The multi-crore fraud came into light when some teachers discovered about personal loans against their names after the death of the chairman, management committee Dr Shyam Sunder Sharma (42) on January 15. According to bank reports personal loans against 30 staff members, including teachers and 297 students. But according to sources the names of all 297 such students mentioned in the list are not on the school rolls.
The case seems to be first of its kind in which the Chairman of the management committee of Doon Dhruva Public School, a well-known ICSE-affiliated residential school near here, has fraudulently took personal and educational loans worth crores from a nationalized bank in the name of staff members and students by forging their signatures and using bogus documents
In 2006 for this school a special scheme of educational loan was approved by the bank. According to the sources the total outstanding amount of both types of loans is estimated around Rs 8 crore even as the bank authorities claimed it to be around Rs 4-5 crore. Everything appeared to be okay as per the bank’s auditing report as repayments of the loans were being made regularly. After the untimely death of Mr Sharma the repayments stopped.
It is also bizarre that the branch manager concerned did not know that more than 500 signatures and documents were fake.
After the exposure, regional manager of the Central Bank of India J.R. Sharma personally supervised the investigation and removed the manager K.J. Rawat of the Sela Qui branch of the bank after discovering the grave lapses committed by him in executing the loans.
Sharma in his statement to The Tribune said, “As per a preliminary inquiry, we have found the branch manager prima facie guilty of not executing the loan documents in his own presence which he must have done as per banking rules. This cannot be possible without his connivance. The inquiry is on but I must tell you, this is the first case of its kind in my 35 years’ banking career”. The matter has been taken up to the higher authorities of the bank and all accounts operations with school have since been stopped.
The school was started four and half years ago, run by All-India Nilkanth Educational Society, Delhi, has 310 students from all parts of the country as well from Nepal and Bangladesh. It has 305 students on rolls, including 205 boarders. Its chairman Dr Sharma was a chartered accountant in Delhi before starting the school. His wife and vice-chairman Purnima Sharma, who has been personally looking after the school after her husband’s demise, pretended ignorance when asked for her comments on the whole matter.
Tuesday, February 26, 2008
Tuesday, February 19, 2008
Loan at low interest rate to Class III, IV staff to buy computer
The standing committee had approved the civic administration’s decision to extend the loan facility provided to its Class I and II employees as also to its Class III and IV employees for purchase of computers.
In a query by corporator Sunil Gogale, civic administration said, “The loan facility at cheaper interest rate to purchase computer for Class III and IV employees have received the standing committee and general body approval. However, there has been increase in the loan amount from Rs 25,000 to Rs 40,000 made by the general body meeting and it needs another approval for its implementation.”
But the civic administration’s much overvalued decision to give loan at lower interest to its class III and IV employees for purchase of computers remains wedged in the administrative process.
The civic administration said it has planned implementation of the proposal and is waiting for the go ahead indication.
According to the proposal, an employee can take loan up to Rs 40,000 or the maximum cost of the computer at an interest rate of three per cent. The loan should be repaid in maximum of 60 monthly installments.
However the loan facility have a condition attached to it that the Class III employees should have certificate in basic computer applications and should have completed service of minimum five years. The Class IV employees should have completed service of minimum 15 years.
In a query by corporator Sunil Gogale, civic administration said, “The loan facility at cheaper interest rate to purchase computer for Class III and IV employees have received the standing committee and general body approval. However, there has been increase in the loan amount from Rs 25,000 to Rs 40,000 made by the general body meeting and it needs another approval for its implementation.”
But the civic administration’s much overvalued decision to give loan at lower interest to its class III and IV employees for purchase of computers remains wedged in the administrative process.
The civic administration said it has planned implementation of the proposal and is waiting for the go ahead indication.
According to the proposal, an employee can take loan up to Rs 40,000 or the maximum cost of the computer at an interest rate of three per cent. The loan should be repaid in maximum of 60 monthly installments.
However the loan facility have a condition attached to it that the Class III employees should have certificate in basic computer applications and should have completed service of minimum five years. The Class IV employees should have completed service of minimum 15 years.
Tuesday, February 12, 2008
BOI slashes rates on retail loans
State run Bank of India (BOI) reduced interest rates on retail loans.
A senior official informed about reduction of interest rates on retail loans by between 25 basis points and 250 basis points which would be taken into consideration from February 1.
D. Krishnamurthy, general manager of credit at the bank told that the rates on auto loans and personal loans have been cut by 250 basis points whereas the rates on home loans of up to Rs 0.2 crore have been cut by 25 basis points.
Whereas he added the revised rate for home loans up to Rs 0.2 crore is 9.75 per cent and interest rates on educational loans have also been reduced by 100 basis points.
Bank of India has not touched 13.25 percent, its prime lending rate or the rate at which it lends to its best borrowers.
A senior official informed about reduction of interest rates on retail loans by between 25 basis points and 250 basis points which would be taken into consideration from February 1.
D. Krishnamurthy, general manager of credit at the bank told that the rates on auto loans and personal loans have been cut by 250 basis points whereas the rates on home loans of up to Rs 0.2 crore have been cut by 25 basis points.
Whereas he added the revised rate for home loans up to Rs 0.2 crore is 9.75 per cent and interest rates on educational loans have also been reduced by 100 basis points.
Bank of India has not touched 13.25 percent, its prime lending rate or the rate at which it lends to its best borrowers.
Thursday, February 7, 2008
Long queue of buyers for home and personal loan portfolios of GE Money
GE Money Financial Services had announced selling of personal and home loan portfolio of General Electric’s consumer finance company. There is a long queue of portfolio buyers. Around a dozen players, from India as well as foreign, have shown their interest in buying these divisions. The list includes Kishore Biyani’s Future Capital, the Tata group’s recently-floated financial services firm Tata Capital, private equity investors such as Carlyle Group, ChrysCap, Newbridge Capital, Cambridge Place and the Temasek subsidiary Fullerton. Amongst the large banks like HDFC Bank and Deutsche Bank also seems to be interested. It will take a few months to finalize the deal that might get GE Money a assessing close to Rs 1,000 crore.
According to sources GE Money’s advisor, Morgan Stanley is having talks with these players for the portfolio sell-off. But it is not clear whether GE will be offloading the entire portfolio. Other Indian entities interested in GE Money are Anil Ambani’s Reliance Money and Indiabulls.
When contacted, the GE Money spokesperson told that it was looking for a strategic partner for its “wholly-owned personal loans and mortgage portfolio only.” However, she declined to give out the names of bidders. She said: “It is too early for us to give a definite answer. GE Money will continue to build on its partnership in SBI Card and continue to invest in its fast-growing Wizard Home Loans JV, as well as to seek growth opportunities in other segments. GE Money remains committed to India as a market for growth and investment”.
As per sources, the deal is seen as a ‘complex transaction’. “The value of the operations lies in GE Money’s network since a large part of its business in India is mortgages and barely profitable,” said a source. Most of the players, who are interested in the deal, are quite new entrants keen to expand their operations in the country. HDFC Bank and Deutsche Bank are also said to be looking at the transaction.
Last year GE Money profit declined to Rs 10 crore as against Rs 50 crore in the previous year. It is having a Rs 6,000-crore loan book dominated by residential mortgages. In the loan book home loans is at the top accounting for over 50% of the portfolio while the remaining is personal, auto and consumer durables loans.
Dhanpal Zaveri, who has recently joined the Future Capital board, is negotiating on behalf of the Biyani group. Till last year he was associated with Sterlite Industries’s ADR. When contacted, officials at Future Capital and Tata Capital declined to comment on the development.
Picking up GE’s consumer finance business will be helpful for Future Capital to scale up its presence in the country. The company’s consumer finance business, Future Money mainly target at the middle and mass end of the consumption market with a retail credit plan that will cover every aspect of consumer finance from credit cards, auto and consumer durable finance, mutual funds, insurance, money transfer, financial planning, microfinance and mortgages.
It has started rolling out Money Bazaars across the country. Tata Capital too has ambitious plans. Six months ago the group had announced that Tata Capital will project into capital market services, merchant banking, housing finance and private equity investments, assets and vehicle financing and retail finance. Sources said acquiring of GE Money will give Tata Capital a major entry into the retail financing space.
According to sources GE Money’s advisor, Morgan Stanley is having talks with these players for the portfolio sell-off. But it is not clear whether GE will be offloading the entire portfolio. Other Indian entities interested in GE Money are Anil Ambani’s Reliance Money and Indiabulls.
When contacted, the GE Money spokesperson told that it was looking for a strategic partner for its “wholly-owned personal loans and mortgage portfolio only.” However, she declined to give out the names of bidders. She said: “It is too early for us to give a definite answer. GE Money will continue to build on its partnership in SBI Card and continue to invest in its fast-growing Wizard Home Loans JV, as well as to seek growth opportunities in other segments. GE Money remains committed to India as a market for growth and investment”.
As per sources, the deal is seen as a ‘complex transaction’. “The value of the operations lies in GE Money’s network since a large part of its business in India is mortgages and barely profitable,” said a source. Most of the players, who are interested in the deal, are quite new entrants keen to expand their operations in the country. HDFC Bank and Deutsche Bank are also said to be looking at the transaction.
Last year GE Money profit declined to Rs 10 crore as against Rs 50 crore in the previous year. It is having a Rs 6,000-crore loan book dominated by residential mortgages. In the loan book home loans is at the top accounting for over 50% of the portfolio while the remaining is personal, auto and consumer durables loans.
Dhanpal Zaveri, who has recently joined the Future Capital board, is negotiating on behalf of the Biyani group. Till last year he was associated with Sterlite Industries’s ADR. When contacted, officials at Future Capital and Tata Capital declined to comment on the development.
Picking up GE’s consumer finance business will be helpful for Future Capital to scale up its presence in the country. The company’s consumer finance business, Future Money mainly target at the middle and mass end of the consumption market with a retail credit plan that will cover every aspect of consumer finance from credit cards, auto and consumer durable finance, mutual funds, insurance, money transfer, financial planning, microfinance and mortgages.
It has started rolling out Money Bazaars across the country. Tata Capital too has ambitious plans. Six months ago the group had announced that Tata Capital will project into capital market services, merchant banking, housing finance and private equity investments, assets and vehicle financing and retail finance. Sources said acquiring of GE Money will give Tata Capital a major entry into the retail financing space.
Thursday, January 31, 2008
GE Money India looks for partners for personal loan and mortgage biz
Mr Iqbal Singh will be taking over as CEO and President of GE Money India from February 1, said GE Money India is surveying for a strategic partner for its wholly-owned personal loans and mortgage businesses.
“My priority would be to find a strategic partner for personal loan and mortgage businesses so that it would fit in with our rest of the model. I also want to look for new opportunities for growth. It may look from outside that we are selling off and getting out. I won’t be coming here to India if we are looking to completely exit these businesses”, Mr Singh told Business Line here today.
Mr Singh the newly appointed CEO said that GE Money India is even prepared to give up calculated interest on the wholly owned personal loans and mortgage businesses to the identified strategic partner if a strong brand, good customer base, distribution and products are brought to the partnership.
Before becoming a CEO and President of GE Money India, Mr Singh was Chief Marketing Officer for GE Money Asia and CEO of the Singapore business. In India, Mr Singh will be replacing Mr Vishal Pandit who has now decided to pursue opportunities outside GE.
On his new role, as CEO and President of GE Mr Singh said that he was “pretty excited about India” given its growth trends. “We think the future is here. We want to invest in India and want to grow. We have a great platform of businesses in place. We need to see how we can up the scale in terms of momentum and get to scale much faster than we had originally hoped”, he said.
Speaking about the partnerships Mr Sing said they are really moving ahead. He said that such partnerships in various markets including Korea, Indonesia, Turkey, Latin America and India will create the synergies that work well for GE Money.
“Increasingly, we are looking at partnerships as the way to go. In a way this is not new to us. We would tie up with large retailer groups and launch finance program or cards under their name. Those were more in the nature of a programme. We have now taken it to the next level where we are actually running the partnerships. That’s the way we see us growing. In the same way, we don’t want to keep GE Financial Services in India as standalone. We are looking for strategic partner that would help it to scale,” he said.
In India GE Money is already having partners the State Bank of India (credit card joint venture) and Wizard (home loans). A Memorandum of Understanding has also been signed between GE India and LIC of India.
According to Mr Singh mortgages and credit cards are the big growth drivers of GE Money India in the coming years.
“My priority would be to find a strategic partner for personal loan and mortgage businesses so that it would fit in with our rest of the model. I also want to look for new opportunities for growth. It may look from outside that we are selling off and getting out. I won’t be coming here to India if we are looking to completely exit these businesses”, Mr Singh told Business Line here today.
Mr Singh the newly appointed CEO said that GE Money India is even prepared to give up calculated interest on the wholly owned personal loans and mortgage businesses to the identified strategic partner if a strong brand, good customer base, distribution and products are brought to the partnership.
Before becoming a CEO and President of GE Money India, Mr Singh was Chief Marketing Officer for GE Money Asia and CEO of the Singapore business. In India, Mr Singh will be replacing Mr Vishal Pandit who has now decided to pursue opportunities outside GE.
On his new role, as CEO and President of GE Mr Singh said that he was “pretty excited about India” given its growth trends. “We think the future is here. We want to invest in India and want to grow. We have a great platform of businesses in place. We need to see how we can up the scale in terms of momentum and get to scale much faster than we had originally hoped”, he said.
Speaking about the partnerships Mr Sing said they are really moving ahead. He said that such partnerships in various markets including Korea, Indonesia, Turkey, Latin America and India will create the synergies that work well for GE Money.
“Increasingly, we are looking at partnerships as the way to go. In a way this is not new to us. We would tie up with large retailer groups and launch finance program or cards under their name. Those were more in the nature of a programme. We have now taken it to the next level where we are actually running the partnerships. That’s the way we see us growing. In the same way, we don’t want to keep GE Financial Services in India as standalone. We are looking for strategic partner that would help it to scale,” he said.
In India GE Money is already having partners the State Bank of India (credit card joint venture) and Wizard (home loans). A Memorandum of Understanding has also been signed between GE India and LIC of India.
According to Mr Singh mortgages and credit cards are the big growth drivers of GE Money India in the coming years.
Thursday, January 24, 2008
PSU banks plan to give soft loans to newly TRPs
A few state-owned banks are functioning on a scheme to give soft loans to newly-minted tax return preparers (TRPs) for buying office equipment such as personal computers to help them start business in the current assessment year.
“The loan scheme would be normal commercial transactions with much easier terms,” said a finance ministry official. Details on loan costs were not available, but state-owned banks currently offer education loans of up to Rs5 lakh at interest rates between 11% and 11.5%. Banks started working on the loan scheme after industry body Indian Banks’ Association agreed to the finance ministry’s request to help TRPs, the official added.
TRPs will be unique as they will receive a financial incentive from the income-tax department to bring in new tax assesses, this is the first time in the department’s history that outsiders will be paid for widening the tax base.
At present, 3,545 people have qualified as TRPs. As many as 1,254 people who have got TRP training, but were not able to clear the final test in the first around, will get another chance for the test soon, the official said.
The training program for TRPs was completely funded by the government, which held a qualifying exam last year to shortlist people for the training. The income-tax department will formulate a strategy to constantly monitor the quality of work done by TRPs.
Work on the TRP scheme started sincerely after finance minister P. Chidambaram, during his Budget 2006 speech, said it would be introduced.
Generally individual taxpayers take help form Chartered accountants (CAs) to file their income-tax returns if they choose not to do it on their own.
But the Institute of Chartered Accountants of India (ICAI) is not happy with the TRP scheme. It has requested the income-tax department to take a re look at the scheme. Ved Jain, the institute’s vice-president said that ICAI feels that only CAs are capable and have requisite skills to handle tax returns. TRPs, unlike CAs, can not be allowed to take up statutory audits such as the ones that are needed to be filed by companies. In addition, the income-tax department has restricted TRPs’ probable client base and limited the fees they can charge.
A TRP will not be able to file the return of anyone with an annual taxable income above Rs3,00,000 and their fee has been capped at Rs250. The government, however, has tried to encourage TRPs to widen the tax base by giving incentives that exceed Rs250 in the event they file returns on behalf of a first-time assesses. Every addition to the tax base of about 3.27 crore assesses (end-March, 2006) through a TRP will result in an incentive of 3% of the tax return, subject to a ceiling of Rs1,000.
Once a new assesses files a return for the first time, he/she is likely to continue filing returns annually. This will help the income-tax department write off the relatively high initial expenses over a long period and keep the tax collection costs in line with the average.
Last year the finance minister said the cost of tax collection in India is 0.67% of the total tax collected, it is lowest in the world.
“The loan scheme would be normal commercial transactions with much easier terms,” said a finance ministry official. Details on loan costs were not available, but state-owned banks currently offer education loans of up to Rs5 lakh at interest rates between 11% and 11.5%. Banks started working on the loan scheme after industry body Indian Banks’ Association agreed to the finance ministry’s request to help TRPs, the official added.
TRPs will be unique as they will receive a financial incentive from the income-tax department to bring in new tax assesses, this is the first time in the department’s history that outsiders will be paid for widening the tax base.
At present, 3,545 people have qualified as TRPs. As many as 1,254 people who have got TRP training, but were not able to clear the final test in the first around, will get another chance for the test soon, the official said.
The training program for TRPs was completely funded by the government, which held a qualifying exam last year to shortlist people for the training. The income-tax department will formulate a strategy to constantly monitor the quality of work done by TRPs.
Work on the TRP scheme started sincerely after finance minister P. Chidambaram, during his Budget 2006 speech, said it would be introduced.
Generally individual taxpayers take help form Chartered accountants (CAs) to file their income-tax returns if they choose not to do it on their own.
But the Institute of Chartered Accountants of India (ICAI) is not happy with the TRP scheme. It has requested the income-tax department to take a re look at the scheme. Ved Jain, the institute’s vice-president said that ICAI feels that only CAs are capable and have requisite skills to handle tax returns. TRPs, unlike CAs, can not be allowed to take up statutory audits such as the ones that are needed to be filed by companies. In addition, the income-tax department has restricted TRPs’ probable client base and limited the fees they can charge.
A TRP will not be able to file the return of anyone with an annual taxable income above Rs3,00,000 and their fee has been capped at Rs250. The government, however, has tried to encourage TRPs to widen the tax base by giving incentives that exceed Rs250 in the event they file returns on behalf of a first-time assesses. Every addition to the tax base of about 3.27 crore assesses (end-March, 2006) through a TRP will result in an incentive of 3% of the tax return, subject to a ceiling of Rs1,000.
Once a new assesses files a return for the first time, he/she is likely to continue filing returns annually. This will help the income-tax department write off the relatively high initial expenses over a long period and keep the tax collection costs in line with the average.
Last year the finance minister said the cost of tax collection in India is 0.67% of the total tax collected, it is lowest in the world.
Wednesday, January 9, 2008
Rise in Credit card due to loss in small ticket personal loans
A report by Crisil Ratings stated that loss levels in small ticket personal loans and a portion of credit card receivables, which are at present at 7-9 per cent, can rise to 10-13 percent in three years.
Describing this section as ‘sub-prime’ assets in the Indian context, the report stated that these are unsecured loans between Rs 5,000 and Rs 25,000-30,000. Out of the total credit card received, about 15-20 per cent comes in the profile of low income groups.
Mr Tarun Bhatia, Head, Corporate and Government Ratings stated that the total retail assets of the Indian banking industry are about Rs 4 lakh crore. From this the portion of the ‘sub-prime’ section is about 5 per cent or Rs 20,000 crore.
There was a sharp point of failure during September-October 2007 due to the slowdown in recovery efforts, following the controversy over recovery methods of some banks.
Mr Bhatia said that there will be a slowdown in this section and some banks might exit the small ticket loans segment in the future.
It is considered that the retail segment which saw a compounded growth of 30-40 per cent two years back, is likely to see a growth of 20-25 per cent this year.
Delinquencies across all retail assets are likely to increase.
An increase is expected in the gross NPAs in home loans, which comprises over half of total retail loans, to 2.7 per cent in 2008-09, from 2.2 per cent in March 2007.
Whereas the gross NPAs for car loans are likely to go up by 3 per cent (2.3 per cent) and for commercial vehicles it is likely to increase by 5.5 per cent (4 per cent).
The Public sector banks may see higher NPAs as their risk management systems and collection practices are not as effective as their private sector counterparts
Mr Bhatia said that PSU banks are getting into the retail asset classes without fully understanding it. As per now even that problem had been resolved to a large extent.
When asked about the profitability of banks, Mr Bhatia informed that it will remain under pressure and might see a fall of 15-20 basis points in 2007-08, because of high cost of deposit.
As most of the banks have taken advantage of the rising equity market and this would be reflected in their profits.
Mr Bhatia stated for the next six months a reduction in lending rates on the retail side is unlikely in the near term, as deposit costs are still high and the Reserve Bank of India too had not reduced rates.
Describing this section as ‘sub-prime’ assets in the Indian context, the report stated that these are unsecured loans between Rs 5,000 and Rs 25,000-30,000. Out of the total credit card received, about 15-20 per cent comes in the profile of low income groups.
Mr Tarun Bhatia, Head, Corporate and Government Ratings stated that the total retail assets of the Indian banking industry are about Rs 4 lakh crore. From this the portion of the ‘sub-prime’ section is about 5 per cent or Rs 20,000 crore.
There was a sharp point of failure during September-October 2007 due to the slowdown in recovery efforts, following the controversy over recovery methods of some banks.
Mr Bhatia said that there will be a slowdown in this section and some banks might exit the small ticket loans segment in the future.
It is considered that the retail segment which saw a compounded growth of 30-40 per cent two years back, is likely to see a growth of 20-25 per cent this year.
Delinquencies across all retail assets are likely to increase.
An increase is expected in the gross NPAs in home loans, which comprises over half of total retail loans, to 2.7 per cent in 2008-09, from 2.2 per cent in March 2007.
Whereas the gross NPAs for car loans are likely to go up by 3 per cent (2.3 per cent) and for commercial vehicles it is likely to increase by 5.5 per cent (4 per cent).
The Public sector banks may see higher NPAs as their risk management systems and collection practices are not as effective as their private sector counterparts
Mr Bhatia said that PSU banks are getting into the retail asset classes without fully understanding it. As per now even that problem had been resolved to a large extent.
When asked about the profitability of banks, Mr Bhatia informed that it will remain under pressure and might see a fall of 15-20 basis points in 2007-08, because of high cost of deposit.
As most of the banks have taken advantage of the rising equity market and this would be reflected in their profits.
Mr Bhatia stated for the next six months a reduction in lending rates on the retail side is unlikely in the near term, as deposit costs are still high and the Reserve Bank of India too had not reduced rates.
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