Saturday, February 22, 2014

United Bank CMD, who blew lid over NPAs, resigns

  • Archana Bhargava
Saturday, February 22, 2014 - 06:00 IST | Place: Kolkata | Agency: DNA
United Bank of India's chairperson and managing director Archana Bhargava has resigned, almost a year ahead of the end of her tenure amid growing concerns over sharp rise in its non-performing assets in recent times and apprehensions that there were serious lapses in its detection and reporting in the books over the years.
''Ministry of Finance vide its letter dated February 21 has communicated its acceptance to the application for voluntary retirement of Archana Bhargava. In absence of chairman and managing director both the executive directors shall jointly remain in charge of the bank till such time that a regular incumbent takes over the charge of CMD," the Kolkata-headquartered bank said in a statement.
Bhargava's exit, curiously, is being seen by a section of the banking circle as a precursor to fulfilment of her political ambition -- she is speculated to be emerging as a Congress candidate in the forming Lok Sabha polls -- and not entirely influenced by the current state of affairs at the bank.
While is has been revealed post a forensic audit by Deloitte that there was systematic flaws in United Bank's NPA detection mechanism for years, the shooting up of dud assets since the second quarter in the books coincided with Bhargava's entry as the CMD in April, which means she was responsible not for generation of the NPAs but their exposure.
In fact, her insistence in revealing NPAs proactively didn't go down well with senior management, sources said. ''There were differences in opinion between the CMD and the GMs in the way she was managing the affairs," a person in the know said.
The current crisis in UBI erupted in end of September quarter with sharp rise in NPAs to 7.52% at gross level from 4.25% as on March-end, which along with an increase in cost of funds led to a significant drop in its core profitability. Also, despite the bank creating higher credit provisions in the first half, solvency profile (net NPA as a ratio of net worth) worsened to 109% by September from 44% in March.
Then in December quarter, NPAs again shot up to 16.4% in Q3, and the bank reported a loss of Rs 1,238 crore while capital adequacy dropped to 9.01% as against 9.48% in September and solvency further worsening to an alarming 162%.
This led successive downgrading of UBI's lower tier 2 bond rating by Icra from AA to AA- and then again to A- over the two quarters.
The Reserve Bank of India (RBI) then asked UBI to virtually stop lending activity while the finance ministry appointed Deloitte to carry out a forensic audit which is believed to have detected serious lapse in NPA detection.
The government, for the time being, has prevented the crisis from triggering a panic among UBI's customers by pumping in Rs 1,000 crore of tier 1 capital.
Yet, for the old timers in UBI's Kolkata headquarters, it's a sense of déjà vu, bringing back memories of 1996-97, when UBI, along with another city-based bank UCO and Indian Bank collectively turned 'weak banks' when Verma Committee was formed to detect systematic weaknesses in them.
A study of the report, however, shows much of the lessons learnt then have gone in vain with little efforts made to overcome the shortcomings.
"The malady has been deep in the case of three banks. Continuous decline in profitability and efficiency of these banks and their dependence on capital support from government are causes for concern. They are trapped in a vicious circle of declining capability to attract good business and increasing need for capital support. There is also the question of concentration of branches in specific areas with which United Bank of India and UCO Bank are faced. There is an urgent need to consider rationalisation of branches in all the three weak banks," the report said.
While flawed strategy of capital infusion to get over systematic inefficiency is still being followed, UBI has now admitted that part of the current trouble stems from its concentration of its branches in east and north-eastern parts of the country, a flawed feature which the committee had pointed out way back in 1999.

Citibank rules out India subsidiary, informs RBI






















 B S  :Manojit Saha & Somasroy Chakraborty  |  Mumbai / Kolkata  February 22, 2014 Last Updated at 00:58 IST


Major setback to RBI's ambition of making foreign banks convert their branches into subsidiaries


Citibank has ruled out setting up a subsidiary in India and has officially informed the Reserve Bank of India about its decision.

The banking regulator was hoping to convince a few foreign banks to operate in India through wholly-owned subsidiaries (WOSes). But, according to people familiar with the development, Citibank recently wrote to RBI saying it had no plans to establish a  in India at this point.

The central bank’s initial effort to persuade foreign lenders to convert their branches into subsidiaries (between March 2005 and March 2009) for better regulatory oversight had failed due to absence of adequate incentives. However, this time, in its new subsidiarisation norms released in November 2013, RBI promised near-national treatment to foreign banks that opted for a subsidiary mode of presence.

Though most foreign banks appear reluctant to establish a subsidiary here, Citi is the only bank that has so far communicated this to the regulator, in writing. The bank’s desire not to set up a WOS in India was mentioned in its recent periodic report to RBI.

Citi confirmed it had no plans to convert its India branches into a subsidiary. “At this point, Citi does not have plans to establish a local subsidiary,” a spokesperson for Citi told Business Standard in an e-mail.


Bankers felt the reciprocity clause in RBI’s guidelines probably deterred Citi from opting for a subsidiary mode of presence. According to the new norms, foreign banks will be given unfettered branch access in India after establishing a WOS, provided their home countries allow Indian lenders to open branches without much restrictions.

“Indian banks are not allowed to expand networks freely in the US. Citi, being a US-based bank, would have found it difficult to convince the regulator in getting a near-national treatment in branch expansion here,” said a banker who did not wish to be named.

Sources said uncertainty on stamp duty and certain areas of taxation, and the need for rural presence might also have influenced Citi’s decision.

Bankers also pointed out that RBI had not made subsidiarisation mandatory for foreign banks that entered India before August 2010, leaving to many of them, including Citi, the option of not creating a WOS in India. According to RBI data, Citi opened its first branch in India in 1963. It currently has 42 branches across the country and three unused branch licences.


Hurdles for foreign banks in creating WOSes

* Near-national treatment in branch expansion not guaranteed due to reciprocity clause

* Need to have significant presence in rural/unbanked regions

* Lack of clarity on tax sops, stamp duty relaxation

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Powerful Quotes of Steve Jobs  :
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Buffett and President Obama at the Oval Office, July 14, 2010

In addition to other political contributions over the years, Buffett has formally endorsed and made campaign contributions to Barack Obama's presidential campaign. On July 2, 2008, Buffett attended a $28,500 per plate fundraiser for Obama's campaign in Chicago hosted by Obama's National Finance Chair, Penny Pritzker and her husband, as well as Obama advisorValerie Jarrett. 
Buffett backed Obama for president, and intimated that John McCain's views on social justice were so far from his own that McCain would need a "lobotomy" for Buffett to change his endorsement. 
During the second 2008 U.S. presidential debate, candidates John McCain and Barack Obama, after being asked first by presidential debate mediator Tom Brokaw, both mentioned Buffett as a possible future Secretary of the Treasury.Later, in the third and final presidential debate, Obama mentioned Buffett as a potential economic advisor.Buffett was also finance advisor to California RepublicanGovernor Arnold Schwarzenegger during his 2003 election campaign.

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- செல்லமுத்து குப்புசாமி


புத்தகத்தின் பின் பக்க வரிகள் கீழே..

******

உங்களிடம் 100 ரூபாய் உள்ளது. இதை 100 கோடி ரூபாயாக மாற்றும் வழி தெரியுமா உங்களுக்கு? வாரன் பஃபட்டின் வாழ்க்கையைக் கவனமாகப் படியுங்கள். கொஞ்சம் கொஞ்சமாகப் பணம் குவிக்கும் டெக்னிக்குகள் உங்களிடமிருந்தே உற்பத்தியாக ஆரம்பிப்பதை உணர்வீர்கள். இந்த உலகமகா பணக்காரரின் வெற்றி ரகசியங்கள் மிகவும் வெளிப்படையானவை. உங்களை வாரிச் சுருட்டி பாக்கெட்டில் போட்டுக்கொள்ளப்போகிற வாழ்க்கை வரலாறு இது.


ஷேர் மார்க்கெட்டா? அது சூதாட்டமாச்சே! என்று எல்லோரும் பிரசாரம் செய்து கொண்டிருந்த காலத்தில், இல்லை, அது ஒரு அறிவியல் பூர்வமான முதலீடு. யார் வேண்டுமானாலும் அதில் பணத்தைக் குவிக்க முடியும் என்பதைத் தெள்ளத் தெளிவாக எடுத்துச் சொன்னவர் வாரன் பஃபட்.
சொன்னது மட்டுமல்ல, தன் வாழ்நாளில் அதைச் செய்தும் காட்டினார். வெறும் 100 டாலர் பணத்தோடு ஷேர் மார்க்கெட்டுக்குள் நுழைந்தார் வாரன். ஆனால், இன்று அவரிடம் இருக்கும் பணத்தின் மதிப்பு பல பில்லியன் டாலர்கள்.
ஷேர் மார்க்கெட்டுக்குள் நுழைந்து நாலு காசு சம்பாதிக்க நமக்கு முதலில் என்ன தெரிய வேண்டும்? லாபம் தரும் கற்பகத் தரு மாதிரியான கம்பெனிகளின் ஷேர்களைக் கண்டுபிடிப்பது எப்படி? என்ன விலையில் ஒரு ஷேரை வாங்கலாம்? அல்லது விற்கலாம்? கையைக் கடிக்காமல் இருக்கும் கலையைக் கற்றுக் கொள்வது?


பொருளாதாரச் சூத்திரங்களின் பின்னால் ஒளிந்து கொள்ளாமல், வரைபடம் வரைந்து தலையைச் சுற்ற வைக்காமல், பட்டியல் போட்டுச் சாகடிக்காமல், ஷேர் மார்க்கெட்டின் சிதம்பர ரகசியங்களை ஒரு குழந்தைக்குச் சொல்லிக் கொடுக்கிற மாதிரி கற்றுத் தரும் பங்குச் சந்தை சூப்பர் ஸ்டாரின் வெற்றிக் கதை இது.