reduced to Zero, health of Not only PS banks will increase , but bank staff will also be happier and customers of banks will get comfortable service.
In our country , it is culture to punish good staff ( they are denied wage hike) and award bad officers (who get promotion out of turn and who earn bribe and least bother for wage hike ). It is bad borrowers who are awarded by writing off of loans or by sacrificing interest and principle amount and good borrowers have to pay high interest or face court cases.
As such issuance of good guidelines is one thing and putting the same into effect is entirely a different story. Officers who have to use ministers and top officials for getting undue advantage in promotions and postings can approach the house of important officers and ministers with a flower bouquet and a packet of bribe money or by extending costly gifts on some ceremonial occasions where VIPs are wilfully and strategically invited to grace the occasion. There are several ways to oblige top officials and ministers or top politicians to get favour in corrupt way.

RBI steps up efforts to improve coordination with law enforcement agencies-Business Standard- 19.12.2014

Move aimed to prevent recurrence of Saradha-like chit fund scam
The Reserve Bank of India (RBI) is engaging with state governments across the country to prevent a recurrence of Saradha-like chit fund scam.

The banking regulator has held meetings with chief secretaries of states and is making efforts to improve coordination between regulators and law enforcement agencies for early identification of financial malpractices by some fly-by-night operators.

“Since the revelation of the financial mismamangement of some Ponzi schemes, there was a feeling that some of these entities are falling in the so-called regulatory gap. Since then we had a meeting of chief secretaries where we have urged them to make much better use of the state-level coordination committees. These committees should meet more frequently, at least four times a year,”
RBI Governor Raghuram Rajan had said following the central bank’s board meeting in Kolkata last week.

A number of states, including West Bengal, have also created sub-committees under their state-level co-ordination committees.

“These are a sort of full-time contact points among the regulators and law enforcement agencies within the state. Then we can go quickly after some of these fly-by-night operators. There is now a much greater level of coordination as a result of our feeling that some of these entities were not falling within precise regulatory ambits,” Rajan added.

In April, 2013
Saradha Group, which was involved in an illegal deposit mobilisation scheme, shut shop. It had raised close to Rs 2,000 crore from over one million small investors in West Bengal alone. The company also had operations in other states including Odisha and Assam. After the scam came to light, the West Bengal state police arrested Saradha Group promoter Sudipta Sen and a few other key officials.

The Central Bureau of Investigation (CBI) has now taken charge of the investigation and arrested people with close links to the ruling Trinamool Congress (TMC).

West Bengal’s Transport Minister Madan Mitra, TMC’s Member of Parliament (MP) Srinjoy Bose, its suspended MP Kunal Ghosh, and the former director-general of West Bengal police, Rajat Majumdar, have been taken into custody so far.

The Supreme Court, which had given its go-ahead for the CBI probe in the Saradha chit-fund case, had questioned the role of regulators — the Securities and Exchange Board of India (Sebi), RBI and the Registrar of Companies — for their inaction in the multi-crore scam.

“Investigation conducted so far puts a question mark on the role of regulatory authorities like Sebi, the Registrar of Companies and the RBI, within whose respective jurisdictions and areas of operations the scam not only took birth but flourished unhindered,” the Supreme Court had said in its order in May.

RBI officials claimed the coordination between regulators and law enforcement agencies have now improved in West Bengal.

“We have already strengthened the mechanism of co-ordination. We have already conducted one set of state-level coordination committee meeting. Also, for the last three months, we are regularly meeting in the sub-committees and reviewing the progress on a continuous basis,” said a senior RBI official.

The banking regulator has also held training sessions for the state police department at the district level to help them check the proliferation of illegal chit fund companies.

However, government officials feel that the steps taken are still not adequate to prevent Saradha-like scams.

“The practice of officers being sent for training to RBI had been in place even before the Saradha scam. But these officers have hardly been used for the purpose for which they were trained,” said a senior official of the West Bengal government.

The state’s Consumer Affairs Minister Sadhan Pande claims such training camps are held occasionally.  “They are quite infrequent. Only 150 officers from our state consumer affairs department underwent such training in last one year,” he said.

Strike And Wage Revision for Bank Staff

Wage pact: bank unions for long-haul agitation-Hindu Business Line-19.12.2004


Thiruvananthapuram, Dec 16:  
The United Forum of Bank Unions, which has been negotiating with the Indian Banks’ Association for wage revision in the banking sector for the past two years, has decided to go on an indefinite nationwide strike from March 16.
The decision was taken by the top decision-making body of the UFBU following breakdown of yet another round of conciliation in the presence of the Central Government’s Deputy Chief Labour Commissioner in Mumbai on Wednesday. “We have decided to go on all-India indefinite strike from March 16,” MV Murali, convenor of the nine-union UFBU, told BusinessLine. “Before that, the unions will go on a four-day national strike from January 21; and on January 7, there will be a one-day strike.”
The UFBU’s tough stand follows the logjam in the talks for a five-year wage agreement after a dozen rounds of negotiations between UFBU and the negotiating team of the IBA, which represents the managements of the public- and private-sector banks in the country. Murali said that on Wednesday, the conciliation talks between the team led by IBA’s Deputy CEO K Unnikrishan and UFBU leaders ended in an impasse as the IBA stuck to its guns and there was no forward movement on the demands made by the unions. The IBA was willing to raise wages in the banking industry by only 11 per cent.
‘Delaying tactics’

AK Ramesh Babu, President of the Bank Employees Federation of India (BEFI), a member of the UFBU, told BusinessLine that the January 7 strike was an ‘immediate response’ to the highly objectionable ‘delaying tactics’ of the IBA. The IBA had now come up with a new condition that it needed the mandate of the board of directors of all individual banks in the IBA for making any further concessions on wage revision. It had sent circulars to individual bank boards asking them to ‘review the mandate.’
According to Vishwas Utagi, General Secretary, Maharashtra State Bank Employees Federation, bank managements are stonewalling employee demands for a wage hike citing profitability constraints, the need to shore up capital to meet new Basel III norms, and provisioning burden due to stressed loans. “Bank employees are not responsible for the bad loans that have accumulated in the banking system. In fact, they have helped banks grow their business and profitability. So, there is no reason why bank managements should deny our demands.”
Bank branch manager commits suicide-The Hindu
Senior Branch Manager of Karnataka Bank, Krishnamurthy A. committed suicide by hanging himself in the store room of the branch on Friday morning.
Enquires revealed that Krishnamurthy came to the branch at around 8.00 a.m. after collecting the bank keys from the official, wrote a death note and hanged himself to a ceiling fan in the store room.
Krishnamurthy in his death note, which was typed from a PC and found on his table in his chamber, said that he had resorted to the extreme step due to depression and after failing as a branch head in managing the non-performing assets (NPA) and that nobody was responsible for his death.
In another note to the Bank management, Krishnamurthy has written that he had extended over drawings on over-draft accounts of some of the customers, to avoid these accounts slipping into NPA, that too with the permission of Bank’s Regional Office in Shivamogga.
He has also reportedly mentioned the names of some of the customers who had availed over drawing over and above the over-draft limit.
He has requested the management not to fix any responsibility on him and provide employment to one of his two daughters on compensatory grounds.
He has requested the customers to repay their loans promptly so that his family members could live peacefully. He has also requested the police not to hand over his body to his family after subjecting it to post-mortem.
Brucepet police have registered a case and are doing the ‘mahajar’

Wednesday, December 17, 2014

Tax on Gratuity, PF , Leave Encashment After Retirement

No tax on gratuity of up to Rs 10 lakh-Business Standard November 2014

If gratuity is received in earlier years then exemption at time of retirement will reduce to that extent, subject to the overall limit
Sudhakar Rao, an employee with a large private sector firm is due to retire in two months and is planning his post-retirement life. His finances are in order. He has no liabilities since his home loan has been paid off. His children were earning and would repay the education loans taken for their higher studies. Rao is expecting to receive a sizeable amount at the time of retirement by way of gratuity, employee provident fund and unused leave. He wants to know what are the taxes that he will be liable to pay, so that he can plan how to invest the rest of amount accordingly.

Generally, benefits received at the time of retirement are taxable under the Indian
Income tax law as profits in lieu of salary in terms of section 17(3) of the Income Tax Act ('Act'). However, one can avail various tax benefits on the amounts received on retirement from the employer, subject to provisions contained in the Act.

Let us take a look at some of the provisions that can help retirees claim tax benefits.

Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company. Gratuity is paid when an employee completes five or more years of full time service with the employer. Taxability of gratuity depends on the recipient.
  • In case of government employees there is no tax on the gratuity
  • In case of private sector employees, if they are covered under the Payment of Gratuity Act, 1972, then the gratuity is exempt from tax subject to a maximum of Rs 10 lakh or 15 days salary for each completed year of service (or part thereof)
Where the gratuity is received in any of the previous years and if any exemption was allowed for the same, then the exemption to be allowed during the retirement year gets reduced to the extent of exemption already allowed, subject to the overall limit of Rs 10 lakh.

Commuted Pension
  • Pension received by government employees, is exempt from tax.
  • In case of private sector employees, if he/she receives gratuity, the commuted value of one third of the pension is exempt. Otherwise, the commuted value of half of the pension is exempt
  • Pension received from LIC pension fund is entirely exempt
Leave encashment on retirement
Leave encashment during service is fully taxable in all cases. However, such payment received by government employees at the time of retirement is fully exempt. In case of other employees (including employees of local authority and public sector undertakings), leave encashment at the time of retirement, whether on superannuation or otherwise, is exempt from tax to the extent of least of the following amounts:
  • Actual leave encashment received;
  • 10 months of leave encashment, based on last 10 months average salary;
  • Cash equivalent of unavailed leave calculated on the basis of maximum 30 days leave for every year of actual service rendered. The cash equivalent is calculated on the basis of average salary;
  • Rs 3 lakh

  • Leave encashment received by the family of government employees, who died while in service, is not taxable. Similarly, leave salary paid to legal heirs of a deceased employee in respect of privilege leave standing to the credit of such employee at the time of death is not taxable.

    Voluntary retirement payments
    Payment received on voluntary retirement, by employee of a public sector undertaking is exempt from income tax subject to a limit of Rs 5 lakh. Such an exemption is available only when such compensation is received in accordance with the scheme of voluntary retirement or in the case of a public sector company, under a scheme of voluntary separation.

    The scheme governing the voluntary retirement payment should be framed in accordance with guidelines as prescribed in Rule 2BA of the Income Tax Rules. The benefit is also available to employees of authority established under State, Central or Provincial Act; Local Authority; Co-operative Societies; Universities; IITs and Notified Institutes of Management.

    It may be noted that such an exemption is available to an employee only once and if it has been availed for any assessment year, it shall not be allowed to him for any other assessment year. Further, if relief is availed by an employee under section 89 of the Act in respect of any payment on voluntary retirement, termination or voluntary separation, no exemption can be availed by him further.

    Superannuation funds
    In terms of section 10(13) of the Act, any payment received by an employee from an approved superannuation fund is exempt from tax, if it is made in lieu of or in commutation of an annuity on his retirement at or after a specified age.

    Provident funds
    Any payment made to an employee from a provident fund to which Provident Fund Act, 1925 applies or from any other provident fund set up by the central government and notified by it in this behalf, is exempt from tax. The Public Provident Fund (PPF) established under the PPF Scheme, 1968 has been notified for this purpose.

    Other than these exemptions, employees can also invest in any of the instruments under Section 80 C to the extent of Rs 1.5 lakh to save on tax. These include senior citizen deposit schemes, PPF, National Savings Schemes, National Savings Certificate, National Pension System, life insurance policies and Equity Linked Saving Scheme of mutual funds.

    CBI Arrests General Manager Of Bank

    CBI arrests general manager of United Bank of India-Business Standard 17.12.2014

    CBI says he abused his position and as a consequence the bank incurred loss of Rs 93 crore
    The Central Bureau of Investigation (CBI) today arrested Pranab Kumar Roy, general manager, Southern Regional Office, of United Bank of India on charges of corruption. According to CBI, the amount of wrongful loss incurred to the bank during his tenure in various cases due to abuse of official position is Rs 93 crore.

    Roy is accused of abusing his official position by sanctioning working capital loan of Rs 20 crore to Capture Systems Pvt. Ltd., for its “Ethanol Turnkey Project” by fraudulently and dishonestly violating all banking norms and thereby causing a wrongful loss of Rs 9.44 crore to the bank.

    Pranab Kumar Roy is also involved in many other bank fraud cases in different places and same are being investigated by CBI branches at Chennai and Bangalore, said CBI statement.

    The amount of wrongful loss incurred to the bank in all these cases togethere is Rs 93 crore.

    He has been arrested today and produced before the Additional Special Judge for CBI cases, Chennai and remanded to judicial custody.

    Investigation is in progress, said CBI sources.

    CBI arrests three men for causing huge loss to bank-Times of India-16.12.2014

    PUNE: The Central Bureau of Investigation has arrested three private persons in the ongoing investigation of a case relating to an alleged loss of Rs 15 crore to the Corporation Bank.

    CBI had registered a case on June 26, 2014 for allegedly committing an offence of criminal conspiracy, cheating and forgery under sections of the Indian Penal Code on the allegations of a bank fraud in which accused persons availed credit facilities on the basis of forged, false and fabricated documents. A loss to the tune of Rs.15 crore was allegedly caused to the Corporation Bank.

    The accused persons were absconding since registration of the case and avoiding investigation by frequently changing their locations.

    PUNE: The Central Bureau of Investigation has arrested three private persons in the ongoing investigation of a case relating to an alleged loss of Rs 15 crore to the Corporation Bank.

    CBI had registered a case on June 26, 2014 for allegedly committing an offence of criminal conspiracy, cheating and forgery under sections of the Indian Penal Code on the allegations of a bank fraud in which accused persons availed credit facilities on the basis of forged, false and fabricated documents. A loss to the tune of Rs.15 crore was allegedly caused to the Corporation Bank.

    The accused persons were absconding since registration of the case and avoiding investigation by frequently changing their locations.

    Bank officer arrested for taking bribe

    A senior official of State Bank of Bikaner and Jaipur on Friday arrested by the sleuths of Anti-Corruption Bureau while allegedly accepting bribe of Rs 30,000.

    SBBJ Chief Manager (Civil works) Anant Kumar Sinha was arrested by ACB's sleuths while accepting a bribe of Rs 30,000 for clearing a bill of Rs 30 lakh related to renovation of a branch and flat here, an ACB official said.

    Rajkumar Kumawat had filed a complaint against Sinha mentioning that he had asked a bribe of Rs 1.50 lakh from him for clearing his bill worth Rs 30 lakh, she said adding the Chief Manager had taken Rs 50,000 in two instalments from the client earlier

    Two from IIT-Delhi arrested for writing bank exam as ‘fakes’ -Indian Express

    Two IIT-Delhi students and a system engineer with Infosys Consulting in Hyderabad have been arrested by the CBI from Govindpuram in Ghaziabad for allegedly impersonating candidates and appearing for the Nationalised Banks Clerical Cadre examination.

    Five others, alleged to be touts, have also been arrested. “I am not aware of any such incident. This is completely shocking… two students of our institution being arrested on charges of impersonation. We are trying to find out the names and details of these students. This is no longer an internal matter of the IIT. This is a legal matter and police investigations will take their due course,” Sharad Kumar Gupta, Dean Students’ Welfare, IIT-Delhi, said.           

    A senior IIT official said any action against the students would be taken after “due consideration” of the CBI report. According to the CBI, the examination was conducted online by the Institute of Banking Personnel Selection (IBPS), Mumbai. The accused were arrested from the Ideal Institute of Technology at Ideal Nagar, Govindpuram in Ghaziabad, over the past weekend. “The exam was held on Saturday and Sunday, and the two IIT-Delhi students and system engineer Tarun Uppal were impersonating actual candidates and taking the exam for them,” a CBI officer said.

    The CBI has also arrested a candidate who was actually supposed to take the exam and three alleged middlemen identified as Sanjeev Kumar, Sughreev Singh Gujjar and Hanumant Singh Gujjar. “An amount of Rs 6.5 lakh was recovered from Sanjeev Kumar. The money was to be paid to one of the accused impersonating a candidate,” the officer said. The accused have been booked under sections of the IPC, the Prevention of Corruption Act and the IT Act. All of them were produced before a court in Ghaziabad. Sources in Ghaziabad police said the operation was conducted by the CBI with help from the UP Special Investigative Team.

    - See more at:

    RBI slaps Rs 50 lakh penalty on ICICI Bank, Rs 25 lakh on BoB-Business Standard-17.12.2014

    It has imposed monetary penalty on the two banks for violation of its instructions
    RBI today imposed a penalty of Rs 50 lakh on ICICI Bank and Rs 25 lakh on Bank of Baroda for violation of KYC norms after they allowed opening of accounts in the name of a statutory body by fraudsters.

    The Reserve Bank also cautioned SBI, Axis Bank and State Bank of Patiala in the same case.

    "The RBI has imposed monetary penalty on the two banks for violation of its instructions, among other things, on know your customer/anti money laundering Know Your Customer (KYC) /Anti Money Laundering(AML)," the central bank said in statement.

    Giving details, RBI said it had received a complaint from a "reputed statutory organisation" in August, 2013 through which the details of a fraud perpetrated in five banks -- SBI, ICICI Bank, Bank of Baroda (BoB), Axis Bank and State Bank of Patiala -- with the connivance of certain officials of the statutory organisation were brought to it's notice.

    The fraudsters, it said, had managed to open fictitious accounts in the name of the statutory organisation in the five banks.

    The accounts were mainly operated for encashing cheques/ demand drafts/postal orders of which they were not the rightful owners, for periods ranging from one month to two years, without being detected by the banks.

    A scrutiny was undertaken in the five banks in January, 2014 and based on the findings, the RBI issued a show cause notice to each of these banks. The individual banks submitted written replies.

    "After considering the facts...The RBI came to the conclusion that some of the violations of serious nature were substantiated and warranted imposition of monetary penalty... on two banks, namely, ICICI Bank Ltd. And Bank of Baroda.

    "Failure on the part of these banks to take timely remedial measures had aggravated the seriousness of the contraventions and their impact," the statement said.

    In case of the three remaining banks, RBI said it was decided not to impose any monetary penalty as the "banks' explanations regarding the circumstances which led to the fictitious accounts getting opened and operated without detection, was judged to be reasonable".

    However, these banks have been cautioned to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements, RBI said.

    RBI said its scrutiny of the banks revealed violation of certain regulatory guidelines, including non-adherence to certain aspects of KYC norms like customer identification and acceptance procedure and non-adherence to instructions on monitoring of transactions in customer accounts.

    UFBU Proposed Indefinite Strike In Bank For Wage Revision

    UFBU met today in Mumbai decided to observe 1 day Strike on 7th January, 4 days strike from 21st to 24th January followed by indefinite strike from 16th March onwards. Detailed circular follows.
    Chv aibea

    Tenth Bipartite Update
    At last some happy news come towards struggle. UFBU hold an internal meeting with its constituents in Mumbai and took following decisions... :
    → One Day Strike on 7th January
    → Four Days strike from 21st to 24th January
    → Indefinite Strike from 16th March onwards
    More details soon. Bankers, prepare for battle. What we all were demanding, UFBU has at last came up with it.
    Good bipartite is not at much distance now!

    ___________________________________________________________________________________________ Please address all communications to- Arvind Porwal ,  General Secretary, AIABOF, 412, Goyal Nagar, Kanadia Road, Indore- 452018 
     Regn. No. 6171 (Affiliated to A.I.B.O.A.) -------------------------------Central Office------------------------- 14, India Exchange Place, ( Ist Floor), KOLKATA – 700 001 -----------------------General Secretary’s Office------------------ 412, Goyal Nagar , Kanadia Road, Indore- 452018 -   
               GSO/2014/ 45                                                                                                  Indore/  15.12.2014 
    Dear Comrades.  
    After the successful  implementation of  the call of Strike on 12/11/2014 followed by four relay zonal strikes from 02/12/2014 to 05/12/2014 entire work force in the banking industry is eagerly waiting for “What Next?”. Four Zonal Strikes were carried out with lot of expectations but nothing positive is in vision. To review the situation the unions are to meet on 17th December 2014 ie after twelve days. In the mean time four officers organisations have given a symbolic call of protest action.  It need to be improved and strengthened under banner of UFBU. Authorities at IBA  seems to be reluctant to make improvement in their offer .  With the decreasing workforce and mounting pressure of work, should the Bankmen to accept a meagre wage rise? 
    We reproduce hereunder the Circular  Letter No.23/VI/2014 dated December 15, 2014 issued by General Secretary AIBOA  elaborating the AIBOA’s stand and arguments on relative issues. .  With greetings. 
    Yours sincerely  , 
    (Arvind Porwal) General  Secretary 

    Text of AIBOA   Circular  Letter No.23/VI/2014 Dated December 15, 2014 
    Congratulations !!! to the entire work force for having successfully implemented the call of Strike on 12/11/2014 followed by four relay zonal strikes from 02/12/2014 to 05/12/2014.

      The Kolkata CC has authorised to secure regulated working hours, 5 days working , improvement in D & A Regulations synchronizing with  substantial wage revision  equivalent to the % achievement of PSC. During the CC itself, one more round of discussion was held, in which Com.Alok Khare, Vice Chairmen represented AIBOA in the talks.

    Having struck up  subsequently on 26th September,2014,one more round of talks was held, in which it was categorically made clear that unions are to come down substantially and in turn IBA would offer paltry rise of less than 1%. Immediately the nine constituents met in the  IBA Office  and decided to observe the one day strike .As the eastern part of the Nation was in Pooja Celebrations, elections in Maharashtra and Haryana, followed by the Festival of lights.the strike date was decided to be  on 28th OCTOBER 2014.. But suddenly one of the constituents, sent an SMS that the CHAT PUJA was falling on 28th Oct,2014, hence   an alternative date should be decided.

    In the meanwhile, there was a suggestion circulated that the one day strike action should be in the second week of November 2014 followed by zonal relay strikes. Even to decide the date to retaliate against adamant IBA and government combine, it took more than 15 days to meet  and further it took another 30 days to execute the plan of action.   In regular way to achieve peace,  amongst the parties as usual,  a conciliation meet was held at NEW DELHI on 5th November 2014. Shri.P.P.Mitra, the Government representative advised the participants to have one more round of talks specifically advising the IBA to substantially enhance the offer to take forward the 2 year old talks.

    One more exercise was conducted at NEW DELHI on 10th November 2014 wherein UFBU has brought down the demand from 25% to 23% and IBA refused to enhance their offer. 12th November 2014 Strike was a resounding success.   As the Zonal Strikes were already announced , Labour authorities from the centre advised the Zonal CLCs to conduct the proceedings. But UFBU took it up with Dy.CLC (C),and thereby a conciliation meeting was conducted at Mumbai on 1.12.2014. Unions repeated pleas to enhance the offer from the present 11% ,  to recommence the talks were unconsidered as the owner has not signalled the authorities.  

    Four Zonal Strikes were carried out with lot of expectations in the First week of December 2014 throughout the country. To review the various constraints in implementing the programmes of agitation right from 13th October 2014 and also the retaliatatory attacks on probationary workforce of extension  of the probation, the unions are to meet on 17th December 2014 ie after twelve days. The reasons for the delay is inexplicable. Trade unions are to remain alive to retaliate to demonstrate against the authorities who are denying the fair and reasonable wage revision.  Four officers organisations have given a symbolic call of protest action. This can be further improved upon which can be commonly decided.           In nutshell, we are where we were from March 26th, 2014. 

              OUR ARGUMENTS;   1. The Banking System has consistently booked gross profit  between 2012 and 2014, an increased quantum of Rs.15000 crores. Quoting the net profit as a base and increased establishment cost due to price rise are unacceptable. AIBOA right from the first round(21ST FEBRUARY 2013) participated by Com.S.S.Shisodia President and Com.M.A.Srinivasan had placed candidly that the negotiations are to be necessarily based on Gross Profit and Not on net Profit of the banking system.  
    2. When banks have paid an interim dividend of Rs.6747 crores to Government of India why not the workforce which produced the gross profit,  its equal share as wage revision?(PSC Component)  

    3. With the dwindling workforce and enhanced pressure of work, should the Bankmen to accept a meagre wage rise?  

    4. Comparing ourselves based on the evolution of PCR with that of the Government Group A officers is being questioned at various platforms. The ground reality prevailing  in PSBs vis-à-vis Government services cannot be overlooked.  

    5. When C2C is a dangerous concept, there is some sort of indication to free some of the officers from the IBA scales which can never be considered by right thinking organisations.            

    DENYING ENHANCED WAGE REVISION BY IBA:   Due to rising bad loans, fulfilling the Capital requirements under BASEL III and also higher provisioning of Pension,  forces IBA  not  to offer  beyond 11% rise ie Rs.3465 crores of PSC which is no where nearer to the % of PSC achieved in the last wage revision.            

    We are for a prolonged struggle as the owners are  unconcerned in totality.          

      We shall have to go by the famous saying of SWAMI VIVEKANANDA that             ARISE, AWAKE and STOP NOT TILL  THE GOAL IS REACHED.  



    Tuesday, December 16, 2014

    Fraud And Bad Debts

    Public Sector Banks lost Rs 2,417 crore due to fraud in first quarter-Economic Times

    NEW DELHI: State-run banks saw a marked rise in incidents of fraud in the first
    three months of this fiscal, a list compiled by the government shows, adding to
    concerns over the management of these lenders.

    The data shows that  fraudsters cheated these banks of Rs 2,417 crore of public money between April  and June. The amount is more than half of the loss of Rs 4,183 crore in entire
    2013-14 through 1,174 cases of fraud.
    The Central Bank of IndiaBSE -2.23 % alone reported 59 cases of fraud involving Rs
    1,047 crore in the three months to June, according to the data made available by
    the finance ministry.

    In the previous fiscal, too, the Central Bank of  India had the dubious distinction of topping the list with 117 cases of fraud  involving Rs 818 crore.

    As per the Reserve Bank of India guidelines, all  advances related to fraud cases of Rs 1 lakh and above are maintained under  'cheating ..

    Bank frauds rising: Double to Rs 6,212 cr in 2012-13-Business Line
    Public sector banks main victims of poor appraisal systems
    Bank loan frauds almost doubled in 2012-13 adding up to Rs 6,212 crore against Rs 3,183 crore in the previous year. Public sector banks accounted for a chunk of these frauds. In terms of numbers, 349 cases of fraud of over Rs 1 crore were reported in 2012-13 up 28 per cent over the previous year’s 273 cases.
    A fraud is an act or omission intended to cause wrongful gain to one person (in this case, the borrower) and wrongful loss to the other (the bank), either by way of concealment of facts or otherwise.
    In a recent presentation, RBI Deputy Governor K. C. Chakrabarty said poor credit appraisal and low level of promoter equity have led to a jump in the number of loan related frauds, especially diversion of funds. Loan related frauds accounted for 64 per cent of the money misappropriated followed by technology related and know-your-customer (mainly in deposit accounts) frauds.
    There has been a 15-fold rise in large value fraud cases involving amounts of Rs 50 crore and above, from three cases in 2009-10 (involving an amount of Rs 404 crore) to 45 cases in 2012-13 (Rs 5,335 crore).
    Chakrabarty observed that loan appraisal standards are lax for bigger loans both at the time of sanction and restructuring even as the assessing standards are stringent for smaller borrowers.
    Loan appraisal must focus on the quantum of equity brought in by the promoters, the source of the equity, and the contingency planning in respect of infrastructure projects. According to Chakrabarty, “Increase in cases of large value fraud in accounts financed under consortium or multiple banking arrangements, involving even more than 10 banks at times, is a newly emerging, but unwelcome trend in the banking sector. Another glaring issue in this context is the considerable delay in declaration of frauds by various banks in cases of consortium/ multiple financing.”.
    He pointed out that the RBI has come across cases where there is a lag of 12-15 months in declaration of the same case as fraud by different banks. This not only enables the borrower to defraud the banking system more, but also gives him time to erase the money trail and queer the pitch for the investigating agencies.

    Saturday, September 21, 2013

    Bad Loan And Fraud Are Two Killers For Banks

    Bad loans: Banks sleeping at the wheel

    M. SITARAMA MURTY--Business Line

    Competition has pushed banks into cutting corners, while checking the borrowers’ antecedents.
    Non-performing assets (NPAs) have always been a part of the credit function in banks. It is only after the regulator introduced the concept of income recognition and provisioning in the 80s, tightening the definition of NPAs and provisioning norms, that they have assumed greater importance. Adoption of the Basel guidelines on capital adequacy made it a critical segment. For the third quarter of this year, most banks reported a decline in profits, citing the burgeoning NPAs. The fears of the rating agencies, which are sceptical about the assets quality and health of the banks, have been confirmed.
    Gross NPAs showed signs of easing for a couple of years, but are moving menacingly towards the 4 per cent mark. The problem is so widespread that a CEO of a major PSB could defend the low profits as a fall-out of decline in asset quality, and not change in incumbency. Normal growth in credit could have, to some extent, improved the earnings and salvaged the ratios, but the economic slowdown and higher inflation and interest rates have dampened investments.


    If a critical analysis is made, some worrying aspects do surface. Increasing number of frauds has contributed in no small measure to the problem. The acts of criminal minds in financial transactions, internal or external, including cyber crime, are labelled ‘fraud’ and are reported to the RBI. These do not, however, fully reflect the magnitude of the problem. A clear trend of defrauding the banks is emerging. The amounts lost in transaction frauds or theft pale into insignificance if the amounts involved in NPAs due to misrepresentation, falsification of accounts, diversion of funds, cheating, forgery and wilful default are considered.
    Believing it to be safe lending, all banks pushed for housing loans in a big way. While percentages may provide a false comfort, the sheer number of cases where banks were cheated, some times several banks by the same person, with fake or forged documents runs into thousands. If the notices of sale or auction appearing in the press daily are any indication, many loans seem to have been granted without meticulous verification of the KYC norms, the earnings or the repayment capacity of the borrowers.
    A common modus operandi of the fraudsters is to sell off the property or mortgage it to other banks, using multiple copies of the documents. In the era of colour printers it is difficult to make out the genuineness, except by a thorough verification at the registration office. This is time-consuming and beset with practical difficulties, too. With the records not updated in some States even for 5 to 7 years and there being no system of issuing encumbrance certificates in some others, it reads like a horror story. The advocates have to wade through voluminous haphazardly stored papers to verify.


    The number of camouflaged fraudulent borrowings in the trade, manufacturing and services sectors is on the upswing. What is more alarming is that an increasing number of large value or corporate borrowers are resorting to false information and fake or forged documents for obtaining credit.
    The failure of the banks to make a critical and realistic appraisal of credit needs and have efficient credit management practices at all levels, makes it that much easier for a dishonest borrower. Banks have to help themselves by not rushing through the sanctions, in the name of competition. It is a paradox that applicants still complain about delays.
    Prudence or due diligence need not result in delays. But negligence of basics of banking can lead to frauds. Outsourcing most functions such as project appraisal, verification of documents, inspection of securities and their valuation, scrutiny of accounts and books, verification of stocks, internal audit and even recovery, have the bankers lost their professional touch? Is it because of volumes or reluctance to face accountability?
    Realising that the entire exercise of recovery is ending in knots, the government and the RBI thought it fit to have a national register of bank mortgages as a self-help measure. But it will take time to stabilise, as in many States, the revenue and municipal records need to be streamlined and updated. Promotion of Credit Information Bureau (CIBIL) for building the credit history of borrowers is another initiative by the RBI.


    The recovery process is slow and painful, despite creation of DRTs and introducing the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI). Several borrowers become wilful defaulters, only to take advantage of the one-time settlement (OTS) system and gain. Having enjoyed the funds, interest apart, they bargain for discount in the principal. Anxious to reduce NPAs and at their wits end, finding no better alternative, banks fall for the OTS bait, sacrificing substantial amounts.
    The DRTs and the SARFAESI act procedures involve interventions of police and revenue machinery and finally courts, leading to delays up to several years. The work load has also multiplied manifold over the years. Stays are sought and granted routinely, rendering the process ineffective. DRTs frequently stay proceedings under the SARFAESI Act which is not envisaged.
    The Board of Industrial and Financial Reconstruction, which was to be wound up, is going strong and promptly stays recovery proceedings, unable to dispose of the cases for years on. Borrowers know this too well and after several years, throw the bait of OTS at the frustrated bankers.
    If some banks successfully reach the stage of disposal of properties, influential defaulters ensure that no one participates in the auctions. For fear of litigation about the price and procedure, banks shy away from private sale. They settle for sale of debts to asset recovery and management companies at deep discount, as a last resort.


    Only banks with security of immovable property can hope to recover some dues. Traditionally, stocks of goods or commodities, machinery and book debts were considered good liquid securities.
    But not any more. Once an account is irregular or becomes an NPA the stocks do a vanishing trick or the banks find them of no value. Mostly machineries and fixtures are either not available or of only scrap value, by the time the bankers could lay their hands on them, overcoming the various hurdles.
    Book debts are like mirages; either mere statements submitted by the borrowers or the certificates given by the chartered accountants. Bankers seem to have forgotten the skill of verifying and monitoring the book debts. No details of transactions or contact particulars or any supporting documents are available with the banks.
    Banks cannot deny credit for want of securities, particularly if there are not any. The RBI and governments prodding the banks to achieve targets for sectors such as exports, even those who have enough means, avoid offering any securities. Thanks to Export Credit Guarantee Corporation (ECGC), some relief is at hand. Ultimately, it boils down to banks substantially upgrading their appraisal skills and monitoring methods of scrutiny, verification, checks and cross checks. Self-help is the best help.
    They need to look more inwards.

    The author is former MD, State Bank of Mysore.

    Three officers of the Dhanlaxmi Bank arrested for their alleged role in cash-credit scam-Times of India 17.12.2014

    MUMBAI: Investigations into the fixed deposit cash-credit scam on Monday arrested three officers of the Dhanlaxmi Bank for their alleged role in the Rs 141 crore case. The trio would be produced before the court on Tuesday.

    Rajvardhan Sinha, additional commissioner of police, Economic Offences Wing (EOW), said, "We have just got arrested them and their interrogation is on." Those arrested include Suresh Bhogale, Mukesh Gohil and Arunkumar Mudliar. The EOW had earlier last week arrested the mastermind, Mohammed Fasih, in this case. He is in police custody for the last over four months and facing at least 15 such other cases totaling the fraud money upto Rs 300 crore. Fasih is the chairman and managing director of the Showman Group that runs the countrywide Sheesha lounge chain.

    Investigators said that the three bank officers did not check the documents while granting overdraft facility and withdrawal of money. "We suspect they are hand in glove with the prime accused, Fasih and associates. Their custodial interrogation will throw light on these aspects," said a police source.

    The EOW is currently probing 13 cases involving Fasih and CBI is investigating three other cases. EOW had earlier arrested Fasih's aides, Anil Pawar, Roy Joseph Thomas and Avinash Khandale, all three self-proclaimed investment consultants.

    On July 28, Abhay Shah, managing director of M/s P G Group lodged an FIR with the Marine Drive police and the case was transferred to the EOW. The police found that Khandale had approached the P G Group's Marine Drive office and offered high returns on fixed deposits in nationalized banks. He also convinced the directors of the firm for huge investment. Subsequently, firms run by P G Group like P G Foils Pvt Ltd, Trinumala Iron Pvt Ltd, Prem Cables and Paras Raj Bohra Memorial Trust's hospital invested money. All the four companies had collectively invested Rs 141.8 crore in FDs.

    "The hospital was started for poor people in the Piplya Kalan village, Raipur taluka (district Pali) in Rajasthan. The P G Group had made a separate corpus to fund the hospital and from this corpus Rs 10 crore was invested in a nationalized bank's Goregaon branch," said an investigating officer. The accused forged papers and using them they took cash-credit facility loan from the bank. In cash-credit, loan can be obtained upto 90 per cent of the total investment.

    The police said it was scanning the role of some more employees of certain banks and if their roles emerged they will also be arrested. "We have compiled a list of such bank employees who handled FDs and cash-credit departments besides the verification of documents. We have summoned some of them and if their role emerged, they will be placed under arrest," the officer said.

    Mastermind of this fraud, Mohammed Fasih (43) during interrogation told police that he invested Rs three crore in a Goa hotel and became a partner. Besides this, he also claimed to have bought the rights of old Hindi movies from a private firm and paid several crore rupees for this. The firm employees may be summoned for questioning and verification. Fasih told police he had purchased the 2013 Sanjay Dutt starrer Hindi movie Zilla Gaziabad but suffered huge loss since the move flopped at the box office.

    Mumbai, December 15:  
    Burgeoning bad debts in public sector banks has prompted an employees union to file a public interest litigation (PIL) seeking the Bombay High Court’s ‘interference and directions’ for effecting loan recoveries.
    Subhash S Sawant, General Secretary, Central Bank Employees Union, has filed the PIL to get four of the eight respondents — Union of India, Finance Ministry, Reserve Bank of India and Central Vigilance Commission (respondents 1 to 4) — “to immediately and forthwith intervene”. The petition, which names Central Bank of India, All India Central Bank Employees’ Federation, Central Bank Employees Federation of India, and Indian Banks’ Association as the other respondents, seeks adjudication on a host of points of law of grave public importance.
    Sawant has petitioned that the respondent authorities, to take legal action against various public sector banks so that they recover the loans that their clients have defaulted.
    The PIL has also sought legal action against various public sector banks for not prosecuting and punishing their clients, who are highly influential and powerful persons/ entities, who have defaulted in repayment of their loans running into thousands of crores of rupees.
    “…admittedly, if the prosecution and punishment was initiated and pursued, names of senior officials of the management of various public sector banks would be unearthed, making them vulnerable also for prosecution and punishment along with the defaulting clientele,” says the petition.
    The petitioners – Sawant and Central Bank Employees Union – said a ruling be issued for a writ or an order in the nature of a writ directing respondents 1 to 4 to individually and/ or collectively take legal action against various public sector banks for their actions and inactions (vis-à-vis bad loans) within a fixed time schedule that the court may deem fit and proper. Pending hearing and final disposal of the present petition, the PIL has sought a directive to respondents 1 to 4 to file and affidavit and inform the legal action taken, if any, against various public sector banks, including respondent 5 (Central Bank of India).
    Bad loans of public sector banks rose sharply to 5.33 per cent of total advances in September 2014 mainly due to sluggishness in the economy and other factors, including delay in environmental clearances. Bad loans of these banks stood at 4.72 per cent of total advances at the end of March 2014.