Money & Banking
SBI has no information, charge created on companies that took loans of over Rs5 crore

The cases of fraud in loans above Rs5 crore have alarmingly trebled in the past five years at the State Bank of India (SBI); but more shocking is the revelation that the giant bank does not even know if these companies are filing any annual accounts, and whether it has created or modified any charge on the assets of these entities as required under the Companies Act. Where the loan amount is Rs25 crore or more and the frauds are mandatorily reported to the Central Bureau of Investigation (CBI), SBI's recovery is abysmally low.

 

This has been revealed under the Right to Information (RTI) Act queries filed by Rajesh Mittal, a finance professional. He says, over the past five years, SBI has reported 99 cases of fraud to Reserve Bank of India (RBI). The amount involved in such transactions have gone up three times to Rs1,772.88 crore in FY2015-16 from Rs553.18 crore in FY2011-12.  


 

"What is more shocking is that while there is increase in the size of frauds, the recovery of loans is miniscule. In fact, SBI is not able to recover even 1% of the amount given to such companies,” says Mittal, citing the reply given by SBI in another RTI application.

 

 

Replying to eight queries asked by Mittal, the state-run lender only provided a chart giving number of cases and amount involved in frauds cases reported to RBI.

 

 

 

In one specific case, SBI appears to have failed to maintain continuous charge on asset of Avtec Ltd, where form 8 was filed after 3,085 days. In this case, SBI has no information, if this irregularity was reported by any auditor or relationship manager, branch manager of service officer for not having charge on the assets by the bank.

 

The lender even has no information if charge was created after paying proper stamp duty on the documents executed for filing charge after 3,085 days or even the stamp duty paid and amount secured from Avtec.

 

Whenever any security is given for obtaining loan, a charge is created in favour of the lender. As per Section 125 of the Companies Act, 1956, a charge not created in respect of security on the company property or undertaking is void against the lender. If charge is not created, then the charge holder loses his right to claim the sale proceeds of the property in case of default by the borrower. A modification of the loan amounts to charge. These particulars of modification are required to be filed with Registrar of Companies in form 8. This form needs to be filed within 30 days from the date of creation of charge or modification of charge.

 

"What is the use of all the audits and statutory controls if they are just doing 'box ticking' exercise. They are granting loans wilfully to the fraudulent companies knowing that they are putting bank in a 100% risk. SEBI should educate investors to file class suit against the promoters and management of the listed banking company if it is found that management is involved in granting fraudulent loans and putting bank at risk. They cannot play with the money of public and investors," Mittal says.

 

Here are the questions asked by Mittal and replies provided by SBI under the RTI Act...

 

1. Year-wise details since year 2001 to till date 2016

            Year-wise details of how many cases of fraud, money laundering, irregularities are reported by State Bank of India to RBI involving amount of Rs5 crore and amore.

 

SBI's Reply: The number of frauds (amount involved more than or equal to Rs5.00 crore) reported by SBI during the previous 15 financial years 2001-2016 and the amount involved is given in the annex. The information on money laundering/ irregularities case of SBI is not available with us.

 

2. Kindly provide year-wise information since year 2001 about companies obtained loans above Rs5 crore from SBI on the basis of revaluation of assets and not filing any annual accounts or annual returns with Registrar of Companies.

 

SBI's Reply: The required information is not available with us.

 

3. Year-wise details about companies obtained loans above Rs5 crore from SBI and not filing any annual accounts or annual returns with Registrar of Companies.

 

SBI's Reply: --As above (2)--

 

4. Year-wise details since year 2001 about the companies who have obtained loans above Rs5 crore and SBI failed to maintain continues charge on assets of the company like Avtec Ltd, where form 8 was filed after 3,085 days (copy of RBO receipt attached for reference)

 

SBI's Reply: --As above (2)--

 

5. Whether this irregularity reported by any auditor or relationship manager, branch manager or service office for not having charge by SBI on the assets of M/s Avtec Ltd.

 

SBI's Reply: --As above (2)--

 

6. Whether charge is properly created by SBI after paying proper stamp duty on the documents executed for filing charge after 3,085 days.

 

SBI's Reply: --As above (2)--

 

7. How much stamp duty has been paid on creation of fresh charge and amount secured by SBI on filing of form 8 after 3,085 days in the matter of Avtec Ltd.

 

SBI's Reply: --As above (2)--

 

8. What action has been taken on non-maintenance of charge being a serious irregularity by SBI and RBI.

 

SBI's Reply: --As above (2)—

 

Our email sent to SBI remained unanswered till writing this story. We will add their response as and when we receive it.

User

COMMENTS

Kushla Rawat

7 months ago

Agreed with Mr. Mittal. This is the realty in most of the cases.

GLN Prasad

7 months ago

Without registering a charge, Bank is not supposed to release any proceeds, and even for creating charge on the same asset, consent of prior bank is necessary. Some banks dismissed officers for this simple reason for not registering the charge with companies, though the account is regular. (Bank has stated, it is sheer by luck they have recovered the amount, but in case of default, they can not recover single paisa). In every inspection, the first thing inspector has to check is as to whether the charge was registered in favour of the Bank or not.

Fairy gada

7 months ago

completely shocking.

AKC

7 months ago

A Bombay High Court Judge once said in a reported judgment that whatever bank officials say is not gospel truth. Therefore, it is high time that borrower bashing is stopped, and bank officials who have created NPAs are held accountable and made to pay from their personal ill-gotten wealth ...

AKC

7 months ago

A Bombay High Court Judge once said in a reported judgment that whatever bank officials say is not gospel truth. Therefore, it is high time that borrower bashing is stopped, and bank officials who have created NPAs are held accountable and made to pay from their personal ill-gotten wealth ...

D S Ranga Rao

7 months ago

All this happens because of utter lack of accountability norms on the part of the nationalized banks. Just shift the onus on to the bankers and you will see either no loans at all or no NPAs! Problem with our Indian mindset is that anything that is 'government' or 'public' is unaccountable and 'no man's land'. That's to change. But, 'how' is the eternal question?

SuchindranathAiyerS

7 months ago

Between Social Engineering and Bare Foot Banking, I saw this coming in 1983.

At that time I had led a Delphi to prepare the Bank's Long Range Plan congruent with the 7th Five Year Plan, while a Manager of SBI. I resigned after writing a letter to the Hindu on what I thought of Indira Gandhi, Pranab Mukherjee, and Janardhan Poojari. that saw the Government going for my throat.

In those days, the Hindu actually published honest opinions opposing State Policy instead of "moderating" them..

State Policy not only stripped individuals of their integrity but also every institution including banking. A state machinery that is today largely clogged with those constitutionally certified to be congenitally backward.

Meenal Mamdani

7 months ago

Bank officers are part of this fraud if they do not take the minimum information to safeguard the interest of the bank and ultimately of all depositors and in the final run, all taxpayers as they bear the brunt of recapitalizing such banks with high NPA.
It should be easy to find out who approved the loans, who was derelict in their duties, what action was taken against them, and so on.

Proper food, exercise can prevent youth from hypertension: Doctors
 With 30% of deaths in India attributed to hypertension and diseases triggered by it, health experts across the country on Monday cautioned youngsters to regulate their eating habits and improve fitness in order to prevent the health condition, which has risen 20% among the youth.
 
The experts also said that due to the unorganised medical health system in India, youth were becoming victims of hypertension and other major health complications triggered by it including brain haemorrhage.
 
"One in four individuals above 25 years in India has hypertension and it is increasing at an alarming pace. Reducing salt intake, stopping tobacco use, reducing stress by slowing down, yoga or meditation and increasing physical activity are some of the key strategies to reduce blood pressure," said A. Muruganathan, president, Hypertension Society of India.
 
Emphasising that one should always get checked up for the condition early, he said that ignorance can lead to a stage where hypertension cannot be reversed. 
 
"Reversing it may be more difficult if not impossible. Get your blood pressure checked every year as hypertension often has no symptoms and delayed diagnosis can cause harm to some key organs like kidney, eye, brain, heart etc. If diagnosed with hypertension, take drugs without fail and change your lifestyle," he said.
 
Currently the world has over 9.4 million people suffering from hypertension and the figure is on constant rise.
 
S.S. Das, head of critical care and cardiology at Kolkata-based Mercy Hospital, told IANS: "The current scenario is such that youngsters constantly are on working hours and hardly get time to exercise and proper diet. This leads them to get hypertension. Diabetes is found commonly among youths in the 20s and 30s age group. A sedentary lifestyle only exacerbates the situation."
 
Asked if other countries were also witnessing their youths suffering from hypertension, he said: "The scenario in the world is the same, but as the medical system in Western and South Asian countries such as China is very much organised and focused, they are easily able to tackle the problem."
 
The experts also said that many of people indulge in self-medication, which leads to other problems including thickening of blood vessels and kidney ailments.
 
Kenneth Thorpe, Chairman, Partnership to Fight Chronic Disease, said: "To efficiently tackle modern lifestyle diseases like hypertension, we need to move from curative to preventive care. Regular health check-ups, reduction of salt, sugar intake, promoting physical activity, early detection and treatment are some of the possible ways to have a preventive approach towards such diseases."
 
According to him, over 20 crore people are on the verge of stepping into the dangerous zone of hypertension.
 
He said lifestyle modifications, including salt restriction, diet full of fruits and vegetables are more important in day-to-day life.
 
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.

 

User

Twitter to stop counting photos, links in 140-character limit
The micro-blogging site Twitter is reportedly planning to stop counting photos and links against the 140-character limit.
 
This comes as a welcome news for Twitter fans as the change will allow them to compose longer tweets.
 
"Twitter is planning to incorporate changes in the coming two weeks," The Verge reported on Monday.
 
Attaching links and photos currently strikes out 23 and 24 characters respectively off a tweet's character count which often requires thinking in unconventional ways to convey what you mean in your tweet.
 
The change looks more tuned in comparison to earlier reports by Twitter to increase the 140-character limit to 10,000. 
 
Twitter is hoping that it will make the service more approachable to users.
 
According to Twitter, there is still time for you to tweet in 10,000 characters and its original 140-character limit is here to stay.
 
Appearing on a TV show recently, Twitter CEO Jack Dorsey said that the 140-character limit is "a beautiful constraint" and that Twitter "will never lose that feeling".
 
"It's (140-characters) staying. It's a good constraint for us, and it allows for of-the-moment brevity... We're changing a lot. We're always going to make Twitter better," he was quoted as saying.
 
Earlier in January, media reports said that Twitter is building a new feature that will allow users to tweet longer than its traditional 140-character limit.
 
The 140-character limit has been around as long as Twitter has been and has become part of the product's personality.
 
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.

 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)