Citizens' Issues
Paltry increase in budget for judiciary and its infrastructure

The allocation also includes budgetary provision for the National Mission for Justice Delivery and Legal Reforms and the administration of justice

 

The union budget for 2016-17 has earmarked Rs.900 crore for the development of judicial infrastructure in the states, merely Rs.93.35 crore higher from Rs. 806.65 crores allocated in 2015-16.
 
The allocation also includes budgetary provision for the National Mission for Justice Delivery and Legal Reforms and the administration of justice. This includes allocation of Rs.256 crore for the second phase of E-courts.
 
The allocation of funds for the development of judicial infrastructure was Rs. 500 crore in 2015-16 but has been scaled down to Rs.460 crore in 2016-17. However, allocation for northeastern areas have seen more than threefold increase from Rs.24.36 crores in 2015-16 to Rs.90 crore in 2016-17.
 
A sum of Rs.140 crore has been earmarked for National Legal Services Authority (NALSA) and Rs. 122.21 crore under the head of "other programmes" that includes expenditure on attorney general, solicitor general, additional solicitor general and fee of government advocates.
 
This also includes allocation for the National Judicial Academy, International Centre for Alternate Dispute Resolution (ICADR), infrastructural facilities for judiciary in union territories without legislatures and secretariat expenditure of Law Commission and others.
 
The allocation for the Supreme Court under non-plan head is Rs.198.89 crore which is higher by Rs.18.87 crore compared to the allocation of Rs.171.02 crore earmarked in the revised budget estimates.
 
The allocation is to take care of the administrative expenditure of the top court including salaries and travel expenses of the chief justice of India and other judges, staff and officers of the apex court registry, departmental canteen, charges for the deployment of security personnel including security equipment, maintenance of CCTVs and printing of annual report and other expenses.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
 

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IDBI MD’s town hall meeting asks officers to get ready for radical changes
Business plan to reduce government stake and hit Rs5,000 crore of net profit by 2019
 
After reporting the second highest ever quarterly loss among all banks, state-run IDBI Bank is reportedly making plans for its survival, including reduction in the government’s stake and taking its net profit to a Rs5,000 crore by 2019. This was revealed during a town hall meeting of officers with the Bank’s Managing Director (MD) and Deputy MD. 
 
The management is very serious on reducing government’s share to less than 49%, citing inadequate capital, and non-performing assets (NPAs) as major reasons, says a source. 
 
During the meeting, the MD announced that International Finance Corp (IFC), an affiliate of the World Bank and others are keen to invest in IDBI and they are waiting for government’s nod. A business transformation model has been drawn up with 35% growth in current account and savings account (CASA) and Rs10 lakh crore total business and Rs5,000 crore net profit by 2019. The plan has been approved by Board, said the MD and the Minister of State Jayant Sinha has “appreciated the plan,” he claimed. DMD asked to take this additional responsibility to the employees.
 
After IDBI Bank’s initial public offering (IPO) as a financial institution in 1995, the government shareholding had come down to 72.7%. After merger of its subsidiary IDBI Bank in FY2004, the government’s shareholding dipped to 51.2%.  Over years, it has galloped to 80.2%. As a result, IDBI Bank has the highest paid-up capital, with relatively low retained earnings and lowest asset base among its peers. This constitutes limitless tolerance of the government, which has been injecting equity in the banks without deliverables, and without holding anyone accountable for second failure in ten years. 
  
During the meeting, in the manner that sales teams are energised, the MD asked those gathered: "Do you want success in life? Do you want to go up the career ladder? These questions were met with a loud YES,YES from the 150 officers gathered in the meeting. Conversely, the MD asked the crowd, "Do you want IDBI brand to get lost? Do you want to see IDBI losing out like IFCI? If our NPA goes more than 10% RBI will impose prevention of expansion and recruitment in IDBI. Would you like that?" These were followed by a repeated chorus ‘No’ from the officers. The MD announced that six new zones and six different verticals and new posts of Chief General Managers will be created. It appears that employees have been told of incentives like stock options promotions.
 
IDBI Bank, which has an attractive promotion policy also enjoys higher salaries plus perquisites than other PSBs. Whereas PSBs other than SBI generally have two-three Executive Directors (EDs) and around 10-15 General Managers, IDBI Bank has a posse of 11 Executive Directors, 35 Chief General Managers and 133 General Managers. Yet the Bank is in serious distress, and the management cannot be absolved of criminal negligence. The Board of Directors has also proved irrelevant to say the least. The regulator has swung into action only following prodding by the Reserve Bank of India (RBI) Governor, who has diagnosed the malaise.
 
There was an interactive session in which someone asked questions about the need to implement Basel III norms. Some other officer asked, "is it not possible to transform the bank with under the government"? A tense and MD and DMD said its possible but with severe compromises, which the top management is not willing to make. It seems odd that the same salaried senior employees who have run the bank to the ground would like to get out of the clutches of the government when they have no stakes to do so. 
 
The MD and DMD pointed out that these kinds of anxiety and fears (not remaining a government-controlled bank) will come to people who are not confident of themselves. But only the “fittest will survive”. “Don't listen to any unwanted outsiders to influence your decision to accept the change,” they added.
 
For the quarter ended 31 December 2015, IDBI Bank reported a loss of Rs2,184 crore, the second highest ever quarterly loss among all banks. It has to be understood that the NPA levels are still grossly understated and will continue to hit IDBI and other banks. The PSB structure has failed and the best course is to transfer all the NPAs and camouflaged NPAs at fair market value to a government-funded but professionally run asset management company. 

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COMMENTS

Aishwarya Gulati

9 months ago

Such a top heavy bank. And yet, losses?
Try Trimming off the top.

SANTOSH SAHU

9 months ago

I wish it really happens. Investors and economy at large will be relieved if idbi bank performs well. I suggest IDBI bank should start recruitment at managerial levels as like other pvt banks counterparts who are successful overrally. Senior level churning is best solution to bring in change.

Bankruptcy code coming for finance sector, IDBI Bank to privatise
New Delhi : Declaring financial sector reforms as being one of the "nine pillars" of Budget 2016-17, Finance Minister Arun Jaitley on Monday said a comprehensive bankruptcy code will be enacted and legislation brought in to deal with illicit deposit taking schemes.
 
"A systemic vacuum exists with regard to bankruptcy situations in financial firms. A comprehensive Code on Resolution of Financial Firms will be introduced as a bill in parliament during 2016-17," Jaitley said while presenting next fiscal's budget in parliament.
 
"This Code will provide a specialised resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities. This Code, together with the Insolvency and Bankruptcy Code 2015, when enacted, will provide a comprehensive resolution mechanism for our economy," he added. 
 
The Insolvency and Bankruptcy Bill, 2015, proposes to enact a single bankruptcy code and set deadlines for processing insolvency cases.
 
The proposed law aims to reduce delays in resolution of insolvency cases and improve recoveries of amount lent to companies. The draft bill has proposed a timeline of 180 days, extendable by another 90 days, to resolve cases of bankruptcy.
 
A major proposal in the budget to tackle the problem of stressed assets in the banking sector concerns the Asset Reconstruction Companies (ARCs).
 
Jaitley on Friday proposed "to make necessary amendments in the SARFAESI Act 2002, to enable the sponsor of an ARC to hold up to 10 percent stake in the ARC and permit non-instituional investors to invest in Securitsation Receipts." 
 
Besides, announcing that the Reserve Bank of India (RBI) would facilitate retail participation in government securities, he also said state-run general insurance companies would now be listed in the stock exchanges.
 
Continuing government efforts to deal with the high levels of non-performing assets (NPAs), or bad debts, of state-run banks, Jaitley also allocated Rs.25,000 crore towards their recapitalisation in the next fiscal.
 
Jaitley plans to provide Rs.25,000 crore capital each in the current and next fiscal years, while Rs.20,000 crore would be provided during 2017-18 and 2018-19. 
 
In July last, the government had presented to parliament a supplementary demand for grants to provide for Rs.12,000 crore towards recapitalisation of public sector banks (PSBs).
 
The Rs.25,000 crore this year is being provided through three tranches.
 
The finance minister also announced that the government proposes reduction of its equity in IDBI Bank to below 50 percent.
 
"The process of transformation of IDBI Bank has already started. Government will take it forward and also consider the option of reducing its stake to below 50 percent," Jaitley told parliament.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Meenal Mamdani

9 months ago

High time that the govt is reducing its stake in IDBI.

Now watch how the bank removed from interference of pols, reduces its NPA and bounces to health.

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