Happy Janmashtami
Wednesday, August 28, 2013
CBI starts inquiry against big loan defaulters
Press Trust of India |
'A bulk of NPA is from top 30 accounts which is learnt to be running into thousands of crores. CBI has already initiated inquiry into some of the big defaulter accounts,' Sinha said
CBI has initiated an inquiry into cases of defaulters of big loans from public sector banks, its chief Ranjit Sinha said today while emphasising that bulk of non-performing assets were connected to 30 defaulter accounts.
'A bulk of NPA is from top 30 accounts which is learnt to be running into thousands of crores. CBI has already initiated inquiry into some of the big defaulter accounts,' Sinha said.
He did not reveal the specifics of the probe as it may derail the ongoing inquiry by the agency.
Speaking at the fifth annual conference of chief vigilance officers of Public Sector Banks and Financial Institutions and Officers of CBI, Sinha cited number of issues which adversely affect agency's efforts to track and recover these assets.
Highlighting issues which hamper CBI investigation into bank frauds, he said banks are often reluctant to declare bad accounts as fraud despite there being clear manifestations. The CBI Chief said the banks need to realise that delay in reporting of frauds adversely affect tracking and recovery of proceeds of crimes as the initiative is lost.
Sinha said the banks are often reluctant to fix accountability of their staff, resulting in difference of opinion between them and the agency regarding the role of public servants.
'In my view there should be no reason for denial of sanction for prosecution wherever malafide acts by delinquent officials caused huge losses to the banks,' he said.
Sinha said bank frauds involving amount above Rs 50 crore has grown almost 10 times in two years.
'Large value frauds involving amount of Rs 50 crore and above have also increased more than 10 folds from three cases in 2009-10 involving an amount of Rs 404.13 crore to 45 cases involving Rs 5334.75 crore in 2013,' he said.
Tuesday, August 27, 2013
Litigation has gone beyond reach of poor man: Supreme Court
PTI : NEW DELHI, AUG 25 2013, 12:23 IST
Fighting legal battle in courts has become so expensive that it has gone beyond the reach of a poor man, the Supreme Court has said while expressing concern over the legal profession getting commercialised.
Virtually holding a mirror to itself, the apex court said that judicial proceeding is so slow that people in the country are convinced that a case would not finish in their lifetime.
"In the present era, the legal profession, once known as a noble profession, has been converted into a commercial undertaking. Litigation has become so expensive that it has gone beyond the reach and means of a poor man.
"For a long time, the people of the nation have been convinced that a case would not culminate during the life time of the litigant and is beyond the ability of astrologer to anticipate his fate," a bench of justices B S Chauhan and S A Bobde said.
Observing that lawyers are equal partners with judges in the administration of justice, the apex court said, "Advocates cannot behave with doubtful scruples or strive to thrive on litigation."
It said wilful disregard for litigants' interest by a lawyer is reprehensible and unbefitting for an advocate.
"Law is no trade, briefs no merchandise. An advocate being an officer of the court has a duty to ensure smooth functioning of the court. He has to revive the person in distress and cannot exploit the helplessness of innocent litigants. A wilful and callous disregard for the interests to the client may in a proper case becharacterised as conduct unbefitting an advocate."
The apex court also frowned upon the "multi-tier operation of one lawyer hauling a client and then acting as a facilitator for some other lawyer to draw proceedings or engage another lawyer for arguing a case is definitely an unchartered and unofficial system which cannot be accepted as in essence, it tantamount to a trap for litigants which is neither ethically nor professionally a sound practice."
"Such conduct is ridiculously low from what is expected of a lawyer," it said.
The court made the observations while pulling up an advocate on record for "lending" his signature, for consideration, to a petition filed in the top court and thereafter not even once appearing in the case.
Advocates on record are those lawyers who alone are eligible to file cases in the apex court.
An advocate on record (AOR) is not a "guest artist" who lends his signature to a petition, the bench said, adding, "Such an attitude tantamount to cruelty in the most crude form towards the innocent litigant. In our humble opinion, conduct of such AOR is certainly unbecoming of an AOR."
Parliamentary panel.to scan PSB bad loans
FE:ARUN S : NEW DELHI, AUG 27 2013, 01:33 IST
The rising bad loans of public sector banks (PSBs) and the deterioration in their asset quality have come under the scanner of a parliamentary panel.
The Parliamentary Consultative Committee on Finance will question the government this week on the increase in non-performing assets (NPAs) of PSBs and the measures taken to contain them, sources told FE.
The finance ministry is looking into the books of PSBs to see if there are any cases of “aggressive or reckless lending” in the past or an unexplained jump in the credit growth that has resulted in a rise in NPAs, sources said.
“We had an isolated incident where there was a huge rise in credit growth, but later it was found that those were all financially sound accounts. However, we are monitoring the lending practices of banks now from the NPA point of view,” a senior finance ministry official told FE.
A member of the Parliamentary committee, on condition of anonymity, said the panel considers the rising NPAs a serious problem that needs to be dealt with urgently. This is even as the Central Bureau of Investigation (CBI) is looking into the top 30 major loan defaulter accounts to see if there are any wrongdoings by officials and borrowers.
Sources said the chief vigilance officers of banks could soon be told to prepare a list of cases where there are suspected malpractice in lending, loan sanctioning and disbursement. The idea is to see if anyone has committed any fraud to obtain loans by forging collateral titles, fudging numbers in balance sheets and financials of companies as well as in asset valuation, they said.
The issue of the measures taken by the government to help banks recover NPAs at the earliest was also raised on Friday in Parliament. Finance minister P Chidambaram in a written reply told Lok Sabha the government had asked PSBs to increase the pace of recovery and manage NPAs.
It was suggested to the PSBs that the write-offs of loans should not be more than the recovered amount, the minister said. He had said the PSBs were told to conduct a special drive for recovery of loss assets in addition to appointing nodal officers for recovery.
PSBs were also told to put in place an early warning system and constitute a Board-level committee to monitor the recovery. The minister also pointed to the RBI’s instructions to banks to put in place a loan recovery policy and a robust mechanism for early detection of signs of distress, including prompt restructuring in case of all viable accounts.
He also said recently enacted Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, which came into force on January 15, had removed certain bottlenecks in the recovery of bad debts.
Gross NPAs of public sector banks had jumped to R1.79 lakh crore at the end of June quarter from R1.55 lakh crore at March 31, 2013.
“The high level of NPAs cost the banks by way of loss of interest income, besides provisioning, recovery and litigation costs,” RBI had said. The RBI annual report had said the gross NPAs of scheduled commercial banks (SCB) had risen from 2.9% in 2011-12 to 3.4% in 2012-13. In fact, the grosss NPAs of all SCBs rose from R50,000 crore in March 2007 to R1.83 lakh crore in March 2013. The net NPAs have also climbed to R88,300 crore in March 2013.
The banking industry in general has suffered due to the slowdown and delay in government clearances to various projects. SCBs also ended up with a lower profit growth of 12.8% in 2012-13 from 14.6% in the previous fiscal due to the higher provisioning.
Saturday, August 17, 2013
Credit crisis begins to cripple Chinese cities
A painful credit crisis is now spreading across Shenmu and cities nearby, as thousands
of businesses have closed, fleets of BMWs and Audis have been repossessed and street
protests have erupted.
New York Times : ET :17 Aug 2013
By Keith Bradsher
As the Chinese economy boomed, few cities soared faster or higher than Shenmu, a community of nearly 500,000 in northwestern China.
Top luxury clothing stores in this city's downtown were recording as much as $500,000 a day in sales. Tables at the best restaurants had to be reserved weeks in advance. The new Fortune Garden Club for the city's business elite made headlines by paying $1 million for a king-size mahogany bed, to be used by members and their companions.
But a painful credit crisis is now spreading across Shenmu and cities nearby, as thousands of businesses have closed, fleets of BMWs and Audis have been repossessed and street protests have erupted.
Now the leading purveyors of Western fashions are deserted, monthly sales at restaurants are down as much as 97 percent and the marble entrance to the Fortune Garden Club is shuttered. All but one of the city's car dealerships have failed. The owner of the city's largest jewelry store was detained by the authorities a week ago after creditors found him secretly packing millions of dollars' worth of gold and jewels into cases and accused him of preparing to flee the city without settling his debts. A top restaurant closed a day earlier, and its owner left town, as have the founder of the Fortune Garden and many other executives.
"It's an economic crisis just like the United States has had; just like it," said Wang Ting, an operator of an illegal casino in Fugu, near Shenmu. "There's no cash, everyone stays home without a job, there's no way the economy can recover."
Shenmu, and nearby cities like Ordos and Fugu, are at the leading edge of broader troubles that are beginning to afflict the entire Chinese economy. Across China, growth has slowed. With the slowdown have come rising defaults on loans made outside the conventional banking system, chronic overcapacity in many industries like coal mining and steel production and, in particularly troubled cities like Shenmu, a sharp decline in previously debt-fueled prices for real estate and other assets.
The cracks are showing in many sizable cities like coastal Wenzhou, where informal lending, a big part of so-called shadow banking, has dominated for a quarter-century. Cities with economies linked to commodities with falling prices have also been affected, as more people have defaulted on loans. The biggest, most economically diverse metropolitan areas like Beijing and Shanghai seem considerably less affected, but also have many small and medium-size businesses that depend on informal lending.
Lending has collapsed here in northern Shaanxi province, where it had been particularly speculative and frenzied, and where the local coal industry has also been crippled by steeply falling prices.
As some borrowers began defaulting early this year, worried lenders in the informal sector raised interest rates for small and medium-size businesses, previously 25 to 40 percent a year, to as much as 125 percent a year. The increase set off a much broader wave of defaults in recent weeks, as owners found themselves unable to repay billions of dollars in bad debts, many of them handwritten and hard to enforce in court.
"Almost no one will give you a loan," said a construction executive who gave only his surname, Xie, as he stood next to his white Toyota Land Cruiser outside a project that had been halted.
Although changes are being slowly introduced, state-owned banks have long been allowed to lend only at low, regulated rates barely above the inflation rate, with the total value of loans controlled by quarterly quotas. All over China, these loans go overwhelmingly to large state-owned businesses, government officials and politically connected individuals, who then relend the money at much higher interest rates to small and medium-size businesses in the private sector that need money to grow.
Liu Linfei, a government official from nearby Yulin, stood on a Shenmu street corner in a T-shirt and shorts on a recent weekend afternoon, outside two high-rise hotels where construction had been stopped just before the windows could be installed. He said he had borrowed 600,000 renminbi, almost $100,000, from a bank shortly before the collapse, at an interest rate of 4.1 percent a year.
Liu then lent the cash to moneylenders here at an interest rate of 10.4 percent, planning to pocket the difference.
The moneylenders who borrowed from Liu defaulted, and now he is struggling to repay the bank. "I'm not going to lose my house, because I'm repaying it little by little with money I borrow from my relatives," he said.
The Chinese are finding it harder to repay loans because the economy is slowing. Most analyses of China's economy look only at the real economic growth rate, around 7.5 percent this year. But for companies' sales and profits, which determine their ability to repay debts, what really matters is the nominal growth rate, which is real economic growth plus inflation.
Private sector businesses could afford to borrow at double-digit interest rates because nominal growth at 16 to 23 percent a year from 2004 through 2011 exceeded the rates. But nominal growth slowed last year to 9.8 percent and then fell again in the first half of this year, to an annual pace of 8.8 percent.
At the same time, overinvestment led to overcapacity. Dozens of new mines opened around Shenmu in the last decade and older mines expanded. But demand has grown much more slowly than expected for electricity and steel, the two main users of coal.
Coal prices have dropped by half in the last three years as a result. Now, out of 90 mines near Shenmu, practically the only ones still operating are nine that are state-owned and do not need to show a profit.
The popping of the real estate bubble has been the most serious blow to the local economy. Real estate prices had soared in cities across China. In Shenmu, 1,200-square-foot apartments that sold for less than $20,000 a decade ago reached $330,000 by last winter.
Local real estate brokers say that they are advising sellers to avoid price cuts of more than 10 percent. But local business owners who buy and sell apartments say that deals are now being done for as little as $115,000 for a 1,200-square-foot apartment, a decline of 65 percent.
Public discontent is fueling street protests. Several thousand residents turned out in mid-July for a demonstration in the expensively paved square across the street from city hall, demanding that municipal officials revive the stalled economy. More recently, a smaller group of migrant workers protested, demanding that the local government pay their back wages after construction was halted on a row of high-rise apartment buildings.
Yet a Shenmu merchant who insisted on anonymity because of local tensions, said that he had a lot of sympathy for officials, who even put up banners on city streets last year warning residents of the dangers of participating in informal lending schemes.
"It's a national problem, it's not a local issue," he said.
As the Chinese economy boomed, few cities soared faster or higher than Shenmu, a community of nearly 500,000 in northwestern China.
Top luxury clothing stores in this city's downtown were recording as much as $500,000 a day in sales. Tables at the best restaurants had to be reserved weeks in advance. The new Fortune Garden Club for the city's business elite made headlines by paying $1 million for a king-size mahogany bed, to be used by members and their companions.
But a painful credit crisis is now spreading across Shenmu and cities nearby, as thousands of businesses have closed, fleets of BMWs and Audis have been repossessed and street protests have erupted.
Now the leading purveyors of Western fashions are deserted, monthly sales at restaurants are down as much as 97 percent and the marble entrance to the Fortune Garden Club is shuttered. All but one of the city's car dealerships have failed. The owner of the city's largest jewelry store was detained by the authorities a week ago after creditors found him secretly packing millions of dollars' worth of gold and jewels into cases and accused him of preparing to flee the city without settling his debts. A top restaurant closed a day earlier, and its owner left town, as have the founder of the Fortune Garden and many other executives.
"It's an economic crisis just like the United States has had; just like it," said Wang Ting, an operator of an illegal casino in Fugu, near Shenmu. "There's no cash, everyone stays home without a job, there's no way the economy can recover."
Shenmu, and nearby cities like Ordos and Fugu, are at the leading edge of broader troubles that are beginning to afflict the entire Chinese economy. Across China, growth has slowed. With the slowdown have come rising defaults on loans made outside the conventional banking system, chronic overcapacity in many industries like coal mining and steel production and, in particularly troubled cities like Shenmu, a sharp decline in previously debt-fueled prices for real estate and other assets.
The cracks are showing in many sizable cities like coastal Wenzhou, where informal lending, a big part of so-called shadow banking, has dominated for a quarter-century. Cities with economies linked to commodities with falling prices have also been affected, as more people have defaulted on loans. The biggest, most economically diverse metropolitan areas like Beijing and Shanghai seem considerably less affected, but also have many small and medium-size businesses that depend on informal lending.
Lending has collapsed here in northern Shaanxi province, where it had been particularly speculative and frenzied, and where the local coal industry has also been crippled by steeply falling prices.
As some borrowers began defaulting early this year, worried lenders in the informal sector raised interest rates for small and medium-size businesses, previously 25 to 40 percent a year, to as much as 125 percent a year. The increase set off a much broader wave of defaults in recent weeks, as owners found themselves unable to repay billions of dollars in bad debts, many of them handwritten and hard to enforce in court.
"Almost no one will give you a loan," said a construction executive who gave only his surname, Xie, as he stood next to his white Toyota Land Cruiser outside a project that had been halted.
Although changes are being slowly introduced, state-owned banks have long been allowed to lend only at low, regulated rates barely above the inflation rate, with the total value of loans controlled by quarterly quotas. All over China, these loans go overwhelmingly to large state-owned businesses, government officials and politically connected individuals, who then relend the money at much higher interest rates to small and medium-size businesses in the private sector that need money to grow.
Liu Linfei, a government official from nearby Yulin, stood on a Shenmu street corner in a T-shirt and shorts on a recent weekend afternoon, outside two high-rise hotels where construction had been stopped just before the windows could be installed. He said he had borrowed 600,000 renminbi, almost $100,000, from a bank shortly before the collapse, at an interest rate of 4.1 percent a year.
Liu then lent the cash to moneylenders here at an interest rate of 10.4 percent, planning to pocket the difference.
The moneylenders who borrowed from Liu defaulted, and now he is struggling to repay the bank. "I'm not going to lose my house, because I'm repaying it little by little with money I borrow from my relatives," he said.
The Chinese are finding it harder to repay loans because the economy is slowing. Most analyses of China's economy look only at the real economic growth rate, around 7.5 percent this year. But for companies' sales and profits, which determine their ability to repay debts, what really matters is the nominal growth rate, which is real economic growth plus inflation.
Private sector businesses could afford to borrow at double-digit interest rates because nominal growth at 16 to 23 percent a year from 2004 through 2011 exceeded the rates. But nominal growth slowed last year to 9.8 percent and then fell again in the first half of this year, to an annual pace of 8.8 percent.
At the same time, overinvestment led to overcapacity. Dozens of new mines opened around Shenmu in the last decade and older mines expanded. But demand has grown much more slowly than expected for electricity and steel, the two main users of coal.
Coal prices have dropped by half in the last three years as a result. Now, out of 90 mines near Shenmu, practically the only ones still operating are nine that are state-owned and do not need to show a profit.
The popping of the real estate bubble has been the most serious blow to the local economy. Real estate prices had soared in cities across China. In Shenmu, 1,200-square-foot apartments that sold for less than $20,000 a decade ago reached $330,000 by last winter.
Local real estate brokers say that they are advising sellers to avoid price cuts of more than 10 percent. But local business owners who buy and sell apartments say that deals are now being done for as little as $115,000 for a 1,200-square-foot apartment, a decline of 65 percent.
Public discontent is fueling street protests. Several thousand residents turned out in mid-July for a demonstration in the expensively paved square across the street from city hall, demanding that municipal officials revive the stalled economy. More recently, a smaller group of migrant workers protested, demanding that the local government pay their back wages after construction was halted on a row of high-rise apartment buildings.
Yet a Shenmu merchant who insisted on anonymity because of local tensions, said that he had a lot of sympathy for officials, who even put up banners on city streets last year warning residents of the dangers of participating in informal lending schemes.
"It's a national problem, it's not a local issue," he said.
Friday, August 16, 2013
சென்னை உட்பட 12 மாவட்ட நீதிபதிகள் மாற்றம்!
!6 AUG 2013
சென்னை: சென்னை உட்பட தமிழகம் முழுவதும் 12 மாவட்ட நீதிபதிகள் பணியிடம் மாற்றம் செய்யப்பட்டுள்ளனர்.
இது தொடர்பாக சென்னை உயர் நீதிமன்ற தலைமை பதிவாளர் பொன்.கலையரசன் வெளியிட்டுள்ள அறிவிக்கையில், "மதுரை மகளிர் நீதிபதி நீதிபதி ஆர்.தரணி, தர்மபுரி மாவட்ட முதன்மை அமர்வு நீதிமன்ற நீதிபதியாகவும், சென்னை 16வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி கே.வி.செந்தூர்பாண்டியன், கோவை வெடிகுண்டு வழக்குகளை விசாரிக்கும் சிறப்பு நீதிமன்ற நீதிபதியாகவும், கோவை வெடிகுண்டு வழக்குகளை விசாரிக்கும் சிறப்பு நீதிமன்ற நீதிபதி ஜெ.செல்வநாதன், விருதாச்சலம் 3வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதியாகவும், விருதாச்சலம் 3வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி பி.கீதாஞ்சலி, சேலம் மோட்டார் வாகன விபத்து வழக்குகளை விசாரிக்கும் சிறப்பு நீதிமன்ற நீதிபதியாகவும் நியமிக்கப்பட்டுள்ளனர்.
இது தொடர்பாக சென்னை உயர் நீதிமன்ற தலைமை பதிவாளர் பொன்.கலையரசன் வெளியிட்டுள்ள அறிவிக்கையில், "மதுரை மகளிர் நீதிபதி நீதிபதி ஆர்.தரணி, தர்மபுரி மாவட்ட முதன்மை அமர்வு நீதிமன்ற நீதிபதியாகவும், சென்னை 16வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி கே.வி.செந்தூர்பாண்டியன், கோவை வெடிகுண்டு வழக்குகளை விசாரிக்கும் சிறப்பு நீதிமன்ற நீதிபதியாகவும், கோவை வெடிகுண்டு வழக்குகளை விசாரிக்கும் சிறப்பு நீதிமன்ற நீதிபதி ஜெ.செல்வநாதன், விருதாச்சலம் 3வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதியாகவும், விருதாச்சலம் 3வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி பி.கீதாஞ்சலி, சேலம் மோட்டார் வாகன விபத்து வழக்குகளை விசாரிக்கும் சிறப்பு நீதிமன்ற நீதிபதியாகவும் நியமிக்கப்பட்டுள்ளனர்.
சென்னை 5வது கூடுதல் அமர்வு நீதிமன்ற (தடா) நீதிபதி எஸ்.செங்கோட்டையன், சென்னை 7வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதியாகவும், சென்னை 7வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி ஏ.கயல்விழி, சென்னை 10வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதியாகவும், சென்னை 10வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி எம்.குணசேகரன், சென்னை 15வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதியாகவும், சென்னை 15வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதி ஏ.மணிவேல், 16வது கூடுதல் அமர்வு நீதிமன்ற நீதிபதியாகவும் நியமிக்கப்படுகின்றனர்" என்று கூறியுள்ளார்.
SBBJ reports max auditing irregularities in debt waiver scheme
NEW DELHI: SBI's largest subsidiary, State Bank of Bikaner and JaipurSBBJ), has reported the most auditing irregularities in the implementation of the UPA-1 government's ambitious Rs 52,000 crore Agriculture Debt Waiver and Debt Relief Scheme, 2008.
As of June 2013, as many as 499 cases have been detected by public sector banksand cooperative banks, where the responsibility of auditors has been fixed, sources said.
Of the total, SBBJ detected 314 cases. In these cases, auditors and statutory auditors failed to point out irregularities related to the scheme, according to sources.
Responsibilities have been fixed in such cases and banks have initiated action, sources said.
SBBJ is followed by Kolkata-based United Bank of India with 138 such cases. In these cases, responsibilities of auditors have been fixed.
Based on the observations of the CAG in its report on performance audit of farm debt waiver, the Finance Ministry had directed all the lending institutions to assess irregularities done by banks in the scheme, take necessary remedial action and re-verify all such cases.
Re-verification was done with the objective of recovery of amounts from ineligible beneficiaries, recovery of excess payment and fixing responsibility of the bank staff and auditors in appropriate cases.
Third on the list is State Bank of Mysore, which registered four such cases.
In its report released in March, CAG had found several cases where ineligible farmers were given the benefit of the scheme and instances of tampering of records were also found.
It had said several farmers who were eligible for the benefit under the scheme were not considered for loan waivers by the lending institutions.
The report pointed out that the banks also claimed undue benefits like penal interest, legal charges and miscellaneous charges from the government.
Under the scheme, banks were supposed to bear these charges.
Referring to the issue of tampering of records, CAG suggested the Department of Financial Services should review such cases and take "stringent action" against erring officials and banks.
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