Canara Bank: Rs47,310 Crore Write Off in 8 Years; Just 19% Recovery, Latest PSB Loot
Canara Bank is the latest to join other big public sector banks (PSBs) that have written off bad loans worth thousands of crores of rupees and recovered paltry amounts from big defaulters.
 
Like other PSBs, Canara Bank also refused to share this information as well as names of defaulters under the Right to Information (RTI) Act and instead asked the applicant to check its annual reports. 
 
Data shared by Pune-based RTI activist Vivek Velankar shows that during the past eight-year period from FY12-13 to FY19-20, Canara Bank wrote off a total of Rs47,310 crore while recovering just 19% or Rs8,901 crore from defaulters.  
 
 
As happened with other PSBs that we have reported so far, Canara Bank too used vague reasons (privacy) for not sharing information like names of big defaulters with a bad loan of Rs100 crore and above. In the reply to the RTI, the Bank says, "Information sought is the personal information of the concerned and if disclosed would invade the privacy of those concerned and its disclosure does not have any relationship with public interest or activity and is exempted under section 8(1)(j) of the RTI Act."
 
 
An aggrieved Mr Velankar, who is also president of the Sajag Nagrik Manch, asks, "When a common borrower defaults, the same banks publish his name and all details through advertisements in newspapers. Then why do they want to keep names of big defaulters hidden under the privacy cause? Why doesn’t the 'privacy' clause apply while publicising names of common borrowers?" 
 
In several judgements, the central information commission (CIC) had ruled that, to qualify for the exemption under Section 8(1)(j) of the RTI Act, the information must satisfy certain criteria, such as personal information and public interest. 
 
Ordinarily, the adjective 'personal' is attributed to that which applies to an individual and not to an institution or a corporate. Therefore, it flows that 'personal' cannot be related to institutions, organisations or corporates, especially publicly listed entities with a large shareholding of retail investors.
 
Hence, Section 8(1)(j) of the RTI Act cannot be applied when the information concerns institutions, organisations or corporates.
 
Former central information commissioner Shailesh Gandhi had observed in a judgement, “...disclosure of information, which is routinely collected by the public authority and provided by the public servants, cannot be construed as an invasion of the privacy of an individual and must be provided to an applicant under the RTI Act."
 
In the case of Canara Bank, the information on loan write offs, recovery and all other details like names of borrowers are collected and then reported to the Reserve Bank of India (RBI) as statutory obligation. In the circumstances, Canara Bank has no right to withhold this information under any Sections of RTI Act. Yet, the bank has refused to share names of big defaulters with Mr Velankar. 
 
Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean-up process. 
 
In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. However, as State Bank of India (SBI), Bank of Baroda (BoB), Bank of Maharashtra (BoM), Union Bank of India (UBI), IDBI Bank, Punjab National Bank (PNB) and Indian Overseas Bank (IOB) have shown, most of the times, there is no recovery or negligible recovery for the amounts written off.    
 
As in the cases of the State Bank of India (SBI), Bank of Baroda (BoB), Bank of Maharashtra (BoM),  Union Bank of India (UBI), IDBI Bank , PNB and IOB that have been reported by Moneylife, this is one more example of massive ‘technical’ write-off with minuscule recoveries, leading to frequent recapitalisation of banks with the taxpayers’ money. 
 
Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts. 
 
As reported by Moneylife, Indian Overseas Bank wrote off a massive Rs41,392 crore as technical write-offs in the past eight-year period from FY12-13 to FY19-20. As against these write-offs, the recovery was just 17% or Rs7,253 crore. (Read: Indian Overseas Bank, Another PSB to Write Off Rs41,392 Crore in 8 Years; Recovers Just 17%)
 
PNB wrote off a massive Rs44,565.59 crore as technical write-offs in a four-year period from FY16-17 to FY19-20 . As against these write-offs, the recovery was just Rs12,027.97 crore. If one were to look at large loans of Rs100 crore and above, the technical write-off in this segment alone is Rs31,966 crore, while the recovery from big defaulters is only 22% at Rs7027.94 crore. (Read: Punjab National Bank Wrote Off Rs31,966 Crore in Past 4 Years; Recovered only 22% from Big Defaulters)
 
Similarly, IDBI Bank, which became a private sector lender a few months ago, wrote off total bad loans worth Rs45,693 crore but could recover just 8% of it after spending more than Rs29 crore during the past seven years. (Read: IDBI Bank Wrote Off Rs45,693 Crore Bad Loans and Recovered Just 8% in 7 Years)
 
 Union Bank of India too wrote off bad debt worth Rs26,072.81 crore between FY11-12 and FY19-20 (this information pertains only to loans of over Rs100 crore). 
 
Bank of Maharashtra has written off bad loans of over Rs7,402 crore in the past, while recovering a paltry 4% in over eight years through recovery efforts. The lender wrote off bad debts worth Rs7,402 crore during four out of the past eight years, while recovering just Rs253.55 crore. (Read: Bank of Maharashtra Writes Off Rs7,100 Crore Bad Loans; Recovers Just 4% in 8 Years)
 
From 2012 to 2020, BoB had technically written off 97 accounts with bad debts of Rs100 crore and more. These add up to Rs21,476.89 crore over eight years, while recovery in that same period is just 4.91% or Rs1,056.53 crore. (Read: Bank of Baroda Follows SBI, Writes Off Rs21,474 Crore in Bad Loans; Recovers only Rs1,057 Crore in Past 8 Years)
 
 Similarly, from FY12-13 to FY19-20, SBI, the country's largest lender, wrote off bad loans worth Rs1.23 lakh crore of bad debt but recovered a paltry Rs8,969 crore. (Read: SBI Writes Off Rs1.23 Lakh Crore of Bad Debt, Recovers Paltry Rs8,969 Crore in 8 Years!)
 
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    COMMENTS

    karan.kabirnagar

    1 month ago

    Modi government is government of big corporates. So Modi ji stop privatised the banks, PSU, railway, airports because economy of India is very down today. So modi government should help the government PSU, s and government banks by recapitalize.After the last round of mergers of state owned banks. Modiji should supports the banks and PSU, s. So that unemployment among youth can be protected and also protect the serving employees of banks and PSU, s

    saharaaj

    1 month ago

    all is not write off some may have found in to the pockets of LOOTyens, touts and fixers and crony capitalists like Dewan housing Ruias.. Only way to recover is felons be sent to Andeman islands for forced holidays

    saioamshyd

    1 month ago


    FOR EVERY COMPLICATED PROBLEM, WE HAVE A SIMPLE REMEDY FOR A KARMA YOGI PM WITH A REVOLUTIONARY MINDSET-DR.MANMOHAN SINGH. AN ACCIDENTAL PM:
    1. Any ways, the PMO has taken over Fiiance Portfolio for a deep study into wheewithal of World Bank, the US $, the British Pound, and EUROS, etc.
    2. It is an open secret to note that Bank Finance is made available at 4.00% PA in the USA, Australia, Singapore & Newzealand, etc. With the creative mindset of Karma Yogi PM, Shri Narendra Modi, the deposit interest is brought down vis-a-vis advance/loan interest rates. Surprisingly, PSBs mobilized INR.20 trillion.
    3. To loot the Indian wealth in Trillions & shift it across the borders was a way of life during Congess regime. Congress leadership looted INR.17 quadrillion, which is 45 times more than Modiji's humble plan of mobilizing US$.5 trillion by selling India's Sovereign Bonds. There is a nexus between members of CVC, IBA & CORNERED & BRIBED-UFBU AFFILIATES LED BY CHV , PSB boards/CEOs/CMDs + Duds of UFM, ruling politicians & fugitives, etc. Unless & until the nexus is broken & culprits are booked & punished- though opening a Pandora's box- no future for India.
    4. When POs mobilized huge sums of deposits and such sums were utilized by GOI through annual budgets, why can't the deposit moneys be mobilized by PSBs & be utilized by GOI routed throughannual budgets. BJP led NDA has sufficient majority in Parliament.
    5. With a single stroke of his pen the PM can do so, in consultation with the accidental PM, DR.Manmohan Singh, A TRUE PATRIOT TOTHE CORE, X RBI GUV. Once the PSB employees'/retirees' issues are brought under the purview PAY COMMISSION, the entire PSB employees/retirees are benefitted.
    6. https://www.youtube.com/watch?v=4Si8U02s8cQ.
    7. SATYAMAEVA JAYATHE!!!

    REPLY

    saharaaj

    In Reply to saioamshyd 1 month ago

    Modi Govt is not not in position to send Gandhis to jail but got only Bail as not enough material is available or this collusion between felons and perceived victims

    rs235m

    1 month ago

    Honest taxpayers are there to bear the burden of written off amount like donkey.

    karan.kabirnagar

    1 month ago

    Government of India , RBI and finance department should keep sharp eyes in 12 PSB banks. To run these state owened PSU banks efficiently by recapitalize them. After these lone should be given to the main corporates through making High lavel committee. And law should be strict to recover the lone. There should be CBI enquiry against big defaulters. Privatised the state owened PSU banks is not a solution. Because froud also occured in private banks also. Like Yes banks.

    dhirajsbaruah

    1 month ago

    And then Modi has the audacity to tell people about paying taxes. Sorry boss. All these news make me wanna not pay tax and hire a CA just to make sure govt gets nothing from me. As that money will go to some billionaire who will probably waste it on some drugs or prostitute. I might just do that from 2021. Any CA here?

    saioamshyd

    1 month ago

    https://www.moneylife.in/article/canara-bank-rs47310-crore-write-off-in-8-years-just-19-percentage-recovery-latest-psb-loot/61857.html
    1. How come PSB managements refuse to share the names of big defaulters, as it is grandpa's property of Apex level management[s]. How come RBI extends blanket moral support to PSBs & SBI in violationof SC judgments.?
    2. Are we living in Jungle Raj or democracy? Why PMO/UFM are keeping mum to spoil the public confidence in PSs vis-a-vis the image of GOI, ruled by BJP led NDA?
    3. https://www.youtube.com/watch?v=4Si8U02s8cQ.
    4. SATYAMAEVA JAYATHE!!!

    asher.jayesh

    1 month ago

    You must show the comparison of Debts written off by Private Banks which i am sure must be extremely miniscule to further expose the PSBs in the way they operate without any accountability. Need of the hour is to Privatize the Banking sector in toto.

    vaderajr

    1 month ago

    sometimes i wonder if there is any purpose paying income tax particularly for those in the salaried sector who are in the high to very high tax bracket

    ganesan.aruna1968

    1 month ago

    Citizenship should be stripped off for all the directors of the corporate which fail to pay off for the public sector banks

    gbrhyd

    1 month ago

    It is game of ‘big’ people and the banks. Simply they will take crores of rupees in the name business from banks and escape. Nothing will happen to them. No law will work , but when it is a ordinary person then total Indian law come in to action.
    Take it easy....

    karan.kabirnagar

    1 month ago

    Government of India should treat all banks in same way. So if government want some state owened PSU banks to be privatised then it is discrimination among employees. I Suggest the govt of India if they want privatised the PSB banks so all banks including SBI, Bank of Baroda, PNB Banks should also be privatised. If not then no banks should be privatised.

    karan.kabirnagar

    1 month ago

    I request the government of India to those PSB Banks are running in losses since 5 to 8 years, should close down and there staff should be merged with other Good PSB. Privatised the Government owned bank is not a solution. So stop privatised the PSB Banks.

    karan.kabirnagar

    1 month ago

    Big froud by canara Bank which has not shown big amount written off till today to government. This big written off amount of big corporates, which is now shown through RTI. I request the government of India to why you are save sui banks. Close these banks and adjust there staff in another PSB Banks.

    REPLY

    saioamshyd

    In Reply to karan.kabirnagar 1 month ago

    Entire PSBs are in doldrums.

    Nahom

    1 month ago

    Reading such stories continuously gives one anger and high BP.

    NPAs impact banks' rate cut transmission, loan growth: Study
    Non-performing assets (NPA) of a bank weakens the monetary policy transmission and loan growth rate, said a recent working paper prepared by the staff members of the Reserve Bank of India (RBI).
     
    The paper titled, 'Bank Capital and Monetary Policy Transmission in India' shows the requirement of bank capital regulation in India.
     
    The study finds evidence on the existence of the bank capital channel of monetary policy transmission for India. It said that that there is a positive association between bank equity and credit growth.
     
    "This finding calls for the need for countercyclical capital buffer for the Indian banks to protect their balance sheet against losses from changes in economic conditions during the recessionary phase," it said. The paper mentioned that the views expressed are those of authors and not that of RBI.
     
    The study revealed that banks with higher Capital-to-Risk (Weighted) Assets Ratio (CRAR) face a lower cost of funds. The pro-cyclical nature of leverage shows that banks lend during economic boom by raising debt funds -- through deposits, borrowings -- rather than using their excess capital.
     
    "Higher CRAR unlocks the bank lending channel and helps in smooth transmission of monetary policy. However, the magnitude of transmission of monetary policy was found to be weak for banks with CRAR higher than a certain threshold level," it added.
     
    It noted that low level of CRAR not only hampers bank health but also restricts smooth transmission of monetary policy.
     
    Injection of capital by the Government of India in public sector banks is likely to increase the credit flow to the real sector and help in smoother transmission of monetary policy, it added.
     
    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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    Sambandh Finserv Defaults in Payment due to Liquidity Issues; Loan Fraud by MD & CEO, Alleges CFO
    Odisha-based Sambandh Finserve Pvt Ltd has defaulted in its payment obligations arising due to internal fraud unearthed at the end of September 2020. In a note to the board of directors, four officials, including its chief financial officer (CFO) James Raj, has levelled serious allegations against the company's founder, Deepak Kindo, who is also managing director (MD) and chief executive officer (CEO) of Sambandh Finserve. They allege that assets under management (AUM) have been inflated by a whopping Rs250 crore by showing fictitious disbursement, withdrawals and showing deposits as collections.   
     
    A note prepared by CFO James Raj, and three others, for the board, reveals that there were serious irregularities in the functioning of the management.
     
    "The actual portfolio as (AUM) is around Rs140 crore as against reported figure of Rs391 crore as on 30 September 2020. The reported AUM is inflated and non-existent. The gap is about Rs251 crore," it says. 
     
    The note also alleges that "this gap in the portfolio was managed by fictitious disbursement, subsequent withdrawals and deposited as fictitious collections under the direction of MD and CEO saying it would be managed soon and it goes on. This has been going on since the financial year 2015-16 and the gap has simultaneously gone up beyond control."
     
    According to the note, "there is pilferage in the cash withdrawn for disbursement by the MD and CEO and diverted to other entities namely Diya Dairy & Agroprocessors Pvt Ltd, Kshamta Foundation, Regional Rural Development Centre, DK Enterprises, Utkal Dairy and other unknown persons or entities."
     
    All this was done under the instructions of the MD and CEO, it is alleged. The note claims that these instructions were followed and executed 'under extreme duress and intimidation' in the belief that it would be 'managed soon'.  
     
    The note goes on to blame several other executives without naming them, but says that the “fake portfolio on the ground was managed by the current COO and the regional business leader” responsible for Orissa and Chhattisgarh. 
     
    The note has several general allegations and asks the board to initiate further investigation and take action for safeguarding the interests of all stakeholders and the safety of those who have blown the whistle on the fraud. (check the note at the end of this article.)
     
    Meanwhile, Brickwork Ratings (BWR) has downgraded the long-term rating of Sambandh Finserve's non-convertible debentures (NCDs) and bank loan facilities to BWR D from BWR BBB- with positive outlook.
     
    In a release, BWR says it downgraded Sambandh Finserve's ratings as per the feedback received from one of its lenders on 10 October 2020. However, when BWR called the company officials, it was informed by James Dinesh Raj, chief financial officer (CFO) of Sambandh Finserve, about the internal fraud where large quantum of bogus loans entries was made in the book of accounts of the company. 
     
    "This also resulted in the company facing sudden liquidity issues since the first week of October 2020. The CFO informed BWR that they have timely met all repayment obligations on time till the month of September 2020. He also informed BWR that an internal investigation is being initiated by the board of the company with regards to the loan fraud unearthed," the note says.
     
     
     
    Sambandh Finserve has two NCDs worth Rs50 crore and one fund-based term loan of Rs383 crore, taking the total of its debt instruments to Rs433 crore. As on FY19-20, the company has asset under management (AUM) worth Rs461.38 crore.
     
    In June this year, Opportunity International Australia's subsidiary Dia Vikas Capital Pvt Ltd invested Rs2.5 crore in Sambandh Finserve.  
     
    In 2013, Sambandh Finserve got registered with the Reserve Bank of India (RBI) as a non-banking finance company – micro finance institution (NBFC-MFI). Before that, it was working as NBFC and MFI since 2006. In FY19-20 the company started its operations in Bihar and Gujarat through 34 new branches and has an active customer base of 0.22 million.
     
    It offers customised lending and financing solutions to low-income households and to those having little access to formal financial avenues, who use the credit to run small businesses, renovate their dwelling units and educate their children.
     
    Sambandh Finserve has presence in the five states of Odisha, Chhattisgarh, Jharkhand, Bihar and Gujarat and offers personalised credit and wealth management solutions to its clients.
     
    Here is the note prepared by four officials of Sambandh Finserve…
     
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    COMMENTS

    saharaaj

    1 month ago

    It is like rapists, killers, extortionist become minister so the promoters, their kins lateral and direct join top posts and award them selves designation . if it was US all would have been behind bars, here political parties will rush to offer savior service in return for grease on the palms every one happy

    yerramr

    1 month ago

    What sort of rating institutions we have? Do they need a whistle blower to point out corruption by none other than MD? This fraud must be in existence even before the earlier rating by the BRICKS. One of the most important things to be done in the financial reforms is correcting the rating agencies by building a code for all of them to work and transparently too.

    REPLY

    AJ_AJ

    In Reply to yerramr 1 month ago

    What could rating agencies do in this case? They are not forensic auditors. Even a FPI got burnt...

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