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SIDBI sees four-fold hike in fee income by 2017

The four-fold jump in fee income will be made possible primarily by a loan syndication service which SIDBI is launching soon and also earnings from its recently launched credit consultancy centres at SME clusters

 
Mumbai: Small Industries Development Bank of India (SIDBI) is targeting a four-fold jump in its fee income over next five years as it launches a slew of service oriented products to help small businesses raise funds, reports PTI.
 
"We are expecting a four-fold jump in fee income in the four to five years," Sushil Muhnot , chairman and managing director of SIDBI said on the sidelines of an event.
 
This will be made possible primarily by a loan syndication service which SIDBI is launching soon and also earnings from the recently launched credit consultancy centres at SME clusters, he said.
 
The Lucknow-based specialised institution's fee income, which includes upfront and processing fees, and commission and brokerage, had stood at Rs33.03 crore in the past fiscal, which was a growth of 25% from Rs26.30 crore in FY11, according to the bank's annual report.
 
Muhnot said as part of its micro small and medium enterprises (MSME) development services initiative, SIDBI will soon start a loan facilitation service that will involve acting like an investment banker and help SMEs arrange finance from multiple banks if required.
 
SIDBI will earn a fee for the services, Muhnot said, adding there is a need for such a facility as a single company exposure norms may compel a bank to keep away from a proposal.
 
Apart from that, SIDBI has also launched credit consultancy centres across 110 SME clusters to help small businesses with their documentation as they approach lenders to avail loans, he said.
 
As part of the service, a retired banking official having experience in the credit department is appointed by SIDBI to help the local SMEs, Muhnot said.
 
SIDBI ties up with local industries association in the respective cluster to launch the service, he said, adding that going forward, it will focus on increasing the clusters covered by the service.
 

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I-T Department probing foreign banks, brokers in investments case

I-T is probing suspected tax evasion to the tune of Rs800 crore during the last two years in Private Placement Programmes or PPP where an exceptional amount of returns are guaranteed within an extremely short tenure

 
New Delhi: The Income Tax (I-T) department is probing a few foreign banks and financial brokers after it was tipped off about large scale illegal high returns investment programme being executed in violation of guidelines issued by the Reserve Bank of India (RBI), reports PTI.
 
The investments and returns scheme, called the Private Placement Programmes (PPP), is devised where an exceptional amount of returns are guaranteed within an extremely short tenure and the I-T is probing suspected tax evasion to the tune of Rs800 crore during the last two years in this alleged tax crime.
 
According to sources privy to the development, the department was alerted about these schemes, being run by some private players and foreign banks, after economic intelligence agencies like the Central Economic Intelligence Bureau (CEIB) and others provided them with such inputs last year.
 
The PPP, according to RBI and tax laws, are not permitted in Indian economic channels and any investment returns programme can only be undertaken after obtaining due clearance from these agencies.
 
"A probe is underway. The names and identities of the case cannot be disclosed at present as the department is gathering evidence," they said.
 
In a typical PPP, sources said, brokers offer as much as 200-300% returns to a bank account holder over a short period of time through pledging of fixed deposits (FDs) and the resulting amount is utilised in some other high return investment avenue by the operator.
 
The FDs used in this scheme are worth crores and the conniving banks then issue letters of credit to the account holder and route the cash or FDs to be used for any other investments purpose, thereby skirting the legal requirements of reporting the assets on records.
 
The department which was given the data by snoop agencies from late 2010 has begun an exhaustive probe of all the suspicious and cash transaction reports it had received on these banks and financial intermediaries since then.
 
The department, according to sources, will soon begin the process of assessment in these cases and investigate the role of the people involved and also the end use of the profits generated through this scheme.
 

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