http://www.hindustantimes.com/mumbai/banking-system-changes-make-india-a-target-for-cybercrimes/story-3Udd8M3wzgevxgguKo10NM.html
07.02.2016 Economic Times
RBI has rightly suggested that working of public sector banks should be delinked from social banking to make them efficient and allow them to work on commercial principles The frictions that hinder the performance PSBs need to be completely eliminated and they should be allowed to work on commercial principles. RBI further suggested that the costs of social banking have to be provided for separately. If that is through budgetary support, the government may be more than compensated through increased revenues from and valuations of PSBs
Read more at:
http://economictimes.indiatimes.com/articleshow/50871509.cms?platform=hootsuite&from=mdr&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
I submit below some old blogs written by me with their links which are enough to say that without improving Human resource practices , public sector banks cannot dream of improvement in assets of banks.
Can Public Sector Banks Survive Without Government Support?
State Bank of India chairperson Arundhati Bhattacharya said banks were apprehensive about the Reserve Bank of India's deadline of March 2017 for them to clean up their balance sheets as the move may affect lenders' bottomline. The Reserve Bank of India (RBI) has asked banks to increase provisions to cover visibly stressed assets in the second half of this fiscal year. This directive issued by RBI if honestly put in action may cause bad loans and provisions to bloat.
Now it has become crystal clear to all that management of every public sector bank are to suffer more pain and face erosion in profit and even incur loss if RBI Governor Mr Rajan remain rigid on his stand that all banks should clean their balance sheets latest by March 2017 and should increase provisions on stressed assets identified by RBI latest by March 2016. This has become more evident when SBI Chairman expressed apprehension of sharp rise in NPA and fall in profit.
Now there is no doubt that Chiefs of all banks including so called strong bank like SBI had resorted to hiding of bad debts using illegal and unethical ways and tools in all preceding financial years to inflate profit ,to earn unjustified incentive and to get quicker promotion.
They all are guilty of window dressing. In the past they all were caught committing fraud in making inadequate or no provisions for staff terminal benefits payable to them on retirement.
Inspite of all warnings issued by RBI and Ministry of finance not o inflate business and profit of bank by window dressing, Chiefs of every bank ignored and disobeyed such warning ,and they have been doing so year after year. Who will punish such high profile fraud masters?
As a matter of fact ,branch heads of almost all branches of all banks are resorting to window dressing and to conceal stressed assets by using wrong and improper ways. This culture of playing foul game is very old and promoted and irrigated by all top officials . Junior officers have to dance as per direction given to them by their seniors. RBI and GOI have been silent spectator of all such game of manipulation for decades.
I may say that without manipulation , PSB cannot earn profit because the culture of lending is erroneous, culture of promotion in PSB is flattery and bribery based and because politicians use PSB to enhance their vote bank. Unless and until there is change in DNA of bankers and politicians, there is no guarantee that creation of bad assets will stop rising. Bankers will continue to blame economic slowdown or global recession and continue to cause loss to their bank in greed of getting self interest served and on the contrary private banks will continue to boost up their profit and business quarter after quarter.
Shares of banks with exposure to large corporates have come under selling pressure in recent weeks with those in the public sector bearing the brunt. The stock market value of one private bank HDFC Bank is now almost the same as that of State Bank of India and all the 20 nationalized banks put together. These 21 banks control over 70% of bank lending in the country whereas HDFC Bank, the country's second largest private lender, accounts for 6%. This proves that investors do not have trust on functioning and financial figures of public sector banks and they do not have trust on quality of assets of PSU banks and SBI . They know it very well that these banks are hiding bad assets in their books to reduce burden of provisioning and to inflate profit.
It is however a matter of pleasure that RBI Governor Mr. R Rajan has taken some step to clean balance sheet of public banks and State bank of India . It is true that if all banks honestly declare all bad asses as bad, there will be voluminous jump in value of bad assets . As on September 2015, Gross NPA of banks have crossed 6% of total assets and that of stressed assets have crossed 14% . But if all hidden stressed assets are exposed honestly, Gross NPA will rise to more than 25 % .
It is another matter of pleasure that RBI official and the government has assured it will provide public sector banks all the capital they need to grow their business and the central bank will release regulatory capital if required.
Let us see how far bankers act honestly and how far RBI officials and government officials are able to punish bank officials who still indulge in window dressing to hide NPA and those who perpetuate culture of treating bad assets as standard assets.
http://importantbankingnews2.blogspot.in/2016/01/can-public-sector-banks-survive-without.html
Now it has become crystal clear to all that management of every public sector bank are to suffer more pain and face erosion in profit and even incur loss if RBI Governor Mr Rajan remain rigid on his stand that all banks should clean their balance sheets latest by March 2017 and should increase provisions on stressed assets identified by RBI latest by March 2016. This has become more evident when SBI Chairman expressed apprehension of sharp rise in NPA and fall in profit.
Now there is no doubt that Chiefs of all banks including so called strong bank like SBI had resorted to hiding of bad debts using illegal and unethical ways and tools in all preceding financial years to inflate profit ,to earn unjustified incentive and to get quicker promotion.
They all are guilty of window dressing. In the past they all were caught committing fraud in making inadequate or no provisions for staff terminal benefits payable to them on retirement.
Inspite of all warnings issued by RBI and Ministry of finance not o inflate business and profit of bank by window dressing, Chiefs of every bank ignored and disobeyed such warning ,and they have been doing so year after year. Who will punish such high profile fraud masters?
As a matter of fact ,branch heads of almost all branches of all banks are resorting to window dressing and to conceal stressed assets by using wrong and improper ways. This culture of playing foul game is very old and promoted and irrigated by all top officials . Junior officers have to dance as per direction given to them by their seniors. RBI and GOI have been silent spectator of all such game of manipulation for decades.
I may say that without manipulation , PSB cannot earn profit because the culture of lending is erroneous, culture of promotion in PSB is flattery and bribery based and because politicians use PSB to enhance their vote bank. Unless and until there is change in DNA of bankers and politicians, there is no guarantee that creation of bad assets will stop rising. Bankers will continue to blame economic slowdown or global recession and continue to cause loss to their bank in greed of getting self interest served and on the contrary private banks will continue to boost up their profit and business quarter after quarter.
Shares of banks with exposure to large corporates have come under selling pressure in recent weeks with those in the public sector bearing the brunt. The stock market value of one private bank HDFC Bank is now almost the same as that of State Bank of India and all the 20 nationalized banks put together. These 21 banks control over 70% of bank lending in the country whereas HDFC Bank, the country's second largest private lender, accounts for 6%. This proves that investors do not have trust on functioning and financial figures of public sector banks and they do not have trust on quality of assets of PSU banks and SBI . They know it very well that these banks are hiding bad assets in their books to reduce burden of provisioning and to inflate profit.
It is however a matter of pleasure that RBI Governor Mr. R Rajan has taken some step to clean balance sheet of public banks and State bank of India . It is true that if all banks honestly declare all bad asses as bad, there will be voluminous jump in value of bad assets . As on September 2015, Gross NPA of banks have crossed 6% of total assets and that of stressed assets have crossed 14% . But if all hidden stressed assets are exposed honestly, Gross NPA will rise to more than 25 % .
It is another matter of pleasure that RBI official and the government has assured it will provide public sector banks all the capital they need to grow their business and the central bank will release regulatory capital if required.
Let us see how far bankers act honestly and how far RBI officials and government officials are able to punish bank officials who still indulge in window dressing to hide NPA and those who perpetuate culture of treating bad assets as standard assets.
After Much Delay ,RBI Warns Banks .
Reserve Bank deputy governor SS Mundra today warned banks against their excessive focus on retail lending, saying that the segment cannot be the panacea for growth and that too much of retail lending will also create its own problems. Now Mr Mundra or say RBI appear to have come out of deep slumber. For a decades and more PSU banks have concentrated more on retail banking than on business loan or corporate loan only because lending retail loan is considered by most of bankers as safe ,easy and tension free lending.
During eighties and nineties private banks used to give loan for cars at exorbitantly high interest rates, say 30 to 40 percent per annum. And PSU banks used to avoid lending for buying a car. Ratio of vehicles loan in PSU banks used to be less than one percent even upto 1990 and a few years later, but now this ratio has gone above 25% in many banks..
PSU banks were guided by RBI credit policy which used to focus on business loan, farming loans and loans to traders and these loan were considered as priority sector loans. But in course of time , government discarded social banking and started focusing on commercial banking. Consumption of petrol and diesel started increasing which not only caused huge pollution in air but also affected trade balance to a great extent.
PSU banks were guided by RBI credit policy which used to focus on business loan, farming loans and loans to traders and these loan were considered as priority sector loans. But in course of time , government discarded social banking and started focusing on commercial banking. Consumption of petrol and diesel started increasing which not only caused huge pollution in air but also affected trade balance to a great extent.
From 1991 onwards, period of privatisation, liberalisation and globalisation started. Process of so called reformation put into action. Banks were liberated from RBI control and RBI too became free of burden to a great extent. Banks were made free to make their own loan policy and earn profit . Banks were forced to come out with public issue and earn profit more and more for investors and government and also compete with new era private banks. This gave birth to unwarranted competition among public banks and a culture of easy methods of earning profit started. Gradually stiff competition started among banks including PSU banks and interest rate for retail lending started falling from around 40 percent and reached upto 10 percent and even below. .
Today you can get a car loan from a PSU bank at rate lower than 20 percent but a pensioner, traders, industrialist, student, doctor, professional will get loan at around 15 to 20 percent. Bank officials are recruiting marketing officers whose work is to market retail loan and compete with peer private banks in retail loan specially car loans and house loans. Huge targets are given to these marketing officers and Branch Managers of branches . They are always busy in searching high class business men and high wage earners for selling car loan and for selling house loan.
Banks are busy in sanctioning even personal loan to wage earners after making tie up with corporate houses to create more and more demands for easy and quick loan .Processing charges are waived by bankers as festival offer to attract more and more car loan takers or home loan takers .They have thus helped in increasing spending capacity of wage earners without increasing their real income . Heavy discounts are offered by car dealers and real estate builders to banks and huge gifts are distributed to financers to sell their vehicles and houses. In this way a few builders and car manufacturers have become billionaire .In modern era, banks give advertisement to attract customers for loan for car and houses in five days or in five minutes. TAT for retail loan in banks have come down to few days and few hours. Some of banks even started online lending.
http://importantbankingnews2.blogspot.in/2015/12/after-much-delay-rbi-warns-banks.html
Stop repeated loan restructuring of corporates to avoid NPAs’-The Hindu 14.01.2014
State-owned banks should stop "ever-greening" or repeated restructuring of corporate debt to check the constant bulging of their Non-Performing Assets, members of a Parliamentary panel said on Friday.
The spiralling of NPAs is due to bad economic situation, observed the members of the Parliamentary Standing Committee on Finance - headed by former finance minister and senior BJP leader Yashwant Sinha, but emphasised that the NPA situation is horrendous and requires urgent attention.
"The committees’ suggestion to curb NPAs is that banks must stop ever-greening of loans. If there is strong case for restructuring, then go ahead and do it. But do not go on doing it repeatedly," a member of the panel said after the meeting.
The members were of the view that NPAs are the result of bad economic situation, but there were also management issue of every-greening of loans which could be avoided by "not renewing loans, particularly of corporates", the member said.
In view of the worsening NPA situation, it is the direct responsibility of the Reserve Bank to rectify the problem, he said, adding that RBI Governor Raghuram Rajan would appear before the panel on February 4.
"He could not find time today. We have decided that we will interact with him on NPAs on February 4, one day before the Parliament session begins," the member said.
NPAs of public sector banks rose by 28.5 per cent from Rs 1.83 lakh crore in March, 2013 to Rs 2.36 lakh crore in September, as per the information provided by the Finance Ministry to Parliament in the recent Winter Session.
Total NPAs had gone up to Rs 1.37 lakh crore in March, 2012 from Rs 94,121 crore in March 2011. Thus the amount of NPA in September last year was more than double of what was in March 2011.
According to the information provided by Finance Ministry, top 30 loan defaulters of public sector banks (PSBs) account for more than a third of the total gross NPAs of the state-run lenders.
"The ratio of top 30 NPAs as a percentage of gross NPAs, in respect of public sector banks, as on September 2013 is 35.5 per cent and for all banks it is 38.8 per cent," Finance Minister P Chidambaram had said in a reply to the Rajya Sabha.
The Gross NPA amount of top 30 accounts of public sector banks (PSBs) stood at Rs 72,174 crore, while for all banks it was Rs 91,667 crore at the end of September.
In case of nationalised banks, top 30 defaulters contributed 43.8 per cent to the GNPA with Rs 55,663 crore.
Forensic audit must for all bad loans, Parliament Panel to RBI -The Hindu Business LIne
A. M. Jigeesh
February 5:
Cautioning that the rising trend of non performing assets (NPAs) with banks has "the potential to damage the growth story", the Finance Standing Committee of Parliament has called for immediate forensic audit of all restructured loans that had turned into bad debts.
Forensic audit is also required for wilful defaults and Reserve Bank of India (India) has been asked to prepare guidelines for the process. The analytical reports of the forensic audit should be submitted to the panel in six months, it said in its report, which was adopted here on Friday.
"We have adopted the report. We will submit it to the Speaker," said Veerappa Moily, Chairman of the panel and senior Congress MP, after the meeting.
The panel asked the apex bank to form empowered committees at the level of RBI, banks and borrowers to monitor large loans.
As on September 2015, net NPAs of public sector banks stood at ₹ 2,05,024 crore and may reach Rs. 4 lakh crore by the end of this fiscal, the panel said, adding that such a huge figure "raises questions" on the credibility of mechanisms to deal with NPAs.
The report said wilful defaulters owe public sector banks ₹ 64,335 crore, which constitutes about 21 per cent of total NPAs, and called for making public the names of the top 30 stressed accounts of each bank, in the category of wilful defaulters. There is no justification of keeping the names secret and asked the RBI to amend its guidelines, it added.
RBI, as a regulator, did not succeed in implementing its own guidelines, it said, an asked the apex bank to proactive and monitor the issue on a regular basis.
The panel also recommended the development of a "vibrant bond market" to finance infrastructure products. Batting for large infrastructural projects, it said the Centre should revive Development Financial Institutions for long-term financing of such projects and urged the Centre to also allow Infrastructure Finance Companies to buy infrastructure projects turning into NPAs and keep them as standard assets.
The report noted that in majority of the cases, corporate debt restructuring (CDR) mechanisms had failed to achieve the desired objectives, adding that there should be a definite timeline of six months to settle CDR cases. In 2014-15, most of the slippages came from restructured debt.
On strategic debt restructuring, the report said it could empower banks to take control of the defaulting entity, and recommended that a change in management must be made mandatory in cases involving wilful default.
The prolonged slowdown in the economy has eroded the market for distressed assets so much so that even Asset Reconstruction Companies found it hard to offload these, the committee observed, adding that RBI should consider creating a dispensation that allows banks to write off losses in a staggered manner.
http://www.thehindubusinessline.com/economy/policy/forensic-audit-must-for-all-bad-loans-parliament-panel-to-rbi/article8199281.ece
http://www.thehindu.com/business/Industry/stop-repeated-loan-restructuring-of-corporates-to-avoid-npas/article5614682.ece
http://www.businesstoday.in/sectors/banks/public-sector-banks-npas-bad-loans/story/202302.html
Parliament panel to examine reasons for high NPAs in public sector banks-Business Today
Kartikeya Sharma New Delhi Last Updated: January 13, 2014
Stop repeated loan restructuring of corporates to avoid NPAs’-The Hindu 14.01.2014
State-owned banks should stop "ever-greening" or repeated restructuring of corporate debt to check the constant bulging of their Non-Performing Assets, members of a Parliamentary panel said on Friday.
The spiralling of NPAs is due to bad economic situation, observed the members of the Parliamentary Standing Committee on Finance - headed by former finance minister and senior BJP leader Yashwant Sinha, but emphasised that the NPA situation is horrendous and requires urgent attention.
"The committees’ suggestion to curb NPAs is that banks must stop ever-greening of loans. If there is strong case for restructuring, then go ahead and do it. But do not go on doing it repeatedly," a member of the panel said after the meeting.
The members were of the view that NPAs are the result of bad economic situation, but there were also management issue of every-greening of loans which could be avoided by "not renewing loans, particularly of corporates", the member said.
In view of the worsening NPA situation, it is the direct responsibility of the Reserve Bank to rectify the problem, he said, adding that RBI Governor Raghuram Rajan would appear before the panel on February 4.
"He could not find time today. We have decided that we will interact with him on NPAs on February 4, one day before the Parliament session begins," the member said.
NPAs of public sector banks rose by 28.5 per cent from Rs 1.83 lakh crore in March, 2013 to Rs 2.36 lakh crore in September, as per the information provided by the Finance Ministry to Parliament in the recent Winter Session.
Total NPAs had gone up to Rs 1.37 lakh crore in March, 2012 from Rs 94,121 crore in March 2011. Thus the amount of NPA in September last year was more than double of what was in March 2011.
According to the information provided by Finance Ministry, top 30 loan defaulters of public sector banks (PSBs) account for more than a third of the total gross NPAs of the state-run lenders.
"The ratio of top 30 NPAs as a percentage of gross NPAs, in respect of public sector banks, as on September 2013 is 35.5 per cent and for all banks it is 38.8 per cent," Finance Minister P Chidambaram had said in a reply to the Rajya Sabha.
The Gross NPA amount of top 30 accounts of public sector banks (PSBs) stood at Rs 72,174 crore, while for all banks it was Rs 91,667 crore at the end of September.
In case of nationalised banks, top 30 defaulters contributed 43.8 per cent to the GNPA with Rs 55,663 crore.
Forensic audit must for all bad loans, Parliament Panel to RBI -The Hindu Business LIne
A. M. Jigeesh
February 5:
Cautioning that the rising trend of non performing assets (NPAs) with banks has "the potential to damage the growth story", the Finance Standing Committee of Parliament has called for immediate forensic audit of all restructured loans that had turned into bad debts.
Forensic audit is also required for wilful defaults and Reserve Bank of India (India) has been asked to prepare guidelines for the process. The analytical reports of the forensic audit should be submitted to the panel in six months, it said in its report, which was adopted here on Friday.
"We have adopted the report. We will submit it to the Speaker," said Veerappa Moily, Chairman of the panel and senior Congress MP, after the meeting.
The panel asked the apex bank to form empowered committees at the level of RBI, banks and borrowers to monitor large loans.
As on September 2015, net NPAs of public sector banks stood at ₹ 2,05,024 crore and may reach Rs. 4 lakh crore by the end of this fiscal, the panel said, adding that such a huge figure "raises questions" on the credibility of mechanisms to deal with NPAs.
The report said wilful defaulters owe public sector banks ₹ 64,335 crore, which constitutes about 21 per cent of total NPAs, and called for making public the names of the top 30 stressed accounts of each bank, in the category of wilful defaulters. There is no justification of keeping the names secret and asked the RBI to amend its guidelines, it added.
RBI, as a regulator, did not succeed in implementing its own guidelines, it said, an asked the apex bank to proactive and monitor the issue on a regular basis.
The panel also recommended the development of a "vibrant bond market" to finance infrastructure products. Batting for large infrastructural projects, it said the Centre should revive Development Financial Institutions for long-term financing of such projects and urged the Centre to also allow Infrastructure Finance Companies to buy infrastructure projects turning into NPAs and keep them as standard assets.
The report noted that in majority of the cases, corporate debt restructuring (CDR) mechanisms had failed to achieve the desired objectives, adding that there should be a definite timeline of six months to settle CDR cases. In 2014-15, most of the slippages came from restructured debt.
On strategic debt restructuring, the report said it could empower banks to take control of the defaulting entity, and recommended that a change in management must be made mandatory in cases involving wilful default.
The prolonged slowdown in the economy has eroded the market for distressed assets so much so that even Asset Reconstruction Companies found it hard to offload these, the committee observed, adding that RBI should consider creating a dispensation that allows banks to write off losses in a staggered manner.
http://www.thehindubusinessline.com/economy/policy/forensic-audit-must-for-all-bad-loans-parliament-panel-to-rbi/article8199281.ece
http://www.thehindu.com/business/Industry/stop-repeated-loan-restructuring-of-corporates-to-avoid-npas/article5614682.ece
http://www.businesstoday.in/sectors/banks/public-sector-banks-npas-bad-loans/story/202302.html
Parliament panel to examine reasons for high NPAs in public sector banks-Business Today
Kartikeya Sharma New Delhi Last Updated: January 13, 2014
Scam After Scam In Banks
Only a few days ago we came to know Rs.6000 crore forex fraud in which huge amount of Indian money has allegedly been remitted to foreign banks in the name of various fake companies and that through Bank of Baroda branch situated in Delhi. It is also informed that 32 banks were indirectly involved in such remittances .None of banks could detect it and if detected , none of them had courage to point it out or reveal the face to RBI and Government of India. this is India where telling truth is treated a crime and person who is indulged in crime gets appreciation, promotion and elevation from all . This is why fraud cases go unnoticed
.
Another fraud of bill discounting came to light in the same fortnight when fake bills or say accommodation bills have been discounted by one of branches of Bank of Baroda and it is now difficult to recover Rs.350 crore from the company which committed fraud with bank.
Latest news is that The Enforcement Directorate has unearthed one more forex scam. This time it involves a total of 7 banks including Oriental Bank of Commerce , Axis Bank , ICICI , IndusInd , Kotak Mahindra , DCB , Dhanalaxmi Bank. The ED has arrested one Manish Jain under the Prevention of Money Laundering Scam. Jain transferred more than Rs 500 crore through 70 fake bank accounts. Jain was also sending money in the garb of imports and exports. He used to send money to Hong Kong in HSBC Bank and further to China. The money was remitted out of India illegally against the imports which actually never took place.
Last year also fraud through remittances involving many bank amounting to Rs.150000 crore was unearthed. We are also aware of global forex scam involving Rs.36000 crore of rupees.
.
Another fraud of bill discounting came to light in the same fortnight when fake bills or say accommodation bills have been discounted by one of branches of Bank of Baroda and it is now difficult to recover Rs.350 crore from the company which committed fraud with bank.
Latest news is that The Enforcement Directorate has unearthed one more forex scam. This time it involves a total of 7 banks including Oriental Bank of Commerce , Axis Bank , ICICI , IndusInd , Kotak Mahindra , DCB , Dhanalaxmi Bank. The ED has arrested one Manish Jain under the Prevention of Money Laundering Scam. Jain transferred more than Rs 500 crore through 70 fake bank accounts. Jain was also sending money in the garb of imports and exports. He used to send money to Hong Kong in HSBC Bank and further to China. The money was remitted out of India illegally against the imports which actually never took place.
Last year also fraud through remittances involving many bank amounting to Rs.150000 crore was unearthed. We are also aware of global forex scam involving Rs.36000 crore of rupees.
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