Money & Banking
Rs2500 crore bank fraud: CVC examining case against 24 officials

A Mumbai-based construction company has been reportedly sanctioned credit facilities under regular consortium--Rs2,510 crore--and as China Project consortium -- Rs410 crore-- with 26 banks, with PNB as lead bank

 
New Delhi: The Central Vigilance Commission is examining a reference received from Punjab National bank involving 24 of its officials in an alleged fraud involving over Rs2,500 crore, reports PTI.
 
The Central Bureau of Investigation (CBI) had on 25th April last year registered a case against Directors of a Mumbai-based construction company and others for their alleged involvement in cheating Punjab National Bank (PNB) and causing losses worth several crores.
 
According to information given by Minister of State for Finance Namo Narain Meena in the Rajya Sabha today, the company has been reportedly sanctioned credit facilities under regular consortium--Rs2,510 crore--and as China Project consortium -- Rs410 crore-- with 26 banks, with PNB as lead bank.
 
"It has been further informed by the CVC that PNB had made reference in September 2012 involving 24 officials, which is under examination in CVC," Meena said.
 
The exposure of loan on the company in all consortium banks is Rs2,529.62 crore as on 31 March 2011, the Minister said.
 
Of these, a highest of Rs409.97 crore is by PNB, followed by Rs309.51 crore by UCO bank, Rs216.64 crore by United Bank of India, Rs176.72 crore by Union Bank of India, Rs129.77 crore by State Bank of Bikaner and Jaipur, Rs102.82 crore by Indian Bank and Rs102.45 crore by Central Bank of India among others.
 
"Reserve Bank of India (RBI) had reported that the consortium banks had lodged claims with Export Credit Guarantee Corporation of India (ECGC) for the invoked guarantees. ECGC on 7 October 2011 had expressed their inability to consider the claim. The case has been again represented on 23 November 2011.
 
"A recovery suit before Debt Recovery Tribunal (DRT) was filed on 5 November 2011. The members of the consortium have also initiated recovery proceedings under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002," the Minister said.
 
In order to make third parties and professionals accountable, who have played a vital role in credit sanction or disbursement or facilitated the perpetration of frauds, Meena said that banks have been advised to report to Indian Banks' Association (IBA).
 
"IBA in turn will prepare caution lists of such parties for circulation among the banks," he said.
 

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12.6% of total bank debt is with top 10 Indian corporate groups

Unless a solution to the problems of the heavily leveraged sectors and corporates is found, it is very unlikely that the economy will move ahead, says Espirito Santo Securities

 
Over the last five years (FY07-FY12) the debt of the top 10 debt-laden Indian conglomerates has increased at a CAGR (compounded annual growth rate) of more than 40%. This led to significant concentration of the banking system debt with the top 10 Indian groups accounting for nearly 12.6% of the total banking system debt.
 
Figure 1                       Debt as a % of total banking system advances
Figure 1 shows the group debt as a percentage of the total banking system advances of the top 10 corporate groups. This analysis is based on a report by Espirito Santo Securities. The Anil Ambani group (ADAG), Essar and Vedanta groups account for the top 6.4% of the total banking system advances. This is followed by Adani and Jaiprakash groups.
 
Of the groups deeply in debt, most, if not all have large interests in the infrastructure space with some of them being pure play infrastructure companies such as ADAG, Adani, GMR, Lanco and GVK. Others such as Vedanta and JSW invest mainly in metals and mining along with having interests in power generation.
 
It does not come as a surprise that it is these specific sectors, infrastructure, in particular, which are facing problems. According to Espirito Santo, understanding the fate of these large corporates and the sector specific issues can give us a glimpse of the asset quality problems.
 
Espirito Santo adds “Unless a solution to the problems of these heavily leveraged sectors and corporates is found, it is very unlikely that the economy will move ahead.”
 
As can be seen in the above graphs, the balance sheets and P&Ls for these groups are significantly stretched, as is clearly visible from the low interest coverage ratio which is hovering precariously close to the 1x, and the high leverage of the balance sheet at more than three for nearly six of the top 10 groups. 
 

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No official reports of black money of companies in foreign banks: Government

In a written reply Minister of State for Finance SS Palanimanickam said there are no official or authentic reports of large scale stashing of black money belonging to corporate houses in foreign banks

 
New Delhi: There are no "official" reports of large-scale stashing of black money belonging to corporate houses in foreign banks, Parliament was informed on Thursday, reports PTI.
 
"No...there are no official or authentic reports of large scale stashing of black money belonging to corporate houses in foreign banks," Minister of State for Finance SS Palanimanickam said in a written reply to Rajya Sabha.
 
He further said that whenever any credible information on black money is received, appropriate action under the Direct Tax laws is taken to bring to tax any undisclosed amounts.
 
In another reply, the minister said the government has received information under the Double Taxation Avoidance Convention (DTAC) from France about some bank accounts held by certain individuals and non-individuals in the HSBC Bank, Geneva.
 
"Based on the information received from the Government of France, appropriate action under the Direct Tax laws has been taken to bring to tax any undisclosed amounts in such cases," Palanimanickam said.
 
He, however said under confidentiality clause of the DTAC, the information received can be used only for the purposes specified therein.
 

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COMMENTS

NSriramamurty

5 years ago

While all other Countries in the Globe are Using the Information from France & switzerland to trace out How the Account Holders Got the Money and whether any Illegal activity is involved and Prosecuting them,Indian Authorities are telling Stories to Indians that GOI got the information only on Assurance to forign Countries that GOI do utilise the Information ONLY to Recover some Income TAX from them without revealing the Account Holders Names & their Amounts stashed outside.While All Indias fear that it ill--gotten Money involves BLACK Money & Illegal Money , GOI does look into that Angle at all - Obviouly to Protect those Individuals for Mutual Benefit.
disgusting Situation.

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