The executives and governance tiers of India's public sector banks and regulators seem to have much to be ashamed of as exemplified by:
1) It is reported that Rs. 6,172 crore ( Rs 1 billion = 100 crore ) was remitted from Bank
of Baroda to Hong Kong as payments for non-existent imports in cashew, pulses
and rice. The amount was purportedly deposited in 59 accounts in cash as
advance for imports that never existed. The amount remitted in each
instance was below $100,000. These remittances were presumably an advance
towards imports ; in most of the cases,
the beneficiary was the same. The exchange-related transactions were carried out
in newly opened accounts. Heavy cash
receipts did not seem to trigger exceptional transaction report (ETR). The bank
should have monitored the high-value transactions and reported suspicious transactions. The systems and procedures were flouted.
2) It is reported that at Bank of Baroda there has been a bill discounting scam in Gujarat by a
textile borrower involving Rs 350 crores also.
3) There has been non-payment of dues by Mr. Ramachandran 's Atlas
Group, an Indian jeweller with operations in the Gulf. BoB has an exposure of
70 million dirhams or Rs 120 crore through its Dubai branch. The Atlas group
owes 20 banks a total sum of Rs 1,000 crore according to press reports.
4) The recent transfer of BoB’s Executive Director KV
Ramamoorthy to United Bank, reportedly due to certain transactions made by the Dubai
branch which were allegedly not in compliance with existing rules seems to indicate managerial and executive connivance or complacency.
5) The cup of woes of United Bank of India is over full. Archana Bhargava chairperson and managing director, who had a brief stint of about 10 months brought accounting malpractices at the Kolkata-based United Bank of India to the Reserve Bank of India (RBI) attention but had to leave for some reason . By sending Ramamoorthy there, the regulators seemed to add to the bank's non performing assets!
5) Mr Jain CEO of
Syndicate Bank was arrested by CBI for allegedly taking a bribe of Rs 50 lakh
for increasing credit limit of some companies. He was held for allegedly
negotiating with Bhushan Steel for 'illegal gratification' in return for
granting credit extension to that company as it had defaulted on payment of
loan instalments amounting to crores of rupees to the bank.
7) Vijay Mallya’s Kingfisher's borrowings from 17
banks including the largest of all State
Bank of India (SBI) exceed Rs 7,000 crore of non perforing loans with interest overdue. Central Bureau of Investigation (CBI) has found that
Mallya even diverted part of the loan amount to tax haven countries. It is investigating the IDBI case and this enquiry is likely to spread to other banks.
Regulators seem lost in making exhortation speeches rather than taking action.
This blog's views are academic views expressed without any risk or responsibility. The blog recommends no investment
