I salute RBI for the hard decision taken for
forensic audit of United Bank of India. I am astonished however that RBI has
ignored other banks where NPA ratio was much higher in last quarters. Anyway
the step is praiseworthy. I would like to add here that for unbiased report and
for knowing the bitter truth without any tapering and any manipulation by
auditors in nexus with chief officials of the bank , RBI should keep
surveillance of auditors , Bank officials and middleman .
It is necessary to
have CCTV recording of all auditing and if possible to have telephone tape of
all officials directly or indirectly involved in sanction of loans. It will be
better if the auditors records views of all juniors in processing of loans and
how they succumbed to pressure from higher bosses and politicians while
according sanction or while recommending sanction of loans despite several
shortcomings, deficiencies and violation of policy in the loan proposals
sanctioned by them in past years which are now bad.
Time is ripe now to assess and ascertain the integrity of all CMD and EDs of the bank irrespective of the fact that they are in service or retires from services because it is they who through verbal or telephonic instructions used to build pressures on juniors and it is they who created bad culture in sanction of loans and it is due to their wrong management, now banks are facing the burden of huge NPA and facing erosion of their capital. It is they who have caused loss of public money in write off to the tune of two lac crores, bad debts more than two lac crores and restructure loans moiré than ten lac crores. Let us see whether RBI is able to do justice with investors and bank staff.
Time is ripe now to assess and ascertain the integrity of all CMD and EDs of the bank irrespective of the fact that they are in service or retires from services because it is they who through verbal or telephonic instructions used to build pressures on juniors and it is they who created bad culture in sanction of loans and it is due to their wrong management, now banks are facing the burden of huge NPA and facing erosion of their capital. It is they who have caused loss of public money in write off to the tune of two lac crores, bad debts more than two lac crores and restructure loans moiré than ten lac crores. Let us see whether RBI is able to do justice with investors and bank staff.
I am of strong view that If
head of an organization is strong and honest , there is no doubt that juniors
will follow the suit and will not dare indulging in corrupt practice without
the support of higher bosses.
I once again thank RBI for taking bold decision of real audit of a bank. Sooner or later they will do the same for other more critical banks if they do not succumb under pressure of politicians and bank officials.
Rising NPAs: RBI initiates forensic
audit at United Bank--Money Control
The Reserve Bank of India has initiated a forensic audit of United Bank of
India 's books, concerned by the steep deterioration in asset quality. The state-
owned bank reported a net loss of Rs 489.5 crore in the quarter ended
September as gross non-performing assets surged to 7.5 percent from 5.6
percent in the preceding quarter.
United Bank Sources told CNBC-TV18 that this audit is different from
the routine annual inspection. The regulator has sent a team of inspectors to
the bank’s Kolkata headquarters to conduct the audit and has also appointed
audit firm Deloitte to carry out an independent forensic enquiry. The RBI
audit is likely to be completed in a month, sources said.
The term forensic
means ‘suitable for use in a court of law’, and a forensic audit is done to check
for fraud or embezzlement. The development comes barely a couple of weeks
after RBI governor Raghuram Rajan and other senior RBI officials called for a
tough stance against rising bad loans. United Bank of India’s financial
performance has been worsening since December last year.
According to
sources, Deloitte and RBI will examine if there are any hidden NPAs in the
bank and if proper systems are in place to identify them. They will also see if
there is any manual intervention by the employees in the process of NPA
recognition. The RB team will also examine large value loan accounts of the
bank.
http://www.moneycontrol.com/news/cnbc-tv18-comments/rising-npas-rbi-initiates-forensic-audit-at-united-bank-_998640.html
RBI begins probe into UBI over mounting bad debts --Economic Times 29.11.2013
KOLKATA: The Reserve Bank of India has initiated a special inspection of Kolkata-based United Bank of India, apparently prompted by an alarming rise in bad loans that has forced the bank to report a Rs 490-crore loss in the second quarter. While it's not unusual for RBI to undertake such a move, there was speculation about what might have triggered RBI's move. "The bank is sick. So many loan accounts are turning sick. So RBI must be concerned about this and wanted to find out the cause," said ..
http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/rbi-begins-probe-into-ubi-over-mounting-bad-debts/articleshow/26545293.cms
AIBEA to protest on growing NPAs and corporate borrowers' role--Business Standard
Bank employees' body plans to reveal top defaulters' names
The All India Bank Employees' Association (AIBEA) is planning to observe December 5, 2013, as All India Day, demanding a remedy for the increasing bad loans, alleging that the alarming increase in bad loans in the Public Sector Banks (PSBs) is due to the big and corporate borrowers.
The bad loans in PSBs has increased from Rs 39,000 crore in March 2008 to Rs 1,64,000 crore in March 2013 and the bad loans restructured and shown as good loans accounts to Rs 3,25,000 crore. Of the restructured loans, Rs 2,70,000 crore was in favour of corporate borrowers.
"If we include the bad loans in the private banks and foreign banks and other financial institutions, the total bad loans are more than Rs 2,50,000 crore," says a leaflet issued by AIBEA.
C H Venkatachalam, general secretary, AIBEA, said that the association would release the names of the top defaulters in a press meet on December 5, as part of its protest. It would also conduct demonstrations in various parts of the country raising six demands - to publish the list of bank loan defaulters of Rs 1 crore and above, make willful default of bank loan a criminal offence, order investigation to probe nexus and collusion, amend recovery laws to speed up recovery of bad loans and take stringent measures to recover bad loans. It also demanded not to incentivise corporate delinquency.
The provisions made for bad loans from the profits earned by the Banks has been growing and it has show a growth from Rs 11,121 crore in 2008-09 to Rs 43,102 crore in 2012-13, accounting to a total of Rs 1,40,266 crore as provisioning in the five years.
In a period between 2008 and 2013, the banks' gross profit before provisions for bad loans was at Rs 3,58,893 crore, of which the provisions made for bad loans was Rs 1,40,266 crore leaving the banks with net profit of Rs 2,18,627 crore.
Meanwhile, the provision coverage ratio has been falling, making the banks more vulnerable and susceptible to risks against loan losses and as compared to the provision coverage ratio of 68 per cent as on March 31, 2012, it has reduced to 62 per cent by March 31, 2013.
"According to RBI, the ratio in the entire banking system has fallen from 55 per cent to 45 per cent while the global average ratio is 70 to 80 per cent," it said. A list of Non Performing Asset (NPA) provision coverage, the ratio of provisions made against gross NPA, by the association shows that Allahabad Bank and Andhra Bank had a coverage of 74 and 71 per cent as on March 31, 2012, which has come down to 50 per cent each as on March 31, 2013. Bank of Baroda had a coverage of 80 per cent as on March 31, 2012, which has come down to 68 per cent as on March 31, 2013, according to the data.
The association says that while the bad loans were used to be explained as legacy issues, money stuck up in some old accounts and similar to that, the fresh bad loans added in the last four years is Rs 3,15,465 crore. It said that according to RBI, the banks have added Rs 4,94,836 crore to their bad loans between 2007 and 2013.
The bad loans worth Rs 1,41,295 crore were written off during the period 2007 to 2013 and most of these were in favour of the big defaulters and corporate borrowers, it alleged.
The bad loans in PSBs has increased from Rs 39,000 crore in March 2008 to Rs 1,64,000 crore in March 2013 and the bad loans restructured and shown as good loans accounts to Rs 3,25,000 crore. Of the restructured loans, Rs 2,70,000 crore was in favour of corporate borrowers.
"If we include the bad loans in the private banks and foreign banks and other financial institutions, the total bad loans are more than Rs 2,50,000 crore," says a leaflet issued by AIBEA.
C H Venkatachalam, general secretary, AIBEA, said that the association would release the names of the top defaulters in a press meet on December 5, as part of its protest. It would also conduct demonstrations in various parts of the country raising six demands - to publish the list of bank loan defaulters of Rs 1 crore and above, make willful default of bank loan a criminal offence, order investigation to probe nexus and collusion, amend recovery laws to speed up recovery of bad loans and take stringent measures to recover bad loans. It also demanded not to incentivise corporate delinquency.
The provisions made for bad loans from the profits earned by the Banks has been growing and it has show a growth from Rs 11,121 crore in 2008-09 to Rs 43,102 crore in 2012-13, accounting to a total of Rs 1,40,266 crore as provisioning in the five years.
In a period between 2008 and 2013, the banks' gross profit before provisions for bad loans was at Rs 3,58,893 crore, of which the provisions made for bad loans was Rs 1,40,266 crore leaving the banks with net profit of Rs 2,18,627 crore.
Meanwhile, the provision coverage ratio has been falling, making the banks more vulnerable and susceptible to risks against loan losses and as compared to the provision coverage ratio of 68 per cent as on March 31, 2012, it has reduced to 62 per cent by March 31, 2013.
"According to RBI, the ratio in the entire banking system has fallen from 55 per cent to 45 per cent while the global average ratio is 70 to 80 per cent," it said. A list of Non Performing Asset (NPA) provision coverage, the ratio of provisions made against gross NPA, by the association shows that Allahabad Bank and Andhra Bank had a coverage of 74 and 71 per cent as on March 31, 2012, which has come down to 50 per cent each as on March 31, 2013. Bank of Baroda had a coverage of 80 per cent as on March 31, 2012, which has come down to 68 per cent as on March 31, 2013, according to the data.
The association says that while the bad loans were used to be explained as legacy issues, money stuck up in some old accounts and similar to that, the fresh bad loans added in the last four years is Rs 3,15,465 crore. It said that according to RBI, the banks have added Rs 4,94,836 crore to their bad loans between 2007 and 2013.
The bad loans worth Rs 1,41,295 crore were written off during the period 2007 to 2013 and most of these were in favour of the big defaulters and corporate borrowers, it alleged.
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