Saraswat awaits RBI nod for Anyonya Bank merger

Tushar Pawar / Nashik December 03, 2009,

Saraswat Co-operative Bank, the largest multi-state
co-operative bank in the country, is likely to acquire
financially-troubled Anyonya Co-op Bank (ACBL) soon.



The merger of 118-year-old ACBL, which has 10 branches
in Gujarat, is estimated to cost Rs 25 crore to Saraswat Bank.

“We have submitted the merger proposal to the
Reserve Bank of India (RBI) and waiting for its
approval,” Kishore V Rangnekar, vice-chairman,
Saraswat Co-op Bank, told Business Standard.

At present, Saraswat Bank has 190 branches
in Maharashtra, Karnataka, Goa, Madhya Pradesh,
Gujarat and New Delhi. The bank has done a
business of Rs 21,000 crore so far in the
current financial year.

In the last three years, it has acquired
six co-operative banks — Maratha Mandir Co-op Bank,
Mandvi Co-op Bank (Mumbai), Annasaheb Karale Urban Co-op Bank (Sangli),
 Murdha Rajendra Co-operative Bank (Meerat),
South Indian Bank (Mumbai) and Nashik-based
Nashik People’s Co-op Bank.
In the process it has acquired 700,000 depositors.

Carrying huge amounts of cash-Rs65 Lakhs

Travellers who carry huge amounts of cash cannot complain

 of harassment and delay at airports if investigating officers

detain them to inquire about the source and legitimacy of

 the money, the Supreme Court ruled in

 Rajendran vs Additional Commissioner of Income Tax.

 In this case, this passenger, who was also an NRI, boarded

 from Hyderabad to Chennai, with Rs 65 lakh in cash drawn

from a bank with its certificate. He was planning to buy property

 in Chennai.

But when he landed in Chennai, he was detained

for 15 hours by tax officials.

Ultimately he was freed, but he had

 to suffer the harassment and the media also reported

a distorted version due to a ‘leak’ from the authorities.

The court dismissed the petition of the traveller stating

that as the country was facing terrorist threat and

 black money, such probe was inevitable. In view of this

problem, the CBDT has issued guidelines last month to

 air intelligence units to avoid inconvenience to passengers.

SKS Microfinance to Offer Home Loans

Even as realty markets are trying to shake off the downturn impact, SKS Microfinance, the largest microfinance company in terms of assets, is set to offer its customers loans for their housing needs. The company on Thursday said it has joined hands with the Housing Development Finance Corporation (HDFC) in its attempt to bridge the critical gap in the housing finance needs of the poor.

The pilot project will be conducted in Andhra Pradesh among credit members who have been with SKS for at least three years. These loans will be towards extension and improvement of dwelling units which double as income-generating units like eateries, kirana shops, papad and agarbathi-making units, among others. Most microfinance clients belong to the low-income category and do not have any documented source of income.

HDFC will provide technology support and the first tranche of funding worth Rs 10 crore. This loan to SKS would help fund about 1,250 members, considering an average ticket size of Rs 80,000. “While SKS will borrow at variable rates, we are lending at fixed rates of interest for a five-year period,” said Suresh Gurumani, CEO, SKS.

SKS member clients can avail loans ranging from Rs 50,000-1 .5 lakh, with tenure between three and five years, which will be delivered at their doorstep. However, unlike other products of SKS, the liability would not be at the group level and it would be offered as individual mortgage-backed loans.

“The launch of our housing microfinance initiative follows massive demand from our members who have no access to formal institutional funding. The interest rates charged are risk-adjusted rates that compare well with industry rates for urban self-employed and non-formal sector clients,” said Mr Gurumani.

According to him, the operational costs and risks are much higher as borrowers of these loans do not have any income papers or bank accounts and all transactions are in cash. Also, while we borrow at variable rates, we are lending at fixed rates of interest for a five-year period,” he added.

“This association helps HDFC to contribute to the financial inclusion story of India by reaching services to the grassroot levels. We hope that similar efforts of other MFIs would facilitate in shaping the housing microfinance sector,” Renu Karnad, joint managing director, HDFC, said. Other MFIs including Basix and Spandana had offered similar products earlier.

NTPC case: CBI team to go UK

6 December 2009,

NEW DELHI: A CBI team will soon go to the UK to get
 details about the bank account of an Indian firm a
leged to have received about Rs 120 crore 
as kickback from a Russian company for providing
“consultancy” in bagging the Rs 8,600-crore super
thermal power contract project of NTPC in Barh
in Bihar.

Official sources said the team would soon leave for
London for holding consultation with the Crown Prosecution
Service (CPS) officials and Scotland Yard sleuths to
understand the complete chain of money transactions
and the associates of the firm M/S Ravina Associates Pvt Ltd.

The account of the firm is in NATWEST bank, which was frozen
by the CPS after the CBI requested for the same. It belongs
to the firm which was providing “consultancy” service to the
Russian company — Technopromexport — which bagged the contract
in the 1,980 MW (660MWx3) Barh power project in February 2005.

The Indian company had approached a CBI court here to seek
lifting of restraint order on the bank account so that it
could pay the demand of Rs 44.31 crore raised by the Income
Tax department on the firm. However, the plea was turned down
by the court which also imposed Rs 20,000 on the firm for
“having wasted its time in an attempt to bring back prima facie
 illegitimate money, which belonged to the tax payers and had
found its way to the account.”

CBI, which registered a case against unknown officials of NTPC
 and others in February 2006, had alleged that during 2002-05
the NTPC had entered into three contracts with TPE Russia and
transferred $53.63 lakh to it as advance money. Out of this,
the Russian firm is alleged to have transferred $10.37 lakh and
 $10.37 lakh to M/s Ravina Associates Pvt Ltd at Natwest Bank on
May five and May 18, 2005 respectively.

The CBI alleged that the money was paid by TPE Russia to the Indian
firm as commission equalling a percentage of the contract.

NTPC hadgiven the contract to TPE in 2005, when the PSU was headed by C P Jain,
 for supplying equipment to a power project in Bihar.

Source:PTI

Shubham case: Charges by CBI court

 6 December 2009

|

CHANDIGARH: In a fresh development in the Shubham hospital case,
 special CBI court framed charges against two key accused, five bank officials



The case hit the headlines when the owner of Shubham Hospital
and Diagnostic Centre in Sector 20, Panchkula, Sandeep Sharma,
 was booked for obtaining a fake medical degree. Subsequently,
interrogation revealed the accused’s involvement in many loan frauds.

While the bank officers were booked under corruption charges,
a case against the others was registered under sections 420,
120B, 467, 468 of IPC. The matter would come up for hearing
before the special CBI court on December 17.

Those charged include key accused Sandeep and former secretary
 of a housing society, Gita Ram Thakur, apart from 12 others.
The bank officials against whom charges have been framed are
chief manager S N Mahajan, senior manager R K Chaba and manager
 Shashi Bhushan Gupta of Punjab National Bank and Cooperation
Bank manager M Nageswara Rao, apart from another official,
M Ramachandran. The lawyers are Moninder Singh of the district
 courts and R S Batran of Panchkula.

Sandeep had allegedly secured crores of rupees as loans from
the two banks against documents related to 23 flats in various
societies of Panchkula. As per investigations, the property
papers were forged.

A case was registered on the complaint of Corporation Bank’s
deputy general manager M Gokul Das Kamath on June 26, 2008.

It was alleged that between August 2006 and March 2007,
the bank had provided four different credit facilities to
 Shubham Hospital and Diagnostic Centre and its partners
Sandeep Sharma and Ranjana Sharma. The loan amount released
to them was Rs 146.15 lakh.

According to the CBI probe, Sandeep and Ranjana had submitted
 an application on August 17, 2006 to the bank. Thereafter,
the financial institution rendered credit facilities under
different schemes like term loan, mortgage loan and home loan
 in favour of Shubham Hospital and Diagnostic Centre.

The bank had also sanctioned housing loans totalling Rs 138.85
lakh during December 2006-March 2007 to 12 individuals for purchase
 of flats from Sandeep at Bishanpura Cooperative House Building Society.
 Sharma had done this by allegedly using fake certificates,
which were verified by lawyers. Police also booked Sandeep
for possessing a fake doctor’s degree.

Loan list 
According to investigating officials, Sandeep Sharma took a
loan of Rs 2 crore from Punjab National Bank, Sector 16,
 Chandigarh, Rs 1 crore from Bank of India, Sector 16,
Panchkula, Rs 1 crore from Punjab and Sindh Bank, Rs 40 lakh
from Oriental Bank, Manimajra and Rs 1 crore from
 Corporation Bank of Chandigarh.

Delhi mulls Islamic banking

CITHARA PAUL

New Delhi, Dec. 5: The government is considering changing banking law to introduce an interest-free Islamic banking system in the country, sources said. The Shariat prohibits the collection and payment of interest, so many Muslims now avoid opening bank accounts or refuse to claim the interest, which goes to a suspended account. Under the Islamic banking system, banks don’t pay interests on deposits; nor do they charge interest on loans. The money deposited is used to finance projects on ownership basis. The depositors share in the profit or loss of the projects financed through their deposits instead of getting interest. For instance, in case of a housing loan, the bank buys the property and rents it out to the borrower for a specified period of time. The rent is calculated on the basis of the cost of the property plus a profit margin. After the lease term is over, the tenant gets ownership of the property. Under the existing banking system, only current accounts comply with Islamic banking since these accounts don’t give any interest. An Islamic bank, however, cannot invest the money just anywhere: the Shariat prohibits investment in businesses considered haraam, such as those related to alcohol, pork or pornography. An Islamic banking system will benefit India’s 15 crore Muslims, and also the economy by helping unlock the huge sums that remain uninvested by the community. Islamic banking is currently not allowed under India’s banking act, but it is allowed through the non-banking financial institution route. The Centre plans to amend the act, adding to it a chapter exclusively dealing with all aspects of Islamic banking, sources said. It’s not clear if the amendment bill would be tabled in the current session of Parliament. The sources said the government would form a Shariat Supervisory Board to monitor the functioning of the Islamic banking system. Finance minister Pranab Mukherjee has had discussions with the Reserve Bank of India on the subject and obtained its approval, they said. Although an RBI study group had earlier rejected the concept of Islamic banking, the Raghuram Rajan Committee on banking reforms later gave a positive report on “interest-free banking”. The minority ministry too is understood to be in favour. There has been a strong demand for Islamic banking in India from various groups and even the Gulf countries. The Muslim League has handed a memorandum to the Planning Commission urging it to promote interest-free, profit-based banking. The concept is popular in West Asia and predominantly Muslim nations such as Malaysia and Indonesia. Leading international banks such as HSBC and Standard Chartered have exclusive Islamic banking windows. The Kerala Industrial Development Corporation recently launched an Islamic banking company of sorts, which has been registered as a non-banking finance company and will be transformed into a full-fledged Shariat-compliant bank once the banking regulations allow it.

United Bank gets govt nod for IPO

 Kolkata December 4, 2009,

Public sector lender United Bank of India (UBI) today
said it has got the government approval to float an 
initial public offer (IPO) which is expected to hit
the capital markets latest by the first week of February


UBI Chairman and Managing Director S C Gupta told reporters
 here today that the bank has been permitted to issue 5 crore 
equity shares at a face value of Rs 10 to the public at a 
reasonable premium.

Post-IPO, the government holding in the bank would come down
by 16 per cent from the present 100 per cent.

The Centre is also understood to have decided to introduce
the SBI Amendment Bill in the current session of Parliament.
 The Bill seeks to dilute its stakes in the nation's largest
 bank to 51 per cent from the current 59.41 per cent.
The amendment will enable SBI to come up with a follow-on public offer.

SBI Chief Financial Officer S S Ranjan told PTI earlier in the
day that the proposed move will hlep the lender
to raise around Rs 12,000 crore.

Source:PTI

INDIAN BANKS DO NOT HAVE MUCH EXPOSURE TO DUBAI WORLD : RBI

DEC 5, 2009



The Reserve Bank today said the domestic banks do not 
have much exposure to the debt-ridden Dubai World and 
hence their balance sheets will not be materially 
affected from the crisis. In the larger context,
the rating agency Moody’s also today said the ratings
of Asian banks are not likely to be downgraded,
unless there is a massive restructuring in Dubai.

Reserve Bank Deputy Governor Usha Thorat said
that the crisis will not impact the country’s
banking sector as the exposure “is not significant
 and not a matter of concern. It is not something
that materially affects their balance sheets.”

Moody’s also said Asian banks have relatively
small exposure to Dubai and Dubai World companies.
 “Therefore, no rating actions have been taken on
 Asian banks as a result of the requested standstill
 on select Dubai World debt payments. 

Nor does Moody’s expects that there will be
any need of negative rating action on Asian
banks at a later date…”
So far as the domestic banks are concerned,
 Bank of Baroda has an exposure of Rs 5,000 crore
in Dubai. State Bank of India too had provided
 Rs 1,500 crore to some UAE companies.

Moody’s said, “the Asian banks have billions
of dollars of exposures to the UAE entities,
but this represents small per cent of their assets.
 To date, we have found no Asian banks to have
sufficiently high levels of exposure to members
 of Dubai World group to warrant any ratings actions.”

Thorat, however, admitted that the Dubai crisis can
have some impact on remittances and affect those parts
 of the country that receive inflows from the Gulf
nation in larger quantity.

“Some parts of the country are certainly more dependent
 on remittances from Dubai, but overall I think it is
too early to say. There could be some impact obviously,”
the RBI Deputy Governor said, when asked about the impact
 of the crisis on the country.

Many states, especially Kerala, receive large amount
 of remittances from persons working in the Gulf region.
As many as 42 per cent of the 1.5 million population of
 Dubai are Indians and the UAE contributes nearly 13 percent
of the overall remittances to the country. India was the
 highest recipient of remittance flow at $52 billion or
 15 per cent of the global total last year, according to
a World Bank report. This constitutes 3.3 per cent of the GDP.
“We have to see how far this (Dubai financial crisis) spreads”,
she said, adding that it may be too early to say anything about
the fallout of the crisis on the country at present.

The financial crisis in Dubai erupted late last month with
the conglomerate Dubai World asking for six months time to
repay its USD 59 billion debts.