Nation
Supreme Court grants life term to death convicts in Rajiv Gandhi case

Rejecting the Centre’s view, the apex court commuted the death sentence of three convicts – Santhan, Murugan and Perarivalan – to imprisonment for life, subject to remission by the government

The Supreme Court on Tuesday commuted death sentence of three condemned prisoners in the Rajiv Gandhi assassination case to life imprisonment on the ground of 11 years delay in deciding their mercy plea by the Centre.

 

A bench headed by Chief Justice P Sathasivam rejected the Centre’s submission that there was no unreasonable delay in deciding their mercy plea and the condemned prisoners did not go through an agonising experience as they were enjoying life behind the bars.

 

The bench, also comprising Justices Ranjan Gogoi and SK Singh, said they are unable to accept the Centre’s view and commuted the death sentence of convicts – Santhan, Murugan and Perarivalan – to imprisonment for life subject to remission by the Government.

 

It asked the Centre to give timely advice to the President so that mercy petitions can be decided without unreasonable delay.

 

“We implore the Government to render advice in reasonable time to the President,” the bench said, adding that “the executive should exercise its power one way or other in reasonable time”.

 

It said the Government should handle the cases of mercy petitions in a more systematised manner.

 

“We are confident that mercy plea can be decided at much faster speed than what is being done now,” the bench said.

 

Rajiv Gandhi was killed in May 1991. His assassins were convicted by a TADA court in January 1998 and were awarded death sentence, which was confirmed by the apex court on 11 May 1999.

 

The bench had reserved its verdict on 4th February on the petition of the three convicts for commutation of their death sentence to life imprisonment on ground of delay in deciding their mercy plea.

 

Their plea was strongly opposed by the Centre, which had said that it was not a fit case for the apex court to commute death sentence on the ground of delay in deciding mercy plea.

 

Admitting that there has been delay in deciding the mercy petitions, the Government, however, had contended that the delay was not unreasonable, unexplainable and unconscionable to commute the death penalty.

 

The convicts’ counsel had contested the Centre’s arguments, saying they have suffered due to the delay and the apex court should intervene and commute their death sentence to life term.

 

The convicts had submitted that mercy plea of other condemned prisoners, which were filed after them, were decided but their petitions were kept pending by the government.

 

The apex court had in May 2012 decided to adjudicate the petitions of Rajiv Gandhi killers against their death penalty and had directed that their plea, pending with the Madras High Court, be sent to it.

User

COMMENTS

Simple Indian

3 years ago

In my view, the very provision of mercy pleas to be decided by the President of India is a travesty of justice. When the Supreme Court, as the highest Court of the country awards the death sentence in the 'rarest of rare' cases and considers all social, psychological, and circumstantial evidence and all aspects in such cases, the verdict should be upheld in law. The only recourse for death row convicts should be a revision petition in the SC, to be decided by a 5-member SC judge panel. Letting the President decide on mercy pleas is opening the SC verdicts to political manipulations, which is undesirable and certainly not respectful of the judiciary. We have known that most Presidents dither on deciding on mercy pleas one way or the other, purely on political grounds. Even the MHA which forwards such pleas to the President, does so only for select death-row convicts, again for political considerations. With the Constitution not even providing the timeline or reasons for the President to decide on mercy pleas, this provision has been left to gross misuse & abuse, as is seen in this case, and in many such cases in the past. Even Ajmal Kasab was finally executed in secrecy, after much dithering and expenses of over Rs. 50 crores, for political reasons. Law will take its own course is just a meaningless cliche's statement parroted by our politicians and the powers-that-be.

Simple Indian

3 years ago

In my view, the very provision of mercy pleas to be decided by the President of India is a travesty of justice. When the Supreme Court, as the highest Court of the country awards the death sentence in the 'rarest of rare' cases and considers all social, psychological, and circumstantial evidence and all aspects in such cases, the verdict should be upheld in law. The only recourse for death row convicts should be a revision petition in the SC, to be decided by a 5-member SC judge panel. Letting the President decide on mercy pleas is opening the SC verdicts to political manipulations, which is undesirable and certainly not respectful of the judiciary. We have known that most Presidents dither on deciding on mercy pleas one way or the other, purely on political grounds. Even the MHA which forwards such pleas to the President, does so only for select death-row convicts, again for political considerations. With the Constitution not even providing the timeline or reasons for the President to decide on mercy pleas, this provision has been left to gross misuse & abuse, as is seen in this case, and in many such cases in the past. Even Ajmal Kasab was finally executed in secrecy, after much dithering and expenses of over Rs. 50 crores, for political reasons. Law will take its own course is just a meaningless cliche's statement parroted by our politicians and the powers-that-be.

Vinay Joshi

3 years ago

Hello Ms. Sucheta,

Please restrain from such type of posts.

If at all please enumerate all aspects from the time of death penalty awarded till the present SC Judgement.

MLF SHOULD RESIST FROM SUCH ASPECTS!

Regards,

Distressed assets: RBI framework leaves everyone ‘stressed’

RBI’s framework for revitalising distressed assets leaves everyone in stress. Banks, NBFCs, India Inc, CAs and advocates, no one is spared

The slacking Indian economy is sitting with huge pile of bad loans (estimated to be about Rs2.9 lakh crore) in the Rs82 lakh crore banking system and surely is the cause of concern to the health of the economy. The continuing rise in number of the non-performing assets (NPAs) and restructured cases in the banking system made the Reserve Bank of India (RBI) came out with a “Framework for revitalising distressed assets in the economy” on 30 January 2014 to recognise early signs of distress, catalyse the restructuring process, quicker distress resolution planning, leveraged buyouts, take-out financing and more. The framework will be effective from 1 April 2014 and the banks and the non-bank lenders will be required to put in place the necessary infrastructure to implement the Framework.

 

The framework requires ‘Early Recognition of Stress’ and setting up of a Central Repository of Information on Large Credits (CRILC) whereby before an account is declared as NPA, it shall pass through a ‘Special Mention Account’ (SMA). Lenders falling under the framework will have to put in place proper management information system (MIS) to ensure the SMA triggers are captured as they are breached.

 

The CRILC will collect data of the borrowers having aggregate fund and non-fund exposure of more than Rs500 crore and apart from banks, non-banking financial companies- systemically important (NBFC-SIs) and NBFC-Factors will also be required to furnish data. Apart from these, eligible lenders in India will be required to report lending under external commercial borrowing (ECB) regulations as extended by overseas branches to Indian borrowers.

 

Further, where a borrower account falls under SMA-II, banks and notified NBFCs will be required to mandatorily form a Joint Lenders’ Forum (JLF) and formulate Corrective Action Plan (CAP). Any lender reporting an account as SMA-II will trigger the formation of JLF. RBI may also in due course require banks to form the JLF and formulate CAP if the borrower account is SMA-0 for three quarters in a year or SMA-I for two quarters during a year.

 

Where a borrower requests for formation of JLF on account of imminent stress, the lenders will report that account as SMA-0 to CRILC. Indian Banks' Association (IBA) is required to prepare the Master JLF agreement and the operational guidelines for JLF to be adopted by all lenders.

 

The CAP by the JLF will include identifying ways of regularising the account and ensuring that it does not slip into SMA-0, which will include analysing the need for strategic investor, equity participation from outsider, need for additional finance to the borrower and personal guarantees from promoters.

 

The JLF will also be mandated to adopt the options proposed at CAP within 30 days of account being reported as SMA-II or from the receipt of request from borrower and the detailed CAP to be signed off from within the next 30 days. If either of rectification or restructuring process are ineffective, then JLF should initiate recovery process, which would be as per the corporate debt restructuring (CDR) guidelines laid down by RBI.

 

Some of the options suggested for loan restructuring is the possibility of transferring equity of promoters to lenders to compensate for their sacrifice or requiring promoters to infuse more equity or transferring the promoters’ shareholding into escrow till the turnaround happens. This would mean where the account is showing signs of NPA due to whatever reasons, there is threat to the sweat equity of the promoter being snatched from him.

 

In case, banks and notified NBFCs don’t adhere to the SMA classification norms, they will be subjected to accelerate provisioning and other supervisory action as may be deemed appropriate by RBI. Also once a lender has agreed on the CAP by the JLF but changes stance later on or delays the implementation package will also be subject to accelerated provisioning norms as mentioned below:
 

Asset Classification

Period as NPA

Current
provisioning (%)

Revised accelerated provisioning (%)

Sub-standard

(secured)

Up to 6 months

15

No change

6 months to 1 year

15

25

Sub-standard

(unsecured ab-initio)

Up to 6 months

25 (other than infrastructure loans)

25

20 (infrastructure loans)

6 months to 1 year

25 (other than infrastructure loans)

40

20 (infrastructure loans)

Doubtful I

2nd Year

25 (secured portion)

40 (secured portion)

100 (unsecured portion)

100 (unsecured portion)

Doubtful II

3rd & 4th Year

40 (secured portion)

100 (for both secured and unsecured portion)

100 (unsecured portion)

Doubtful III

5th Year onwards

100

100

 




 

 

 

 

 

 


The RBI is to maintain list of directors on board of such companies classified as non-cooperative borrowers for dissemination to lenders and RBI shall send out necessary guidelines in this regard later. Banks will also lodge complaints with the Institute of Chartered Accountants of India (ICAI) against auditors for falsification of accounts or wrong certification. All such chartered accountants (CAs), against whom complaints are received and the disciplinary action is pending, may be flagged for information of all banks. Banks will consider sharing their names with other regulators for more information. Similar would be the fate for advocates, clearing the title of the assets wrongly and valuers, who have overstated the value of the security.

 

Currently banks are not allowed to sell standard assets to asset reconstruction companies (ARCs), but this framework provides that the banks will be henceforth allowed to sell the assets reported as SMA-II to the ARCs. With a view to incentivize the early disposal of stressed assets to the ARCs, RBI has decided to allow the banks to reverse the excess provision on sale of NPA if the sale is for a value higher than the net book value (NBV) to its profit and loss (P&L) account in the year, the amounts are received, so that the banks can recover the appropriate value in respect of their NPA. Further, it will also allow banks to spread over any shortfall, in case the sale value is lower the NBV, over a period of two years, the latter one will be available for the NPAs sold up to 31 March 2015. Banks are allowed to use their floating provisions only for contingencies under extraordinary circumstances to the extent of 33% of the floating provisions held by them as on 31 March 2013 (vide its notification dated 7 February 2014 ) for making specific provisions in impaired accounts  after  obtaining  board's  approval  and  with  prior  permission  of  RBI.

 

With a view to help NBFCs in clearing up the stressed assets from their books, the RBI has decided to make recommendations to the government for allowing designated large NBFCs to assign stressed assets to ARCs under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SARFAESI Act).

 

Trail of questions to be answered

 

Like many other guidelines by the RBI, we think even this framework has few of uncertainties which we have laid down below:

The framework states that as an account is reported as SMA-II to the CRILC, a JLF is to be formed along with the other lenders. So, what if the borrower is classified as SMA-II with only one bank and not with the other lenders – will the other lenders still have to agree for the formation of a Joint Lenders’ Forum?

If a lender disagrees to join the Joint Lenders’ Forum, what consequences will it face? Further, what will be its claim in the cash flows?

It has been clearly written in the framework that along with the banks, notified NBFCs will also have to comply with the provisions laid down for the SMA classification, but the timeframe for classification mentioned in the framework lacks parity with the NBFC prudential guidelines. Unlike the banks, the NBFCs classify NPAs in their books only when the principal and interest remains overdue for over 180 days, so, ideally their mode of SMA classification should have been different from that of the banks.

 

It is very evident from this framework, that the RBI is looking forward to minimise the existing stress in the economy through every possible way. Moreover, it has decided to encounter the artificial stress created on the assets with strict measures for the promoters and directors of the borrowers, the auditors, the advocates and the valuer. None is spared under this framework.

 

(Nidhi Bothra is executive vice president, while Abhirup Ghosh is research analyst at Vinod Kothari & Company)

User

COMMENTS

Kavas Mistry

3 years ago

Please do let me know if you have got any insight to the deliberation on "If a lender disagrees to join the Joint Lenders’ Forum, what consequences will it face? Further, what will be its claim in the cash flows?" ?

Who will take the lead and ensure all lenders are at Par - All lenders lend at different terms and tenors, and with different security stipulations - This will just make the Lead bank (together with a few other banks) in a much better bargaining position and may hurt the smaller banks and foreign banks !

A term lending banker whose exposure is spread over a decade will also dictate terms onto a working capital lender and so on


regards
Kavas

Vinay Joshi

3 years ago

Ms. Nidhi Bothra [VP],
Mr. Abhirup Gosh,

No doubt about economy parameters concerns arise but ARE YOU ALL AWARE that India Inc; Q3FY13-14 the pace in growth was best in last six quarters including operating margins at 12.4%, profit margins 9.5% best in four quarters? Net Profit 18.9% YoY. [BSE 300 analysis, banks,energy, IT cos excluded being different earnings model.]

I addressed your opening para as above & any turnaround direction can be only after next C.Govt. settles in.

Further in respect of growing pile of bank loans. The recent tremors at UBI [United Bank] is advance warning, SBI results a pointer.

The stress in loan books warrants fast [fastest] recapitalization of banks for economic recovery. All PSU banks not well placed.

When will interim budget announcement of 11.2KCR, FY14-15 bank capitalization be fulfilled? This budget provisions valid till June 30, 2014. So the 'capital problem' of PSU banks.

In the case of UBI, RBI has ordered a forensic audit, cap on sanction of 10+Cr loan amount. Its gross bad assets 8.5KCR - 10.82% of advances. Certain others PSU banks have been cautioned as RBI suspects actual bad assets higher than they announce.

Where is FY13-14, 14KCR budgetary provision gone? QIP's not buying into SBI, LIC forced to purchase.

The overall combination of bad & restructured loans exceed 10% of their loans, INR 5.8trn, against equity & reserves of 6.03trn, FY13. In worst case scenario the banking system will be wiped out. This an extremity as several bad loans being cyclical the growth can service it. The growth impetus is required.

As of now as per the stress test conducted no reason to panic but losses in Bond portfolios to be alert.

S&P says stressed assets can be 12% by March 2015, whereas Fitch- Ind.Rating & Research 14% of total loans two years down the line. In June 2013, Mr.Rajiv Takru, Fin.Serv.Sec, MoF, had stated reckless lending, inadequate due diligence. Bankers hit back [in private of course] saying forced to lend to infra & other slowing projects due to political pressures of certain politically connected biz groups.

Even Govt.policy aspects unclear say power sector. The present interim budget has kept 80IA hanging! Fact, govt. responsible & this is an issue as RBI [in fact Mr.Raguram Rajan] whip to go after willful defaulters. No blame game accepted.

Basel III norms will be there, release capital locked in unproductive ventures, hopefully new banks at the earliest function with new capital in the system. Banks can't be in denial of their present balance sheet.

Of course no blowout unlike China, its credit splurge in 2009 stimulus.
India's credit to GDP is very modest, but stressed assets worrisome.
Credit cycle should be separate from business cycle.

Regards,

venkataraman k

3 years ago

every thing lies in the appraisal of the loan proposal. first recovery mechanism should be in the place. if TDS/TCS type recovery in every sales/revenue, no account will go bad. why the govt. should not do. no political will. RBI never learns "prevention is better than cure" at the time of lending no attention is paid by the bank management on the opinion of the CAs. it is allowing the culprit to go Scot free and giving him all protections and later
punishing the police for not vigilant . why don't you bring legislation to say that non-repayment is a criminal offence.
venkataraman k

From KYC to know your customers’ business and its risk

Banks need to go beyond the traditional approach of check box approach in KYC. The first step in risk mitigation in the banking system needs to start with know your customers’ business and the business risk

Know Your Customer (KYC) has traditionally been a check box approach. It starts with collection of proof of identity and residence by banks and financial institutions and verification of the same. This process of verification gets completed when the bank staff ticks the appropriate column in the account opening document for verification process. Of course, nature of document submitted varies, depending upon the type of client that a bank or financial institution is interacting with, but the overall approach remains same. However, KYC conceptually has never been restricted to these two critical document sets. And banks and financial institutions have kept their approach towards KYC restricted to collection of documents only.
 

In the current regulatory set up in India, concept of KYC goes much beyond that. The Reserve Bank of India (RBI) defines KYC as: “KYC is an acronym for ‘Know your Customer’, a term used for customer identification process. It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently”.
 

The recent increase in the non-performing assets (NPAs) of banks, especially public sector  banks (PSBs), have caused the need to have a re-look at the KYC process and enhance the scope of KYC process, not in the regulatory context, but purely from implementation of KYC process . Basic regulatory framework is in place, but the implementation of the framework, has been found wanting in many cases. Banks have been found lacking in analysing the risks associated with client’s business and as a result, many clients have turned delinquent. While it may sound strange to find somebody linking business risks to KYC process, the fact remains that there has never been a Chinese wall segregating these two concepts. The recent experience of huge NPAs getting built in the banking system in India, highlights the need to have robust checks built within KYC process that can protect banks from increasing incidents of delinquency.
 

Recently while speaking at a banking conference, RBI deputy governor Dr KC Chakrabarty said, “KYC is a critical component of a bank’s risk management framework. A customer-centric business needs to know its customer, the nature of his business and the inflows/ outflows into the accounts, if it is to provide customised business products and solutions. This, I call as KYC-B. The banks further need to understand the risks associated with customer’s business to manage risks arising from potential delinquency, fraud and consequent losses as also legal and reputational risks arising from exposure to customers having links to multi-level marketing (MLM) business, terrorist activities and hawala transactions, which is another manifestation of KYC and may be termed as KYC BR”.
 

KYC-business (KYC-B) basically makes a bank more accountable towards ongoing process of customer due diligence. KYC-B will give banks an insight into any changing patterns in the account behavior of a customer and help them manage customer’s account in a better way, while KYC- business risk (KYC-BR) is purely risk focused as the name suggests. KYC-BR will not just supplement the anti-money laundering (AML) measures; it will also provide banks and financial institutions an insight into building of credit risk in the customers’ account. With management of these dual risks, a bank will be able to mitigate reputational as well as legal risks.
 

Significance of KYC-B and KYC-BR are going to gain importance in the days to come if the banking system has to be made robust. Banks need to go beyond the traditional approach of check box approach in KYC. The first step in risk mitigation in the banking system needs to start with KYC-B and KYC-BR.
 

(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)

User

COMMENTS

Ramesh Jaradhara

3 years ago

Banks create their own NPAs-as said by Pro Anil Agashe is true. Banks so far looked in to their clients from traditional perspective. As an officer in a PSB I realise that credit appraisal process is far from satisfactory in PSBs.It needs to be given emphasis on KYC-B and KYC-BR concepts from risk mitigation perspective in each and every credit proposal. Then only we can check over-growth of NPAs in the banking system.

RAVINDRANATH

3 years ago

At the outset let me give a thumbs-up to the article.

I would like to comment on the last-but-one para of the article, as to why something is not happening which ought to happen.

In the good old days of non-computerised era, entries were made in the customer's ledger account and the officer would check every entry in the ledger with the cheque on hand. In the process he/she would get a quick glance on the usage of funds as to where the funds are going and whether the payments made are consistent with the business of the customer and whether the transaction volumes are commensurate with the balance in the account/limits availed, etc. Today, everything is centralised, where the branch maintaining the account has very little chance of knowing where his/her customer's funds are being channelled. Secondly the pressure of work at the branches do not allow the staff to go through the accounts till one day the account starts turning sticky. Of course, there are still ways to prevent the account going out-of-hand by taking certain precautions like not granting frequent overdraft/overlimit, unless understanding the need therefor or observing frequent return of cheques [both inward as well as outward] etc. Vigilance at an early stage in such accounts will save the bank from disaster.

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)