In the first two quarters of 2012-13, banks referred a record number of 74 CDR cases, involving Rs40,000 crore for restructuring
New Delhi: Holding corporates responsible for a major part of the rising bad loans, Dr KC Chakrabarty, deputy governor of the Reserve Bank of India (RBI) said honest borrowers are paying for the sins of 'inefficient', reports PTI.
"Again non-performing assets (NPAs) is creation of the corporate sector, a major part of the NPA. You borrow from banks, you don't pay them in time. They becomes NPA in the books of the banks. I pitty on bankers," he said at an event organised by Assocham.
"So why you are not able to pay back because your cost is more, income is less. You don't pay back the money. This can be possible only with the improvement in the productivity and efficiency," he said.
In a worsening trend of companies failing to meet their financial obligations, banks have seen a rise of up to 85% in bad loans since the beginning of the current fiscal.
In the first two quarters of 2012-13, banks referred a record number of 74 corporate debt restructure (CDR) cases, involving a total debt amount of Rs40,000 crore for restructuring.
Chakrabarty further said if corporates are able to bring down the risk perception of banks, interest rate could be reduced in their benefit.
"If you (corporates) can bring down risk in the economy, if the bank perceive that there is no risk, your interest will become 9-10%," he said, adding that if 5% NPA becomes 1% then this can be done".
"Today what is happening is a person who is sincere, who is honest, he is paying money and the fellow who is inefficient, who is not able to do the business, is not paying the money. It becomes NPA. Its cost goes to the fellow who is paying the money," he said.
"The bank would charge another 2% from the fellow who is paying. We must look at this aspect little bit more dispassionately," he added.
Police said, the clerk from Bank of Maharashtra deposited 48 cheques handed in by the bank customers in 13 accounts, most of them belonging to his relatives or friends
Nagpur: The city police has registered a case against a clerk with Bank of Maharashtra (BoM) for a fraud to the tune of Rs96.43 lakh, reports PTI.
Dewanand Nichwani, who works with BoM's Jaripatka branch, is accused of diverting cheques.
Police said between November 2007 and May 2008, he deposited 48 cheques handed in by the bank customers in 13 accounts, most of them belonging to his relatives or friends, instead of depositing them in the customers' accounts.
No arrest has been made yet.
Rights issue for recapitalisation of banks is under consideration of the government and it will be done for all state-run banks
New Delhi: The Union government has said it will finalise Rs15,000-crore capital infusion for public sector banks soon to help them enhance capital base and increase lending capacity, reports PTI.
"We will finalise recap for banks soon," Financial Services Secretary DK Mittal told reporters.
Rights issue is under consideration for recapitalisation of banks, he said, adding that if government opts for rights issue for banks, it will be done for all banks.
Last week, Finance Minister P Chidambaram had said that most banks would require additional capital and fund allocation to various banks would be decided in the next few weeks.
"We have budgetary provision for infusing additional capital and decision would be taken in the next few weeks about infusing additional capital into banks," Chidambaram had said.
"All but one bank have Tier I capital of above 8% well above Basel norms. But if credit expansion has to take place, additional capital has to be infused. So we will infuse additional capital into the banks," he had said.
He had said the government has made Budget provision of Rs15,000 crore for the current fiscal in this regard and allocation to various banks would be made.
The top three banks which require capital are Indian Overseas Bank, Central Bank of India and the Bank of Maharashtra, he informed.
"We are looking for some capital support from the Government ... we have asked for Rs1,500 crore from the Government," Indian Overseas Bank Chairman and Managing Director M Narendra said here today.
In 2010-11, the government pumped Rs20,157 crore in public sector banks to maintain tier I capital at 8% and increase the government equity in some banks to 58%.
In the following fiscal, public sector banks got Rs12,000 crore for improving their capital adequacy ratio.
In order to strengthen risk management mechanism, the Reserve Bank issued guideline for Basel III earlier this year.
The implementation of the capital adequacy guidelines based on the Basel III capital regulations will begin from 1 January 2013.
The guideline envisages banks to maintain a minimum total capital (MTC) of 9% against 8% prescribed by the basel Committee of total risk weighted assets.