Navodaya co-op bank ex-chairman Ashok Dhawad surrenders
On 4th November 2019, former Congress MLA Ashok Dhawad, ex-chairman of the Navodaya Urban Co-operative Bank, surrendered before the special court of Maharashtra Protection of Interest of Depositors (MPID) Act in the alleged Rs 38.75 crore scam after his anticipatory bail plea was rejected by the supreme court. 
 
He reportedly walked into the courtroom accompanied by his counsel Devendra Chauhan. This is yet another cooperative bank that went into liquidation on account of irregularities and its licence was cancelled by the Reserve Bank of India (RBI) in October 2018. 
 
The Times of India (TOI) has reported that the cops from Economic Offence Wing (EOW) of the police will be seeking his remand from the court. Dhawad’s spouse Kiran, who was also a director, has been granted anticipatory bail by the Bombay High court. On 6th November 2019, the Maharashtra Protection of Interest of Depositors (MPID) Act court judge, Sunil Patil, remanded Dhawad to police custody for one week.
 
Dhawad, who was the chairman of the bank between 2011 and 2015, has been named as one of the accused in the case after his involvement in sanctioning and disbursing fake loans, misappropriation of funds, issuing clearance certificates even to defaulters and many other blatant irregularities were thrown up during the audit by the state’s co-operative department.
 
Following the audit reports, which also indicted the bank’s former chief executive officer (CEO),Samir Chatt, an offence was registered at Dhantoli police station. The EOW, which took over the probe, has so far arrested 13 persons (including Samir Chatt) while about 40 are yet to be nabbed. 
 
Many prominent builders and construction groups, like Jhams, were among the beneficiaries. Mukesh Jham and his wife Mahima were arrested earlier this year for having siphoned off amounts taken as loan which they did not repay. 
 
Former board of directors, office-bearers, and some borrowers of the bank were booked by Dhantoli Police in Nagpur in May this year under various sections of the Indian Penal Code (IPC) for cheating and criminal breach of trust besides under the MPID Act and Information Technology Act.
 
They are accused of approving unsecured loans between 2010 and 2017. The accused had allegedly returned the original documents of the properties mortgaged with the bank as well as the No Objection Certificates (NOCs) to those who have failed to repay loan. The police have also listed preparing fake registration documents among other irregularities allegedly committed by the accused. Another EOW official said the earlier board of directors and some office-bearers allegedly tampered with the computer records to show that the loan was disbursed to genuine borrowers. 
 
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    COMMENTS

    Mohamed Meghani

    2 weeks ago

    Co operative banks in India should be renamed Chor operative banks

    RBI panel calls for strong corporate governance in CICs
    An RBI Working Group (WG) has suggested that core investment companies (CICs) should implement stronger governance practices like formation of board level committees, appointment of independent directors, and internal audits.
     
    These are part of the recommendations submitted by the Working Group (WG) to review regulatory and supervisory framework for Core Investment Companies (CICs) set up in July 2019. The group was headed by Tapan Ray, former Secretary at the Ministry of Corporate Affairs. 
     
    Core investment companies are non-banking financial companies (NBFCs) that hold not less than 90% of their net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.
     
    Experts have been seeking review of CIC guidelines ever since defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS), a large systemically important core investment company.
     
    In September 2018, Infrastructure Leasing and Financial Company (IL&FS), a CIC with over 300 subsidiaries, defaulted on its payment following which over Rs 90,000 crore worth of combined banking sector exposure was declared as non-performing or bad asset in the subsequent months.
     
    The working group led by former Corporate Affairs Secretary Ray has suggested capital contribution by a CIC in a step-down CIC, over and above 10% of its owned funds, be deducted from its adjusted net worth, as applicable to other NBFCs. They are also against allowing step-down CICs to invest in any other CIC.
     
    RBI formed the working group in July to review regulatory and supervisory framework for CICs. RBI has on Wednesday made their report public and invited public comments on it.
     
    "Currently, corporate governance guidelines are not explicitly made applicable to CICs. To strengthen the governance practices, the working group recommends constitution of board level committees viz. audit committee, nomination and remuneration committee and group risk management committee," the report said.
     
    Unlike NBFCs, which are required to constitute committees of the board, no such corporate governance standards are mandated for CICs. The same director could be part of boards of multiple companies in a group, including CICs.
     
    "In a few cases, the working group said, it has been observed that the CIC had lent funds to group companies at zero percent rate of interest with bullet repayment of 3-5 years and without any credit appraisal," it said.
     
    Further, the committee also proposed preparing consolidated financial statements and ring-fencing the boards of CICs by excluding employees or executive directors of group companies from its board.
     
    The report highlighted that the absence of restriction on the number of CICs that can exist in a group and non-deduction of capital of CICs for their exposures in group companies (including in step down CICs), creates scope for excessive leveraging.
     
    The Working Group, therefore, suggested that step-down CICs may not be permitted to invest in any other CIC while allowing them to invest freely in other group companies. That apart, the committee also suggested that the capital contribution by a CIC in a step-down CIC, over and above 10% of its owned funds, should be deducted from its adjusted net worth, as applicable to other NBFCs. 
     
    The number of layers of CICs in a group, it said, should be restricted to two and any CIC within a group shall not make investments through more than a total of two layers of CICs, including itself. 
     
    Currently, CICs are not required to submit off-site returns or statutory auditors certificate (SAC).
     
    The committee recommended that offsite returns may be designed by RBI and prescribed for CICs on the lines of other NBFCs. 
     
    "Annual SAC submission may also be stipulated. Onsite inspection of the CICs may be conducted periodically," it added.
     
    In August 2019, there were 63 CICs registered with RBI. As on March 31, 2019, the total asset size of the CICs was 2.63 trillion and they had 87,048 crore (approx.) of borrowings.
     
    The top five CICs consist of around 60% of the asset size and 69% borrowings of all the CICs taken together. The borrowing mix consists of debentures (55%), commercial papers (16%), financial institutions, other corporates (16%) and bank borrowings (13%).
     
    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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    Amnesty scheme to deploy 40% black money in Elephant Bond
    The High Level Advisory Group (HLAG) set up by the Minister of Commerce has recommended Elephant Bond, an amnesty scheme to bring black money back in India.
     
    Under this proposed scheme, unaccounted wealth holders can disclose their assets by paying minimum tax.
     
    Under the scheme, they have to invest 40 per cent of such wealth in long-term infrastructure bonds called as Elephant Bonds. The proceeds from issuance of such bonds will be utilized for development of Infrastructure in India. The HLAG was asked to give recommendations on ways to promote the country's trade, investments.
     
    A person who invests his black money in an Elephant Bonds will have to pay 15 per cent of unaccounted wealth as tax. The 40 per cent of wealth so declared will have to be invested in long term bonds.
     
    The coupon rate of interest on such bonds will be linked to LIBOR (LIBOR plus 500 basis points) and the coupon rate would be 5 per cent. Interest earned on elephant bond shall be chargeable to tax at the higher rate of 75 per cent.
     
    The maturity period of these bonds would be around 20 to 30 years. The scheme will be open for anyone who wants to disclose the unaccounted wealth and to get immunity from penalty and prosecution under various laws can opt for this amnesty scheme.
     
    The High Level Advisory Group (HLAG) has recommended that a subscriber to an Elephant Bond would get immunity from penalty and prosecution under all laws including foreign exchange, black money laws and taxation laws.
     
    'Elephant Bonds' are different from earlier schemes as it gives immunity from all laws on disclosing of unaccounted wealth and on the other side, the Government would get the enough amount in form of tax and investment in bonds to channelize funds of infrastructure development in India.
     
    This will be, if it gets the government nod, not the first time that an amnesty scheme has been proposed to bring the black money back in India.
     
    In 2016, Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS) was introduced under which a person could declare his undisclosed cash by paying tax, surcharge and penalty. However, that scheme did not turn out to be attractive owing to exorbitant tax rate and non-immunity from certain criminal legislations such as Prevention of Money-Laundering Act, 2002, Prevention of Corruption Act, 1988.
     
    Similarly in 1981, the Special Bearer Bonds (Immunities and Exemptions) Act, 1981 was brought in to channelize the black money for effective economic and social planning. This scheme also had certain shortcomings such as bond holders were not entitled to avail any setoff in any tax proceedings on the ground that he has subscribed to the bonds which in effect didn't isolate the bonds from the regular tax proceedings.
     
    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

    VIVEK SHAH

    2 weeks ago

    If the interest rate would be linked to LIBOR + 5% and the income so generated would be taxed @75 % it would be interesting to see what effect these bonds would have if the negative interest rates hits UK.

    Sukhvir

    2 weeks ago

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