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.
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.
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.
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 IndiaCOIMBATORE: 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
My Blog dated August 8, 2012 Is Reproduced below
Fraud and Manipulation Is Deep Rooted Culture
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.
- 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.
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