Bank Union Writes To Finance Minister Against Privatisation of PSU Banks

Criticising the demand for privatising state-run banks in the wake of the Rs.12,600 crore Punjab National Bank (PNB) fraud, a bank employees' body has written to Union Finance Minister Arun Jaitley that such a move would be "counterproductive".

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SBI chief hits back at critics seeking PSB privatisation

State Bank of India chairman Rajnish Kumar said those living in glass houses shouldn’t throw stones at others and that the private sector’s claims of higher corporate governance standards sound hollow in light of their high rates of debt default and bankruptcy cases. 

Kumar, the chairman of the country’s largest bank by assets, hit back at critics of staterun enterprises and their calls for privatising state-run banks in an interview to ET on Monday. 

He said almost all bad loans and poor governance standards cases are from private sector enterprises while state-run firms have high governance standards. 

“If the private sector is all about good corporate governance then tell me which public sector company is in NCLT (National Company Law Tribunal) today? 

They are all private sector companies,” Kumar said. “They all default and sit in the front rows of the industry associations. That is the reality today. So when somebody is preaching, preach… for sure, but also look at the reality. 

Why are these defaulters sitting in the front row and bankers are sitting in the back row?’’ 

A debate is raging about whether the government should privatise state-run banks after Punjab National Bank recently disclosed the biggest fraud in the nation’s history. It was reported that about Rs 11,300 crore had been swindled from the bank by companies of Nirav Modi and Mehul Choksi in collusion with a few bank employees. 

Billionaire Uday Kotak, executive vice-chairman of Kotak Mahindra Bank, has said that there is no need for so many state-run banks. At the Global Business Summit last week, experts suggested that it may be time to relook at lowering of government ownership. 

But SBI’s Kumar said that there is a certain role that state-run entities play for the betterment of society which the private sector would not be willing to do. “There is a huge socio-economic agenda which only public sector banks cater to,’’ said Kumar. 

“Does anyone speak about who will run branches in the troubled and remote parts of the country where you have to walk for 12 hours to reach the branch?’’ On the PNBBSE 3.05 % scam, Kumar said he is hopeful that the systemic credibility would be maintained with fulfilling of all commitments. 

“I am very confident that PNB will not do anything that will erode the faith in the Indian banking system,’’ said Kumar. 

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Deadline of 15 days to public sector banks for identifying risks

Financial Services Secretary Rajiv Kumar said today that public sector banks (PSBs) have been given a 15-day deadline to take “pre-emptive” action for identifying gaps and to gear up for rising operational and technical risks, as the scam in the PNB widened to Rs 12,700 crore.

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PNB scam effect: Canara Bank moves CBI with Rs 515 cr fraud

Another bank fraud has broken with Canara Bank moving the Central Bureau of Investigation (CBI) with a complaint of fraudulent transactions worth Rs 515.15 crores against Kolkata-based R P Infosystem and its directors.

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Another PNB scam: After Nirav Modi, Rs 6.2 mn Mudra loan fraud reported

The Central Bureau of Investigation (CBI) has registered a fresh case related to fraudulent loans issued under Prime Minister Narendra Modi's flagship Micro Units Development and Refinance Agency (Mudra) scheme. The fraud was reported in Punjab National Bank, which is in the midst of another scam worth Rs 114 billion.

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Jaitley rules out privatisation of public sector banks

                       

Finance Minister Arun Jaitley today ruled out privatisation of public sector banks as a response to the Rs 11,400-crore fraud hitting Punjab National Bank, saying the move may not be politically acceptable. Speaking at an event, he said a lot of people have started talking of privatisation in the aftermath of the PNB fraud.

“This (privatisation) involves a large political consensus. Also, that involves an amendment to the law (Banking Regulation Act). My impression is that Indian political opinion may not find favour with this idea itself. It’s a very challenging decision,” he said.

On Friday, FICCI president Rashesh Shah said that he met the finance minister and asked him to begin the process of bank privatisation in a phased manner, leaving just 2-3 lenders in the public sector. The call for privatisation gathered currency after diamond jeweller Nirav Modi allegedly colluded with some officials of PNB to fraudulently obtain guarantees so as to avail of loans from Indian banks overseas.

Industry body Assocham has also urged the government to reduce its stake in public sector banks to less than 50 per cent so that they can work with the sense of accountability and with the interest of stakeholders and depositors on priority.

Some industrialists too have supported bank privatisation. Adi Godrej of Godrej Group said the move would be good for the country as there are ‘less or no’ frauds at private banks. Bajaj Group head Rahul Bajaj too pitched for bank privatisation.

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Bank of Maharashtra knocks CBI's door in loan default case

Adding to the bandwagon of loan defaulters, the Bank of Maharashtra has filed an FIR with the Central Board of Investigation (CBI) against Delhi-based businessman Amit Singla and others over an alleged loan default.

The accused are M/s Ashirwad Chain Co-Proprietor Amit Singla, his father Roshan Lal and mother Sumitra Devi, M/s Tech Mach international(p) Ltd, and other person(s), company(s) or firm(s) who may have conspired with the accused persons, the bank said.

M/s Ashirwad Chain Company, the bank said, was sanctioned CC of Rs 3.5 million (Rs 350 lakhs) on October 27, 2010 that was enhanced to Rs 5.5 million (Rs 550 lakhs) on September 09, 2011, and further to Rs 9.5 million (Rs 950 lakhs) on August 22, 2012.

As per the FIR, the bank alleged that the accused persons in a criminal conspiracy, deceived it and dishonestly induced the bank for getting the loan on the false representation by forging documents and criminally misappropriated and used the said loan amount.

The bank also alleged that during the time of enhancing the credit facilities, overvalued valuations were deliberately given in connivance with the borrowers and guarantors by the valuer, M/s.

Tech Mach International, in order to cause the undue advantage to the borrower and guarantors, and fraudulently induce the bank to finance the borrower on the basis of the valuations given.

Singla had put three properties as collateral which were valued at over Rs 180 million (Rs 18 crore) by Tech Mach International at the time of taking the loan, but the actual market value of the properties were found to be only Rs 25 million (Rs 2.5 crore) after the loan turned into an NPA.

To this, the bank said the accused persons had submitted the inflated stock audit report and inflated balance sheet to avail the loan, adding that they diverted funds of the bank against the terms and conditions of the sanction, thus causing "wrongful loss to the bank and wrongful gain to themselves."

An investigation into the matter was conducted by S K Saha, the assistant general manager of the bank, whereby a wide gap was found in the valuation of the properties collaterally secured with the bank at the time of sanction and enhancement with its present market value.

Furthermore, it was found that the number of transactions had taken place through RTGS among associate/sister concerns, controlled by its proprietor or his family members just to inflate sales figures and siphoning bank funds.

The complainant had in a letter dated December 24, 2014, informed all the accused that the CC Account of the classification of the CC account as a non-performing asset (NPA) in accordance with the guidelines of the Reserve Bank of India (RBI).

However, Singla, the bank alleged, failed to maintain financial discipline and defaulted in properly maintaining the said CC account in addition to various other breaches and violations of the sanction of the said CC facility. Consequently, a huge outstanding became due and payable to the bank, it said.

The bank also assured that original papers relating to property mortgaged and other correspondences exchanged by the it with the borrower, the above named accused and other banks were in its possession, and would be handed over to the investigating officer as and when required/directed.

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Oriental Bank of Commerce(OBC) loan fraud: Delhi diamond exporter booked for Rs389cr scam

After Nirav Modi and Mehul Choksi, the Central Bureau of Investigation (CBI) has registered a case against a Delhi-based diamond jewellery exporter for an alleged bank loan fraud to the tune of Rs389.85 crore towards Oriental Bank of Commerce.

The CBI has booked Dwarka Das Seth International Pvt Ltd for the alleged fraud.

Six months after the public sector bank filed a complaint with the CBI, the agency booked the company, and Sabhya Seth, Reeta Seth, Krishna Kumar Singh, Ravi Singh — all directors of the firm — and another company named Dwarka Das Seth SEZ Incorporation.

The company has availed various credit facilities from OBC between 2007-12, which swelled to Rs389 crore during the period.

It was found by the bank that the company was using letters of credit (LoCs) to pay off other creditors against the purchase of gold and other precious stone and transfer gold and funds outside the country using fictitious transactions, the bank complaint, now part of the CBI FIR, alleged.

The company was also engaging in business transactions with non existent entities, it said.

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