Rising NPAs of SBI group come under Parliamentary panel lens

Source :business Line :NEW DELHI, FEB. 22:2011 

A Parliamentary Panel has asked the Government to assess the reasons for rising non-performing assets (NPAs) of the State Bank of India (SBI) group. The Government has been asked to spell out the policy on merging the subsidiary banks with SBI.

The Government must also do an in-depth analysis of the issues relating to merger and consolidation of public sector banks in general, the Parliamentary Standing Committee on Finance headed by Mr Yashwant Sinha, said in a report tabled in Lok Sabha today.

 The Standing Committee went into the State Bank of India (subsidiary banks laws) amendment Bill 2009, which was introduced in Lok Sabha in December 2009.

A recent Reserve Bank of India (RBI) inspection report is also understood to have expressed concern over the rising NPAs in SBI, which is the country's largest commercial bank.

On allowing SBI subsidiary banks and other public sector banks to raise equity capital by way of ‘rights issue' of shares as well, the Standing Committee said that it expects appropriate amendments to be carried out in the Bill and also the laws regulating the public sector banks so as to enable them to raise capital through rights issue.

AD HOCISM IN POLICY

Meanwhile, the Standing Committee has, in its report, noted that there is a strong element of ad hocism in the policy stance and approach of the Government in bringing in legislative changes in the legislation regulating the SBI and its subsidiaries in particular. 

For instance, though the amendments carried out earlier vide the State Bank of India (subsidiary banks laws) amendment Act 2007 remain to be given effect to, and the present Bill is pending before Parliament, the Government has embarked on merging two of the subsidiary banks with SBI, the Panel report pointed out.

The report also said that the submission that “proposal of merger come from the management of banks themselves” with the Government playing a supportive role as a common shareholder is, in the opinion of the committee, indicative of ambivalence in the Government's approach on merger and consolidation of banks.

The Standing Committee has also pointed out that amendments remain to be made in the State Bank of India Pension Fund Rules. This is detrimental to the retirees of the merged subsidiary banks, the report said.

Maharashtra government to pay Rs 30,000 to IFCI, IDBI for its "lethargy, negligence, in-aptitude and carelessness".

Source : Business Standard January 18,2003



DRAT asked Maharashtra government to pay Rs 30,000
 to IFCI, IDBI for its "lethargy, negligence, 
in-aptitude and carelessness".


The Debt Recovery Appellate Tribunal (DRAT) has ordered the Maharashtra government to pay Rs 30,000 as "costs" to IFCI Ltd and the Industrial Development Bank of India (IDBI) within a day for its "lethargy, negligence, inaptitude and carelessness".

The tribunal has also been asked to deposit Rs 28 crore within two months, before its appeal against the Mumbai debt recovery tribunal (DRT) order can be taken up for hearing.

Justice Pratibha Upasani, chairperson of the DRAT, came down heavily on the state government saying: "Apparently, a false statement has been made by the state government that it came to know of the DRT order in 2002."

The DRAT orders were issued on Wednesday and Friday on the applications filed by the state government for a "condonation of delay" in filing its appeal against the DRT's order of July 10, 2001, and an application for waiving the requirement to deposit 75 per cent of the decreed amount before its appeal could be taken up for hearing.

The state government had sought a waiver of the condition that 75 per cent of its dues decreed by DRT-II, Mumbai, be deposited within two months before the "compliance hearing" could be taken up by the DRAT on March 17, 2002.

Says a legal source: "The waiver can be granted only if the appellant can prove his economic condition is weak.  The Maharashtra government counsel made no such submission in the application."

Justice Upasani said: "In the application for condonation of delay, government counsel Ranjan Dharmadhikari submitted though the delay was of 466 days, it was not intentional.  He submitted the judgement and order were passed ex parte and the state government came to know about it on October 10, 2002.  It is, therefore, evident the appellants did not respond to the proceedings."

The judge's order said: "The application for condonation of delay is hereby allowed subject to payment of Rs 30,000 equally to IFCI and IDBI by Thursday."

Can a NPA declared company pay dividend ?

Source ;oneindiamoney:Monday, February 21, 2011, 12:04


Vikas WSP Ltd has informed BSE that:

"In the month of March 2009, due to world recession, realizations of export bills were delayed more than 3 months. As per Reserve Bank of India regulations, if the bills are delayed more than 90 days (3 months), the account has to be declared Non - Performing Assets (NPA). SBBJ declared the account of NPA in March 2009 and arecovery suite was filed, in DRT, Jaipur and obtained an interlocutory order from DRT restraining the company from distribution of dividend to its shareholders. 


Subsequently, the realizations of all the bills were received by the SBBJ bank, Company filed damages case against the bank and also filed an appeal against the order of lower Court in Appellate Court.


 On December 08, 2010, due to settlement with bank, the entire issue has been resolved with mutual agreement. Now matter ended. Appellate Court has ordered to distribute dividend within 3 months from the date of order i.e. upto March 07, 2011.

Due to mutual settlement between Bank and Petitioner (Vikas WSP Limited), the petitioner has not pressed the damages claim and therefore, the demand of damages claim is closed without any direction.

Now the company can distribute the dividend for the years 2008-09 and 2009-10 as approved by its shareholders within a period of 3 months from the date of order.

In view of the above order the last date of payment of dividend comes out to March 07, 2011. 


However, company has already distributed dividend for the year 2008-09 and dividend for the year 2009-10 will be distributed latest by March 07, 2011 which is the last date as per Appellate Court order.

Can a NPA declared company pay dividend ?

Source ;oneindiamoney:Monday, February 21, 2011, 12:04


Vikas WSP Ltd has informed BSE that:

"In the month of March 2009, due to world recession, realizations of export bills were delayed more than 3 months. As per Reserve Bank of India regulations, if the bills are delayed more than 90 days (3 months), the account has to be declared Non - Performing Assets (NPA). SBBJ declared the account of NPA in March 2009 and a recovery suite was filed, in DRT, Jaipur and obtained an interlocutory order from DRT restraining the company from distribution of dividend to its shareholders. 


Subsequently, the realizations of all the bills were received by the SBBJ bank, Company filed damages case against the bank and also filed an appeal against the order of lower Court in Appellate Court.


 On December 08, 2010, due to settlement with bank, the entire issue has been resolved with mutual agreement. Now matter ended. Appellate Court has ordered to distribute dividend within 3 months from the date of order i.e. upto March 07, 2011.

Due to mutual settlement between Bank and Petitioner (Vikas WSP Limited), the petitioner has not pressed the damages claim and therefore, the demand of damages claim is closed without any direction.

Now the company can distribute the dividend for the years 2008-09 and 2009-10 as approved by its shareholders within a period of 3 months from the date of order.

In view of the above order the last date of payment of dividend comes out to March 07, 2011. 


However, company has already distributed dividend for the year 2008-09 and dividend for the year 2009-10 will be distributed latest by March 07, 2011 which is the last date as per Appellate Court order.