Monday, June 11, 2012

Cooperative Bank, Regional Rural Banks and Commercial Bank under Scanner

Gujarat's urban co-op banks fight Madhavpura's ghosts
A decade after the Madhavpura scam, Gujarat?s urban cooperative banks are fighting to win back customer confidence and live another day
Rutam Vora & Abhijit Madhav Lele / Ahmedabad/ Mumbai July 4, 2012, 0:39 IST

On June 1, the Reserve Bank of India (RBI) cancelled the banking licence of Madhavpura Mercantile Cooperative Bank (MMCB), bringing the curtains down on the most controversial bank in the history of urban cooperative banks (UCBs). Though it’s been more than a decade since it was taken for a joyride by former big bull Ketan Parekh, many UCBs in Gujarat are still struggling to regain the lost trust and confidence of depositors.

But Amul is an exception. Owned by the Gujarat Co-operative Milk Marketing Federation, it has grown leaps and bounds to become India’s largest brand of milk and milk products. Its turnover rose to Rs 11,688 crore in 2011-12, from 2,745.74 crore in 2002-03.

Otherwise in the pink with Rs 17,500 crore of deposits, things took an ugly turn when MMCB’s multi-crore stock market scam surfaced in 2001. It all started when MMCB, which got the banking licence on August 19, 1994, and later on became a multi-state cooperative bank from April 1996, resorted to indiscriminate lending to stock broking firms during 1999-2000. It not only violated lending norms set by RBI, but the top management colluded with select share brokers to lend unsecured loans for their investments. The bank’s exposure to the stock market through Mumbai-based share broker Parekh was to the tune of Rs 1,200 crore.
by dkjain49709 » Thu Jul 01, 2010 8:34 am
Government has asked now PSU banks to target urban cooperative banks and advised them to takeover sinking banks. I am unable to understand RBI works as an advisor to keep a man healthy or a doctor to diagnose ailing bank or simply a doctor to conduct post Mortem report of a dead body and submit report. It will not be an exaggeration to say that government in general works like a doctor to submit post mortem report of all dead bodies like scams, terror attacks, fraud ,scandals and forget.

RBI and other regulators first allow banks to loot the money, extend reckless credits, spoil the internal culture and intrinsic value of the bank, promote corruption in credit and Human Resource Management, waiver of loan and so on and in the next phase recommends for infusion of capital to salvage the bank and lastly recommends other big banks to takeover sinking bank.

Some times cooperative banks become out of control and some times some Regional Rural banks or some other time some PSU or private bank. In the past several cooperative banks have closed their shutters. Many Private Banks have been forcibly merged with PSU banks like Punjab National Bank or Union Bank or Bank of India. Even there was a proposal to merge banks like United Bank or U Co bank or Indian Bank.

Government has in the past provided capital as oxygen from time to time to various sinking or weak banks .Even in the last month government has passed a bill to provide Rs15000/ capital infusion to weak banks. But unfortunately it never tries to strike at the root of unhealthy culture and stop political intervention. Inspite of preaching all sermons NPA in banks has been rising speedily though it is concealed at the behest of RBI or Government of India.

The great question arises why and how does RBI fail to nip in the bud and why does it not punish the person who caused and perpetuated corrupt line of action in all fields. Why does it fail to break nexus of politicians in spread of corrupt culture in credit delivery prevailing all over the country in almost all banks? Why does it not punish the chartered Accountants who more often than not sell their signature and blindly certify balance sheets? How a rating agency fails to identify bad banks and alert the regulators in time?

Danendra jain

Many district cooperative banks in UP are on verge of closure: 

Shivpal Yadav LUCKNOW: District cooperative banks in 25 districts of the state are on the verge of closure, state minister for corporative Shivpal Yadavdeclared on Monday. Speaking during the cut motion debate in Vidhan Sabha, Shivpal rued rampant corruption and nepotism in the sector which, he charged, was the major contributory factor to the near collapse. SP government, he promised, will take necessary steps to salvage the situation.

The Reserve Bank of India (RBI), Shivpal told the House, is holding back the licence of 25 banks for failing to meet the prescribed criteria and procedural norms. The government, he said, proposes to initiate a dialogue with the Centre and also write to the RBI on issuance as any reluctance or delay would spell ruination for state farmers. The minister slammed the Mayawati regime for rigging election of the cooperative banks in districts to ensure appointments of the favoured one as directors, chairpersons, etc. Shivpal cited the example of how nomination of candidates from the Samajwadi Party was cancelled by the returning officers at the last moment to oblige the ruling party.

The allegation was stoutly rebutted by the BSP MLA and SP turncoat Ranendra Budholiya. Budholiya launched a scathing attack on Samajwadi Party and alleged that its leaders had been using corporative movement to feather their nests and splurge public funds on needless foreign trips. Promptly hooted by colleagues from the treasury benches, he demanded investigation into charges of malpractice and graft that afflict the sector and claimed that even NABARD had stopped sanctioning loans due to the fact.

Charging Mayawati government with criminal highhandedness, BJP leader Hukum Singh told the House how a senior PCS officer arbitrarily rejected the nomination papers filed by all 11 candidates in Muzaffarnagar to pave way for election of a BSP stooge in the elections. Officers who bent rules to please the former government, he said, have now switched sides and hitched on the SP bandwagon. The leader demanded that they be identified and punished. Conceding the demand, Shivpal said the government has already begun the exercise and action would be taken soon. The minister also said that SP government has stocked three lakh metric tonnes in the storage to cater to the growing demand of urea and claimed that this season availability will be no issue unlike the BSP rule when farmers were lathicharged for asking for urea.

Earlier, moving the cut motion in the budget for animal husbandry, Hukum Singh highlighted rampant cattle smuggling across the UP borders. Cattle theft is gone up notoriously in western UP, he said, and claimed that buffaloes yoked to the carts and left unattended even for an hour find their way into the slaughter houses which are doing a thriving business with connivance of the veterinary doctors and the local police. Singh rebutted the claims of Parasnath Yadav that the production of milk has increased in UP and attributed the spiralling graph to adulterated urea concoction and demanded an immediate check of the menace.

42 cooperative banks 
under central bank’s scrutiny for rule violation
Banks put under revival plan in a last-ditch effort to revive their businesses and improve capital adequacy

Mumbai: The Reserve Bank of India has put 42 cooperative banks under a revival programme that involves a thorough scrutiny after the lenders failed to meet critical parameters on minimum capital and net worth.
RBI has barred the lenders from accepting fresh deposits from the public after they missed the 31 March deadline to satisfy the norms.

The programme, known as the monitorable action plan (MAP), is a last-ditch effort by the central bank to revive the businesses of distressed banks.
The banks have till 30 September to revive their businesses and improve capital adequacy.

During this period, the operations of the banks and their business decisions will come under scrutiny. If the banks fail to revive their businesses, the regulator can take punitive action or even cancel their licences.

Of the 42 district central cooperative banks under scrutiny, 25 are in Uttar Pradesh.

Special committees comprising top officials of RBI and the National Bank for Agriculture and Rural Development (Nabard) will monitor the monthly progress of the banks.

“There were about 50 banks which were facing closure threat. Of them, eight, including state-level cooperative banks, have managed to meet the norms. The remaining 42 banks are under MAP till September to work out a revival plan,” Prakash Bakshi, chairman of Nabard, said.

Most of the banks have already submitted their action plans, he added.
If the banks are unable to improve their positions by September, they may be asked to either shut their operations or merge with other banks.

The 50 cooperative banks that faced the threat of closure had total deposits of Rs. 31,242 crore and loans worth Rs. 18,485 crore as of 31 March 2011. These lenders accounted for 13.5% of the total deposits of state and district central cooperative banks in the country.

Updated figures for the 42 banks could not be obtained immediately. Minthad reported this development on 14 March.

India has 30 state and 370 district central cooperative banks. In March 2010, the total deposits of all state cooperative banks and district central cooperative banks stood at Rs. 2.31 trillion and the advances at Rs. 1.54 trillion. Their total assets were worth Rs. 3.39 trillion.

Finance minister to meet state-run banks heads, may discuss credit flow, NPA

NEW DELHI: Amid concerns over moderation in economic growth and rising bad loans, finance minister Pranab Mukherjee will meet on Tuesday with heads of public sector banks to discuss credit flow to productive sectors and review their performance in the last fiscal.

The meeting will take stock of financial performance of the banks in 2011-12 fiscal, sources said, adding it would also dwell upon credit flow to productive sectors.

Besides, focus of the meeting would also be on providing banking facilities to unbanked areas. The Finance Ministry would seek information about the progress on financial inclusion front carried out by individual banks.
The Finance Ministry will deliberate on non-performing assets (NPAs), agriculture loan, credit to infrastructure sector and matters related to human resources in public sector banks, they said.

The Finance Minister has fixed the target for agricultural credit at Rs 5,75,000 crore in 2012-13. This represents an increase of Rs 1 lakh crore over the target for the last fiscal.

Issues on lending to distressed sectors, such as real estate, power, aviation and telecom may also be flagged off during the meeting.

Expressing concerns over rising bad loans, Mukherjee last month asked the banks to take steps to manage their NPAs which has grown on account of economic downturn.

Gross NPAs of public sector banks stood at 3.3 per cent in 2011-12.

Heads of public sector financial institutions like Nabard, Sidbi, NHB, IIFCL and Exim Bank would also attend the meeting.

In 2010, the finance minister had conducted regional meetings, which were attended by PSU bankers along with the concerned chief ministers.

This was with the objective to better understand state- wise flow of credit to the agriculture sector, credit-deposit ratio and loan to weaker section of society among others.

1 comment:

  1. Person who has mainly and predominantly contributed in present Fiscal Crisis and who has damaged the Economy of the country under the Umbrella of Doctor and Economist Prime Minister is Being Awarded with the Post of President of India

    In the Past , the same party awarded Lalu with the post of Railway Minister when he was found guilty in Rs.1000 crore Chara Scam.

    Previous Home Minster Mr. Shiv Raj Patil who failed to control and contain terror attack was awarded with the post of Governor by the same party led government.

    Several officers found to be indulged in corruption have been elevated to higher post or made director of some other public sector undertaking.

    This is USP of Great India. In the crowd of flatterers , voice of good people are not heard and good people are more often than not shunted and thrown out of mainstream in a tactful way.