Wednesday, September 26, 2012

RBI First Allows Open Loot in Banks AND Then Talk of Restructuring AND Merger

Politicians of our country have been consistently using cooperative banks and public sector banks to empower their political workers, their kith and kin, their friends and relatives and to strengthen their vote bank.

Unfortunately RBI officials and Inspecting officials like Chartered Accountants of the country are certifying all loots by taking their share in bribe led lending or unhealthy lending done by officials of various banks to earn illegal wealth.

RBI and Ministry of Finance are taking their share from Heads of PS banks and allowing the irregular practices, bad lending, concealment of bad assets etc so that their misdeeds are not exposed before their retirement and they are not punished. Even vigilance officers and CBI officials get their share in bribe money to close the files of corrupt officials.

Only corrupt officers are selected in promotion processes by team of Interview panels to protect team of corrupt officials. Good and honest officers who may be probable whistle blowers are rejected in promotion processes year after year and posted at critical remote places. This is why and this is how all corrupt officers are exonerated by team of inspecting officials and vigilance officers .Corrupt Heads support corrupt Subordinates.

Harshad Mehta the great cheater in share market got success in motivating CMD, GMs and DGM of the various banks by extending them costly gifts and cash and it was he who could cause loss to various banks in hundreds of crores of rupees. Government of India could not learn lesson from this event. They could not assess and visualize the level and dimension of corruption prevailing in the banks when top ranked officers are indulged in earning money through illegal ways.

Madhu Koda and Mr. A Raja could get success in causing thousands and lacs of crores of rupees to the government only because top ranked bankers and top ranked administrative officers in government departments supported them. Other junior clerks do not have guts in the present system to raise voice against corrupt officers or become whistle blower in fear of repercussions. Malicious role of bank officials cannot be denied in Ketan Parikh scam, UTI scam or even in 2G or CWG scam.
But none of regulating agencies is interested to take against the erring top officials and modify the system.Lacs of cases are therefore pending in various Lower courts, district courts, High courts ,various tribunals and Supreme court.

Indian bank, Global Trust Bank , many private banks ,many regional rural banks and at least one hundred cooperative banks were caught in unhealthy lending  leading to huge capital loss and even merger of such bank or closure of such banks.RBI and Ministry of Finance could not understand how  much deep rooted is the disease of cancerous corruption in the bank. When top ranked officers are corrupt they cannot allow honest officers to hold creamy posts.

In the recent past Central Bureau of Investigation caught eight top ranked officers including CEO of financial Institutes involved in bribe led lending, but RBI officials could not visualize that when top of any financial institute are so much corrupt, there must be a team of corrupt officers down the level who blindly supported CMD or ED or GM of that bank.

Survival of fittest is no more hold good in modern era. Now survival is possible only for those who know the art of flattery and art of bribery.

Historic LIC housing Finance scam did not open the eyes of regulator of financial institutes only because top ranked officers and minister get money in selection of ED and CMD of PSU banks and in turn CMD of financial institutes get money for giving promotion to officers working under him. In such dirty and corrupt atmosphere  officers at lower level have to earn money through illegal sources either in lending or in contractual works and share the same with his bosses to get quick promotion and choice posting superseding many seniors.

It is open secret that these corrupt top ranked officers do not leave any clue of corrupt dealings and they do not allow bribe lending leaving behind an documentary evidence. These corrupt officers do not declare such bad advances as Non Performing Assets as long as adequate safety measures are taken to safeguard the actual lender. They are able to manage even vigilance officers and CBI officers to get rid of them.

These clever top officers resort to telephonic pressure on field functionaries and in case of exposure of their evil work they trap other junior officers and sacrifice them on the altar of honesty and discipline.

All this is possible only when top ranked officers get huge discretionary powers to select officers, promote officers and transfer reluctant honest officers as per his whims and fancies.

This is possible only because courts are unable to deliver judgments even in two or three decades.

The reign of injustice and climate of corruption grows and grows only because judiciary is beyond the reach of common men, only because justice is too much costly and only because there is shortage of good advocates and honest judges who are devoted and sincere in their job .There are plenty of lawyers who  allows the case to die a natural death in a decade or two until the main culprit top officers is retire from his service safely.

This is why thousands of cases filed against corrupt bank officials are languishing in the offices of CVC, vigilance offices, CBI, Ministry of Finance or Banking Division without any punitive action against erring officials.

This is not astonishing to anyone in the country that one lac crores of bank finance is unrecoverable and treated as bad assets by banks and more than three lacs crores of bank’s lending is though bad but not declared to save the image of the bank, to keep the share value up and to boost up the morale of credit officers but in fact bad assets are not declared as Non Performing Assets mostly to save the corrupt officers. Even courts are unable to recover the money from willful defaulters. So many fast track court also failed to achieve the goal of recovery because corruption is rampant in all offices.

People of India have written to all offices including that of you. But none of officers or ministers is so much concerned about rampant corruption. Politicians preach sermons to others make policy for execution and promise to stop corruption but always fail. They themselves are either corrupt or occupied top post through corrupt ways and hence they think it wise to remain as silent spectator.

This is why people of India need to support movement launched by Anna Hazare and his team against corruption.

MONDAY, JUNE 11, 2012

Cooperative Bank, Regional Rural Banks and Commercial Bank under Scanner

Gujarat's urban co-op banks fight Madhavpura's ghosts
A decade after the Madhavpura scam, Gujarat?s urban cooperative banks are fighting to win back customer confidence and live another day
Rutam Vora & Abhijit Madhav Lele / Ahmedabad/ Mumbai July 4, 2012, 0:39 IST

On June 1, the Reserve Bank of India (RBI) cancelled the banking licence of Madhavpura Mercantile Cooperative Bank (MMCB), bringing the curtains down on the most controversial bank in the history of urban cooperative banks (UCBs). Though it’s been more than a decade since it was taken for a joyride by former big bull Ketan Parekh, many UCBs in Gujarat are still struggling to regain the lost trust and confidence of depositors.

But Amul is an exception. Owned by the Gujarat Co-operative Milk Marketing Federation, it has grown leaps and bounds to become India’s largest brand of milk and milk products. Its turnover rose to Rs 11,688 crore in 2011-12, from 2,745.74 crore in 2002-03.

Click Following link to know more about fate of banks

State to bail out six cooperative banks in 

the red

Sandeep Ashar, TNN Sep 23, 2012, 01.01AM IST Collected from times of India

MUMBAI: The state has decided to bail out six ailing district cooperative banks (DCBs) controlled by influential politicians.

On Saturday, Union minister Sharad Pawar met chief minister Prithviraj Chavan and cooperation minister Harshvardhan Patil to discuss the issue. The DCBs in question are Jalna, Osmanabad, Wardha, Nagpur, Dhule-Nandurbar and Buldhana. Earlier this year, the RBI banned these banks from accepting fresh deposits due to their high negative net worth. It had stipulated September 30 as the deadline for the banks to improve their minimum capital adequacy ratio (CAR) and net worth. The six banks, which collectively require Rs 551 crore to improve their financial standing, had approached the government for a bail-out.
Patil said a revival of three out of the six banks, namely Jalna, Osmanabad and Wardha, will be taken up first. The state will provide interim financial assistance of Rs 115 crore to them. The three ministers will meet Union finance minister P Chidambaram on Monday to push for a release of the amount due to the DCBs out of the Rs 935 crore due to the state, under the Vaidyanathan package. But with no provision made in the Union budget, Patil said that they will request Chidambaram to raise supplementary demands.
"The interim financial assistance granted by the state will be recovered within two years," Patil said. The state will also request for an extension of the RBI deadline by another year for the other three banks .
The RBI has put scores of cooperative banks in the country under scrutiny as the lenders failed to meet the basic norms on capital and net worth. The apex bank has stopped the lenders from getting deposits from the public.
The RBI move is intended to change the way the hapless banks are working. The banks are expected to bring about a discernible improvement in their situation. Otherwise, they would be in trouble.
Officials of the RBI and Nabard would be responsible for keeping an eye on how these banks are working to overcome their difficulties.
According to Nabard Chairman, there were altogether 50 cooperative banks that were threatened with closure.  Of them, 8 cooperative banks could meet the norms while 42 banks could not meet the norms and have therefore been put under watch.
According to an estimate, the country has 30 state and 370 district central cooperative banks. The total deposits of these banks counted 2.31 trillion and their total assets were worth 3.39 trillion in 2010.
As per recommendations made by a panel, the cooperative banks should not have excessive non-performing assets nor should they indulge in any financial irregularities. The banks are supposed to have at least a net worth of 1 lakh.
The RBI is of the opinion that these banks are badly managed and are seriously compromised by graft and corruption spreading through them.

Co-op bank chief, builder held in 35 cr fraud case

Vijay V Singh, TNN Aug 11, 2011, 05.11am IST
MUMBAI: The anti-corruption bureau (ACB) arrested the chairman and the directors of Bhandari Cooperative Bank along with a developer in a Rs 35 crore fraud case on Tuesday.
The ACB had registered separate complaints of cheating, forgery, corruption and misappropriation of funds against the executives of the bank, the developers and a few agents. The bank's executives had helped the developer to secure a loan of Rs 20 crore, using forged documents, and they had also fraudulently sanctioned a vehicle loan of Rs 15 crore.
The executives, Umesh Chamankar, Rajendra Shethy, Santosh B and developer Sudhakar Mahatre were produced before the court on Tuesday and remanded in custodial interrogation. The fraud was committed between 2005 to 2009 and the ACB received a complaint regarding the fraud in 2011, an officer said. ACB officers registered the FIR in June. The Reserve Bank of India (RBI) had warned the bank over the irregularities. The RBI wrote to the bank's officials that they were sanctioning the loan without verification of documents. An ACB officer said, "The chairman and directors were involved in the crime so they did not take any action."
Mahatre submitted forged papers along with his proposed construction project in Mumbai and Thane and secured the loan. An ACB officer said, "Mahatre was not constructing any building."
In the second case, the bank's executives, with the help of agents, procured forged documents to disburse vehicle loans. An ACB officer said a probe was on into the role of other bank officials in the case.
During the investigation, ACB officers learnt that some other cooperative banks were also adopting similar modus-operandi to disburse loans, a senior ACB officer said.

Fake bank loan scam worth Rs 500 cr unearthed

Mumbai District Central Cooperative Bank disbursed loans on assurances of credit societies without verifying individual clients
A major scam believed to involve over Rs 500 crore in fake loans disbursed by Mumbai District Central Cooperative Bank has come to light, with hundreds of people to whom the loans were allegedly given having no knowledge of the transactions.

It was only when the bank sent them notices to pay up that they realised the names and addresses of the people were misused by cooperative credit societies to avail of loans.

The victims of the fake loans have approached Economic Offences Wing. The bank, however, claims they too are victims, as they have been duped by credit societies whom they finance.

The scam was unearthed when several residents of Kurla, Ghatkopar and Andheri began receiving notices from the bank to pay outstanding loans. “I was shocked as I never dealt with the bank. I went to a branch and found that a bogus ration card was submitted in my name to obtain a loan. Later I found several loans ranging from Rs 15,000 to Rs 75,000 were taken in my name,” said Shreeram Sapat of Ghatkopar.

Similarly, when the bank asked businessman Avinash Joshi to repay Rs 75,000, he found that forged documents were used to transfer Rs 3.75 lakh to a loan account in his name. “I’ve been running from pillar to post to sort out the problem,” he said.

Investigations show that over 500 people are victims of the scam. While ongoing inquiries by the bank have revealed that fake loans worth Rs 60 crore have been disbursed, sources say the sum is well over Rs 500 crore.

Officials at Mumbai District Central Cooperative Bank admit that loans were disbursed with fake documents, but blame credit societies. “We refinanced credit societies who came to us with names and documents of people seeking loans. As the number of loan seekers was high, we never checked documents or verified addresses. We went by assurances of societies. Only when some societies stopped repaying us did we get in touch with individual borrowers and learnt they never took loans,” said D S Kadam, general manager of the bank.

Kadam said they identified 29 societies which issued such loans but denied bank officials were involved saying, “An internal inquiry showed some officials were negligent and action has been initiated against them.”

When Mumbai Mirror contacted Rajvardhan, additional commissioner, EOW, he said, “We received several complaints. We believe KYC (Know Your Customer) norms were not followed by the bank. Such a scam cannot occur without the connivance of bank officials. We will take action shortly.”

RBI to consider financial restructuring proposals of urban co-operative banks

MUMBAI: The Reserve Bank today said it will consider the financial restructuring proposals of urban co-operative banks for conversion of deposits into equityeven if the networth of the bank does not become positive.

The RBI considers financial restructuring proposals as an additional option for resolution of banks problem.

"...the Reserve Bank would...consider financial restructuring proposals submitted by UCBs, involving conversion of deposits into equity/IPDI, even if the networth of the bank does not become positive after such conversion of deposits, provided the depositors agree voluntarily for such conversion," RBI said in a notification.

Earlier, it was required that the proportion of deposits converted into equity/IPDI should be such that the net worth of the bank after reconstruction turns positive.

UCBs are required to conform to few norms for financial restructuring, including full protection of the interest of small depositors, conversion of deposits into equity or Innovative Perpetual Debt Instruments (IPDI) on depositors consent and non-redemption of shares until the bank achieves Risk-weighted Assets Ratio (CRAR) of 9 per cent, the notification said.

Also, post-restructuring, the management of the bank comes in the hands of a board of administrators consisting representatives of individual depositors and professional bankers to ensure proper implementation of reconstruction scheme including recovery of non-performing assets (NPAs).

Moreover, such banks have to maintain CRR/SLR on the restructured liabilities.

NCP, Cong competing in corruption in Maha, alleges BJP
Press Trust of India / Surajkund (Haryana) September 26, 2012, 19:35

BJP today said the present crisis in the Congress-NCP government in Maharashtra has not come as a surprise as the allies were "into corruption with a competitive spirit".

"The drama in Maharashtra is not new. This had to happen. Both Congress and NCP are thoroughly looting the state.... They are into corruption with a competitive spirit and are vying with each othere. Jointly they are looting the state," BJP spokesperson Prakash Javadekar told reporters here today.

The BJP leader claimed that the events in Maharashtra are "a trailer of things to come in Indian politics. Every ally will now put pressure on the government."

Large cash market main driver of corruption: RBI

H. R. Khan

Stating that the circulation of a large amount of cash in the economy leads to many problems, including corruption, Reserve Bank Deputy Governor H R Khan on Thursday said the central bank is focused on bringing down the cash component in the economy.

“There is a need for the predominant cash in the society to go down,” Mr Khan told reporters at the sidelines of a Punjab & Maharashtra Cooperative (PMC) Bank event here.

He said if the cash component in the society goes down, it will help solve a lot of problems like rampant corruption, monetary policy transmission issues and cash management for banks at the operational level.

At present, the amount of cash circulating in the system is up to 14 percent of the GDP, which makes the country one of the highest markets that has cash circulation, he said, stressing on the need to bring down the ratio.
Only Japan has such high levels of cash, he said, without giving a target on the ratio.

Mr Khan said implementation of information and communication technology (ICT) solutions like mobile and online banking, core banking and electronic fund transfers can help bring down the reliance on cash.
Both the government and the RBI are taking efforts to bring down usage of cash, Mr Khan said, citing the case of compulsory use of electronic fund transfers for all transactions above Rs 25,000 adopted by the government.
When asked about the impact of a possible third round of quantitative easing as is being mooted by the US Federal Reserve which will increase liquidity globally, Mr Khan declined to comment saying the announcement is yet to be made.

He futher added that the RBI will soon be implementing the suggestions of the Malegam committee on cooperative banks, once “legislative issues” around it get solved.

Among other things, the committee recommended a dual structure approach of having a board of directors appoint a board of management to run the cooperative banks and relaxing the entry norms for cooperatives in the unbanked areas, Mr Khan said.

While speaking at the function to launch the mobile banking service of PMC, Khan exhorted the cooperatives to pull up their socks, noting that the sector has not grown as much as the RBI would have wanted it to grow.
Khan said the share of cooperatives in the overall banking business has gone down to around 4 percent from the earlier 6 percent.

He also appreciated other initiatives like improvement in the asset quality of cooperative banks and mergers of weaker banks with stronger ones.

DNA exclusive: Jaiswal slept over CBI probe requests in coal scam

Published: Wednesday, Sep 26, 2012, 10:30 IST | Updated: Wednesday, Sep 26, 2012, 0:42 IST 
Coal minister Shriprakash Jaiswal, embroiled in the coal block allocation controversy, is likely to face more trouble. He will have to explain why his ministry slept over requests from the CBI since 2010 to inquire a corruption case against CMD of Western Coalfield Ltd (WCL). Jaiswal also sat over the vigilance report in the case for over a year.
The case pertains to the submission of a fake bank guarantee worth Rs2.24 crore by Ms Shri Sai Construction Company for the contract of diversion of the Motta Ghat canal at the Padmapur opencast mine of Chandrapur area, WCL worth Rs14 crore. The tender was passed in 2007.
Documents accessed by DNA show that in March, 2010, the CBI apprised the ministry about the misconduct of WCL officials.
It also wrote to the ministry, seeking permission of the central government to conduct an inquiry on the role of DC Garg, CMD of WCL, and a joints-secretary level official. Three months later, the CBI sent a reminder to the ministry about carrying out an inquiry.
Failing to get a response from the ministry, the CBI wrote to the Central Vigilance Commissioner (CVC) in October 2010. The CBI said even the agency’s director had written to the coal ministry and sought approval for the inquiry.
The letter, accessed by DNA, said: “The director, CBI, has also written a letter to the secretary, coal ministry for seeking approval under section 6A of the Delhi Special Police Establishment Act to register a case of criminal misconduct against DC Garg, but so far no action has been taken. Mr Garg continues to enjoy his posting in the midst of all the allegations.”
Following this, the CVC asked the ministry either to grant permission or explain reasons for not doing so. The ministry finally referred the matter to the Chief Vigilance Officer (CVO) of the WCL in December 2010.
DNA’s email queries to Jaiswal and coal secretary SK Srivastava on Friday about reasons for not allowing the CBI to investigate the case have not been answered.
The WCL CVO submitted his report in January 2011, but no action has been taken to date. A vigilance department source said the matter was under ‘examination’. Interestingly, the report, which is in DNA’s possession, concluded that there was indeed an aspect of criminal case and has recommended a CBI investigation. It also found seven officials, including Garg, involved in criminal conspiracy.
The WCL vigilance has exposed various undue favours made by the WCL management to Shree Sai Construction Company. The vigilance report which has been lying with the coal ministry since January 2011 has listed a number of fraud against the WCL staff. 

One concerns favouritism in the submission of a fake bank guarantee. A source said Shree Sai Construction submitted bank guarantee worth Rs2.24 crore issued by Mahesh Merchant Bank Ltd, Tadoba road branch, Tukum, Chandrapur. The report also mentions that during the course of the investigation, the RBI told the vigilance team that there is no such scheduled, urban co-operative, regional-rural or district central co-operative bank with that name. The report says funds worth Rs79.29 lakh were released to the contractor even after the detection of submission of fake guarantees.
The investigation has exposed other discrepancies too. The tendering for the project saw two bids – from Shree Sai Construction and M/s Metcon India. It later emerged that both were the same groups - Shree Sai Construction participated as a dummy bidder. Both the companies had the same address on their letterheads, a source said. Also, the PWD registration submitted by both the companies was same, the report said.
Interestingly, Garg, whose tenure ended in April 2012, has been given an extension by the ministry. Meanwhile, in another case, the WCL vigilance department registered various cases of coal pilferage from the stock worth Rs24 crore in 2009-10. In this case too, the vigilance department wrote to Coal India Ltd referring to a CBI report and recommended appropriate action.

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