Monday, August 25, 2014

Number Of Credit Scam Increasing

Investigations into how Bhojpuri channel Mahuaa TV — one of the biggest bank loan defaulters -- raised hundreds of crores from PSU banks reveal that almost everyone seemed to have dipped into the cash pot of India's banks, or at the least, feigned willful ignorance as every norm was broken. Along with it, there was forgery and fraud.

The details are startling. Through five companies, Mahuaa TV's promoters raised Rs 1,724 crore from 14 nationalized banks. The highest amount of Rs 760 crore went to Century Communication, while Rs 334 crore went to Pearl Vision, Rs 234 crore to Mahuaa, Rs 201 crore to Pixion Media and Rs 195 crore to Pixion Vision.
Jet Airways has total debt of about Rs 9,800 crore, in rupee and dollar denominations. This includes about Rs 6,000 crore of aircraft-related loans, term loans and working capital. The Naresh Goyal-promoted airline continues to spend about Rs 1,000 crore on interest every year.

The carrier, co-owned by Etihad Airways, plans to raise a $150-million foreign loan (in addition to $150 million raised earlier this year) to refinance its high-cost debt. Owing to high operating costs, weak revenue growth, one-off maintenance expenses and an impairment charge, the airline reported a record loss of Rs 4,129 crore for FY14.
Vijay Mallya-promoted Kingfisher Airlines defaulted Rs 6,500 crore of loans to a 17-bank consortium led by SBI. After some repayments, the due are currently about Rs 4,000 crore. Banks are in the process of declaring Kingfisher as a willful defaulter
Similarly, in the case of Winsome Diamonds, the CBI have begun a probe to the working of the company after it allegedly defaulted Rs 6,500 crore worth of loans to a host of banks, making it equal in size to Kingfisher. While the company claims that the default has occurred following non-payment of dues by its trading partners in the Middle East.
In another case, in 2013, the CBI had filed case against Deccan Chronicle Holdings Ltd (DCHL), for alleged cheating, fraud. According to some of the bankers to DCHL, part of the reason the company faced the crisis was diversions of funds to expansion plans of the group, which was not stated to the lenders at the time of taking the loan.
The fate of the Rs40,000 crore loan to Bhushan Steel is currently uncertain in the backdrop of serious charges of bribery by the firm to bankers. Even though the loan is at present standard, bankers fear that any possible slippages in the loan can have huge impact on the banks in the consortium.
Among the banks with high level of gross non-performing assets (NPAs) are United Bank of India (10.49 percent), Dhanlaxmi Bank (7.17 percent), Central Bank of India (6.15 percent), Andhra Bank (5.98 percent) and Indian Overseas Bank (5.84 percent).
Cases of defaults in public sector are many. List of accounts causing loss to banks either b fraud or by bad debts is long. Scam after scam are coming to light which were hitherto hidden in the system. CMDs of banks who were involved in credit scam or who are responsible for rise in volume of bad debts in PS banks have either retired or promoted to higher level. They have earned lacs of rupees as incentive from MOF as because they booked credit growth higher than target allocated to them. Same CMD who earned huge incentive are not denying wage hike to bank staff when they take part in Bipartite settlement  from the platform of IBA

After Kingfisher, Winsome diamonds, Deccan Chronicles, Bhusan Steel and many cases of default exposed in recent past , now case of Mahua TV has erupted causing a loss of Rs.1724 crore and another cases of Rs.9800 crore of Jet Airways in in pipeline. Hundreds of others will follow.

Wait .... positive minded politicians and bureaucrats are hopeful of achhe din in banks.

They (gang of CMD in IBA and Ministers in GOI) allow lacs of crores of rupees lost in bad debts, another lacs of crores lost in write off of bad loan, another lacs of crores locked in restructured loans and so on. But they are  not ready to agree to give respectable wage hike to staff who are innocently working day and night for keeping their bosses happy and for doing service to politicians, poor villagers and all. Very soon bank staff will also realise that they are being cheated by top officials to whom they salute all the time with the hop that they will take the bank to greater height.

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