THIRUVANANTHAPURAM, AUG 19:
The ban on campus recruitment of officers in public sector banks has come into effect in light of the adverse strictures made by various courts.
The Ministry of Finance accepted as much while writing to the heads of banks directing them to stop the practice at once.
BOOSTS UNION MORAL
Among the earliest and most forthright observations by the courts had come as early as in 2006 from the High Court of Kerala in a related case (Sanal KC Vs SBI).
The observations boosted the moral of the Leftist student unions in the State that had built up a sustained campaign against campus recruitment of officers.
Justice K Balakrishnan Nair had heard the case seeking stay on the decision of State Bank of India to fill up 30 per cent of officer posts through campus interviews.
He chose to refer the case to a division bench, but went on to make some crucial observations, which find resonance in the directive to scrap the system altogether.
FUNDAMENTAL RIGHTS
“The point…is whether 30 per cent of the vacancies…could be filled up by campus recruitment…without doing violence to the fundamental rights,” the judge had said.
The following are excerpts from his order:
The three colleges selected in Kerala had only limited seats when compared to the tens of thousands of students who were compelled because of their place of residence or financial incapacity, to seek admissions elsewhere.
The issue is whether recruitment from among the students fortunate to get admission in a few reputed educational institutions would deny justice to a large majority.
I feel that the classification attempted by the respondents cannot be sustained. Those covered must have an intelligible differential when compared to those who are not.
RATIONAL NEXUS
Further, the classification should have a rational nexus with the object of the law. In this case, job seekers have been divided into two groups.
The differential is not really intelligible. Further, the classification has no connection whatsoever with the object of the law, which is to select the best from applicants.
The assumption that the best is available only in certain educational institutions is plainly irrational and does not appeal to common sense.
The overdoing of the classification in this case is undoing the equality clause. To overdo classification is to undo equality.
ELITE INSTITUTIONS
The children of ‘the butcher’, ‘the baker’ and ‘the candlestick maker’ will be permanently kept away from the 30 per cent of vacancies in the cadre of probationary officers in the State Bank of India if the impugned measures are sustained.
Those posts will exclusively remain reserved for fortunate students who get admissions in a few elite educational institutions.
Such a reservation would fly in the face of Article 16(4) of the Constitution, which permits reservation only in favour of backward classes of citizens.
CONSTITUTIONAL DUTY
The concept of classification cannot be pressed into service to camouflage a reservation in favour of persons not covered by this Article.
Counsel for the bank submitted that it is for the executive to lay down policies regarding the administration of the country and this court should not sit in appeal over those policies.
But, when those policies are translated into Acts and Rules and if they offend any of the fundamental rights of the citizens, it is the constitutional duty of this court to step in and strike them down
People can now deposit up to Rs 1.5 lakh annually in their Public Provident Fund (PPF) with the government notifying changes in the popular savings scheme.
The government has issued a notification raising the limit from annual PPF deposit limit from Rs 1 lakh to Rs 1.5 lakh in pursuance of the announcement made by Finance Minister Arun Jaitley.
PPF is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal.
The interest rate on deposit in PPF for 2014-15 fiscal is 8.7 per cent.
Jaitley had increased the PPF investment limit in line with the hike in cumulative tax exemption limit under 80C Income Tax Act from Rs 1 lakh to Rs 1.5 lakh.
He raised the investment limits in tax saving schemes with an aim of encouraging household savings.
Among other things, the government had also proposed to introduced re-introduced Kisan Vikas Patra. He has also proposed higher exemption limit for re-payment of interest on loans of self-occupied houses from Rs 1.5 lakh to Rs 2 lakh.
"To address the concerns of decline in savings rate and improving returns for small savers, I propose to revitalise small savings," Jaitley had said in the Budget speech.
As regards the Public Provident Fund, an individual can invest up to Rs 1.5 lakh, as against Rs 1 lakh presently. PPF is a 15-year investment scheme, which attracts tax exemption.
Government has also proposed to launch National Savings Certificate (NSC) with insurance cover to provide additional benefits for the small saver.
RBI Deputy Governor R Gandhi asks bankers to be innovative on home loans
Reserve Bank Deputy Governor R Gandhi today asked lenders to be more financially innovative in designing home loan products and suggested creation of a periodic deposit-linked facility.
"There is a need with respect to financial innovation, with respect to loan products. One such product would be savings-induced home loans or a home loan deposit," Gandhi told a gathering of realty players here.
Gandhi, who handles banking operations and development at the central bank, said such a product will help lenders understand their customers in a better way on parameters like repayment capacity and also make the margin money available for the property purchase.
"The willing customers may be induced to generate a savings balance by way of monthly or periodic deposits," he said, adding that home loan can be sanctioned after the deposits reach a certain threshold.
The amount deposited by the customer can act as the margin money for the down payment or as a collateral, he said, adding, if implemented, the lender will get an exact idea about the repayment capacity of the future borrower based on the deposits made during the period.
It can be noted that first innovative home loan product was the teaser-loans launched by the nation's largest lender SBI in 2009-10. Despite initial criticism, it was lapped up by the mortgage leader HDFC and then almost everyone else.
Launched during the days of high liquidity and at a time when the realty sector was rocking, the central bank under the then Governor Duvvuri Subbarao frowned upon the product. Citing possible asset bubbles and higher default rates as the loan tenor matures, the central bank forced lenders to discontinue the product
.
In his speech, Gandhi lambasted real estate developers for flaying the bankers and the cautious stance of the RBI for their liquidity issues.
"Due to the ability of the sector to wreck havoc in the financial world, of which there are some precedents, the RBI will continue to be cautious," he said, adding, "we do not have a negative mindset towards the sector, but rather we are sensitive."
"The RBI does not want rapid flow of credit towards the sector which may result in asset price bubbles," Gandhi added.
On the repeated calls for allowing money from the pension funds and insurance into the sector, Gandhi said people need to be sensitive to the fact that the restrictions are due to some purpose, adding there
Cheque bouncing: SC settles law on where to file a complaint-Business Standard 21.08.2014
Bounced cheque must only be filed at the place where the bank dishonoured it
The Supreme Court (SC) ruled on Friday that a complaint about a bounced cheque must only be filed at the place where the bank dishonoured it, settling doubts raised by its own earlier conflicting judgments on the jurisdiction of a magistrate.
Some judgments had specified the place where the cheque was issued, others from where the notice of dishonour was sent and still others the place of receipt. Owing to this confusion in law, the matter was referred to a larger bench of the SC.
A three-judge bench headed by T S Thakur unanimously laid down that the place of dishonour is the right place to file a complaint. However, to avoid inconvenience to persons already prosecuting such cases, the new rule is to come into force only with respect to cases in the future. Those in which trials have begun will remain in the same courts.
The judgment was delivered on a large number of appeals, including those moved by Videocon Industries and Kitchen Appliances Ltd, which raised the question of jurisdiction of the magistrate who can try cases under Section 138 of the Negotiable Instruments Act. According to this provision, it is an offence to issue cheques without a sufficient balance in the account, if the payment is made to discharge a debt or liability. If the amount is not paid within two weeks, the payee can file a criminal complaint.
This is the second major ruling in recent months dealing with this Act. There are a little more than four million cheque-bounce cases at courts. In April, another bench issued a series of guidelines, including issuance of summons through e-mails and completion of evidence within three months.
Some judgments had specified the place where the cheque was issued, others from where the notice of dishonour was sent and still others the place of receipt. Owing to this confusion in law, the matter was referred to a larger bench of the SC.
A three-judge bench headed by T S Thakur unanimously laid down that the place of dishonour is the right place to file a complaint. However, to avoid inconvenience to persons already prosecuting such cases, the new rule is to come into force only with respect to cases in the future. Those in which trials have begun will remain in the same courts.
The judgment was delivered on a large number of appeals, including those moved by Videocon Industries and Kitchen Appliances Ltd, which raised the question of jurisdiction of the magistrate who can try cases under Section 138 of the Negotiable Instruments Act. According to this provision, it is an offence to issue cheques without a sufficient balance in the account, if the payment is made to discharge a debt or liability. If the amount is not paid within two weeks, the payee can file a criminal complaint.
This is the second major ruling in recent months dealing with this Act. There are a little more than four million cheque-bounce cases at courts. In April, another bench issued a series of guidelines, including issuance of summons through e-mails and completion of evidence within three months.
Bank directed to pay Rs 25 K to consumer in cheque bounce case-Business Standard
A bank has been directed by a consumer forum here to pay a compensation of Rs 25,000 to a person for debiting Rs 85 from his account as cheque bounce charge without giving reasons as to why it was dishonoured.
New Delhi District Consumer Disputes Redressal Forum, presided by C K Chaturvedi, asked Vijaya Bank to pay the amount to Delhi resident Kamal Krishan Sharma, saying that banks are supposed to "mould themselves in consumer friendly mode", rather than acting as office without any sensitivity.
The forum, also comprising members S R Chaudhary and Ritu Garodia, passed the order noting that the cheque bouncing charge was debited without explaining to Sharma why it was levied when a cheque of Rs 1.5 lakh, to be deposited in his account, was awaiting clearance.
"In such circumstances, the Opposite Party (bank) should inform the complainant the reason for non-payment, rather than returning the cheque by post with reasons of insufficient funds," the forum said.
It noted that the bank had dishonoured the cheque citing insufficient funds in Sharma's account and that Rs 1.5 lakh cheque was under clearing and Rs 50,000 cheque came for clearing when there was no clear balance available in account.
Further, the bank said that cheque of Rs 50,000 was cleared only when balance of Rs 1.5 lakh was credited in his account, it noted.
Theonly dispute left was for Rs 85 cheque bouncing charge which was debited from Sharma's account, it said.
"The banks are supposed to mould themselves in consumer friendly mode, rather than acting as office without any sensitivity," the forum added.
It said that bank was under obligation to inform Sharma by telephone and depending on his need, to offer alternative of overdraft or temporary payment to avoid embarrassment to him.
"...Opposite Party (OP) should compensate complainant for agony and loss of Rs 85. We direct OP to re-credit Rs 85.... We also award a compensation of Rs 25,000... To sensitise OP bank in its dealing with consumers for such imperfect behaviour," the forum said.
Sharma had told the forum that he had deposited a cheque of Rs 50,000 on April 28, 2011 for withdrawal but it was dishonoured by the bank and Rs 85 was debited from his account as cheque bouncing charge despite having sufficient amount.
The bank, however, had submitted that there were two types of balance available. First was ledger balance when cheque was sent for clearing and other was when cheque returned duly honoured by clearing branch, it said
It added that Sharma was considering the statement of ledger balance as a clear balance available in his account but in reality there was insufficient fund in his account
New Delhi District Consumer Disputes Redressal Forum, presided by C K Chaturvedi, asked Vijaya Bank to pay the amount to Delhi resident Kamal Krishan Sharma, saying that banks are supposed to "mould themselves in consumer friendly mode", rather than acting as office without any sensitivity.
The forum, also comprising members S R Chaudhary and Ritu Garodia, passed the order noting that the cheque bouncing charge was debited without explaining to Sharma why it was levied when a cheque of Rs 1.5 lakh, to be deposited in his account, was awaiting clearance.
"In such circumstances, the Opposite Party (bank) should inform the complainant the reason for non-payment, rather than returning the cheque by post with reasons of insufficient funds," the forum said.
It noted that the bank had dishonoured the cheque citing insufficient funds in Sharma's account and that Rs 1.5 lakh cheque was under clearing and Rs 50,000 cheque came for clearing when there was no clear balance available in account.
Further, the bank said that cheque of Rs 50,000 was cleared only when balance of Rs 1.5 lakh was credited in his account, it noted.
Theonly dispute left was for Rs 85 cheque bouncing charge which was debited from Sharma's account, it said.
"The banks are supposed to mould themselves in consumer friendly mode, rather than acting as office without any sensitivity," the forum added.
It said that bank was under obligation to inform Sharma by telephone and depending on his need, to offer alternative of overdraft or temporary payment to avoid embarrassment to him.
"...Opposite Party (OP) should compensate complainant for agony and loss of Rs 85. We direct OP to re-credit Rs 85.... We also award a compensation of Rs 25,000... To sensitise OP bank in its dealing with consumers for such imperfect behaviour," the forum said.
Sharma had told the forum that he had deposited a cheque of Rs 50,000 on April 28, 2011 for withdrawal but it was dishonoured by the bank and Rs 85 was debited from his account as cheque bouncing charge despite having sufficient amount.
The bank, however, had submitted that there were two types of balance available. First was ledger balance when cheque was sent for clearing and other was when cheque returned duly honoured by clearing branch, it said
It added that Sharma was considering the statement of ledger balance as a clear balance available in his account but in reality there was insufficient fund in his account
Finance Ministry orders forensic audit on Dena Bank, OBC-The Hindu
‘Not systemic’
The two allegedly misappropriated funds from fixed deposits to the tune of Rs. 436 crore.
A forensic audit has been ordered by the Finance Ministry on Dena Bank and Oriental Bank of Commerce (OBC) following reports of misappropriation of funds to the tune of Rs.436 crore from fixed deposits received from customers.
“A forensic audit has already been ordered and some suspensions have already been initiated in this regard,” G. S. Sandhu, Secretary, Financial Services, Ministry of Finance, told presspersons on the sidelines of a Real Estate and Banking conclave organised by NAREDCO here on Wednesday.
Investigation into the matter was on and further action would be taken on the basis of the findings of the investigation, he added.
However, Mr. Sandhu said this was an aberration at an individual level and was “not systemic. These instances have happened at the branch level due to lack of due diligence and non-adherence to norms or procedures.”
Media reports had alleged that the officials at the banks had misappropriated the funds received as fixed deposits. The amount in question at OBC was Rs.180 crore and at Dena Bank Rs.256 crore.
The country’s banking system has been under pressure following the recent arrest of Syndicate Bank’s chairman and managing director on charges of corruption. He is alleged to have received a bribe to extend the credit limit of Bhushan Steel and Prakash Industries. The bank’s CMD as well as the promoters of both the companies have been arrested.
In the light of these developments, Mr. Sandhu emphasised the issue of risk management, saying that in public sector banks, deputy general manager and general manager rank officers would have to undergo risk management training to be considered for promotions. According to him, the other steps to be taken are longer tenures for bank heads and a better quality of nominee and independent directors on bank boards.
Speaking on the occasion, S. S. Mundhra, the newly appointed Deputy Governor of Reserve Bank of India (RBI), said “these are instances of individual failures. However, there is a process and we will certainly look into it. The regulations that we have are robust but such things happen if the regulations are not followed.”
FinMin looking at two models for vesting Govt stake in public sector banks -Hindu Bus Line
The Finance Ministry is examining two bank investment holding company models for parking the Government’s shareholding in public sector banks, said GS Sandhu, Financial Services Secretary.
FinMin looking at two models for vesting Govt stake in public sector banks -Hindu Bus Line
The Finance Ministry is examining two bank investment holding company models for parking the Government’s shareholding in public sector banks, said GS Sandhu, Financial Services Secretary.
“One view is that for all the banks we should have a single holding company. The second view is that we should have a holding company first at the bank level, particularly for banks, such as State Bank of India and Punjab National Bank, which have a large number of subsidiaries,” he said.
So, each of these banks (large banks) will have one holding company and above all these holding companies there would be an apex holding company, Sandhu explained on the sidelines of Indian Banks’ Association’s 67th annual general meeting.
A view needs to be taken about capital requirements — whether capital has to be provided at each level, he added.
“These are some of the issues which are being addressed. So, only after that we will decide on the holding company structure for public sector banks,” he said.
Sandhu observed that there has not been much progress so far on the bank investment holding company model for vesting the Government’s shareholding in public sector banks (PSBs).
“We are at the moment working on raising more capital directly for the banks. Holding company structure is being discussed with the RBI.
“There are some issues which we have to get over. Once those issues are clear, only then we will decide whether we want to have a holding company and how many holding companies. There are two views,” he said.
To provide a level playing field for public sector banks vis-à-vis their private sector counterparts, the RBI’s PJ Nayak Committee on ‘Review of governance of boards of banks in India’ had proposed the transfer of Government holding in PSBs to a Bank Investment Company (BIC).
Wilful defaulters
Wherever borrowers are not repaying loans deliberately, change of management can be done by legal force. That is the provision that the Government is going to incorporate in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, said Sandhu.
Wherever borrowers are not repaying loans deliberately, change of management can be done by legal force. That is the provision that the Government is going to incorporate in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, said Sandhu.
Protection for bankers
On whether the CBI investigations on banks are denting the morale of bankers, he said, “We are advising the banks that any bona fide action which they take will be protected. They should look at the quality aspect (of loan proposals) and the security aspect.
On whether the CBI investigations on banks are denting the morale of bankers, he said, “We are advising the banks that any bona fide action which they take will be protected. They should look at the quality aspect (of loan proposals) and the security aspect.
“We are going to reiterate this soon. Safety and security of their money is important. So, they have to do due diligence and see to it that the money (they lend) comes back to them.”
Pointing out that risk is inherent in banking, Sandhu said a bona fide decision can go wrong. So, for that the banker cannot be penalised. He has to be protected, else no one will take decisions, he pointed out.
PSB chief appointments
On top-level appointments in PSBs, the Secretary said the Finance Ministry is looking at bringing more transparency into the appointments.
On top-level appointments in PSBs, the Secretary said the Finance Ministry is looking at bringing more transparency into the appointments.
“What we are proposing is the PSB chief should be appointed for a total of five years. Initially, for three years and based on assessment for a further period of two years,” he said.
In such a scenario, it would not be necessary for a PSB chief to retire at 60.
