title: Are all birds of same feather, bankers, borrowers, auditors, regulators and so on? *Following is a classic example of nexus between auditors and borrowers and then between bankers. It is not new to bankers though it appears astonishing to outsiders and media men. How Bad borrowers get fresh loans to serve overdue interest and instalment in existing bad loan account and how they convert bad account to good account or keep existing bad loan as standard is not new for experienced bankers.* *It however reveals how bankers can help bad borrowers and how they can hide bad accounts. It makes it crystal clear to non-bankers that if bankers want they can save their skin from assault of regulating agencies by concealing their evil works or by hiding the evil works of his predecessors. It is win-win position for borrowers well as for bankers. Bankers proudly claim that that there is very less bad accounts or no bad accounts in their books whereas clever borrowers can bargain with other banks for higher amount of loan. It is open secret that all banks coming under public sector are doing the same thing. * *Not only this , if banks declare less amount of NPA , even officials and ministers associated with the Government praise performance of banks and do not hesitate in giving a jump in career to such clever bankers. All remain happy when evil works and evil means are adopted. Dishonesty is the best policy in reformation era beginning from 1991.* *Such ever greening process takes place in some form or the other in almost all branches of all banks and at all levels ,branch, Administrative offices and at Central Office which control all. When a loan of small farmer goes bad, branch officials under concurrence or without concurrence of controlling office think it wise to give him additional bigger amount of loan so that he may repay existing bad loan and get some extra money also. If somewhat bigger amount of loan goes bad, such bad borrower including farmers, service providers, professionals, traders and industrialists, all try to obtain banks sanction of reschedule of bad loans or sanction of restructure of such bad loans on flimsy ground or get sanction of some extra loans in the name of other sister concerns and other associated firms of the same firm who in turn adjust critical amount of existing bad loan accounts. This vicious circle of debt for debt continues till it collapses and constrained to become unmanageable.* *Auditors are ready to prepare High quality of financials for loan seeking companies and firms in such a way that bankers will feel comfort in sanction of loan to such ill-motivated loan seeking companies and firms. Auditors know the art of keeping bankers and borrowers happy. We have seen how auditors helped companies like Satyam Computer, Zoom Developers, Winsom Diamonds etc in winning the positive attitude of bankers. It is not only one or two banks, but all banks come together to help a bad borrower if there are underhand dealings called as commission, bribe or kickbacks. * *Various sister banks (all public sector banks are owned by same government) who are competing against each other in high profile and white collared loot and finally making their bank sick .Ministers and officials of all regulating agencies indirectly contribute their role in perpetuating the foul game played by bankers, borrowers, auditors, inspectors and so on. It is the power of bribe that not only CMD of Syndicate bank but as many as 35 banks sanctioned loan to Bhusan Steel. Similarly there are several consortium loans when many banks come together in lending to bad borrowers and cause loss to banks without attracting any blame or any punishment for wrong doing.* *After all government is also interested to keep competition among various public sector banks alive so that some bank or the other come forward in keeping their dirty politics going on. They do not want to understand that if any of 28 government banks suffer loss , it is ultimately GOI and public money which is lost.* *There are hundreds and thousands of such cases available in almost all banks where team of auditors, Chartered Accountants and inspectors have caused loss to banks in collision with clever and talented bank officials. In this way even CAs get business and huge opportunity to earn money not only from firms and companies but also getting audit work from bank management. It is auditors who sign blindly on false, fake ,fraudulently prepared or manipulated balance sheet of banks and other companies after taking some gifts in cash or in kind . And it is to a great extent due to such nexus between bankers and auditors only that volume of bad assets in banks has been going up and up unabated.* *This process continues till the account finally turn NPA and till the bad official is either promoted or get retired safely. In banks taking bribe and getting safe exit and getting rid of punishment if exposed is very much easy. Because birds of same feather are sitting in all offices and in all departments including that of Vigilance, audit and inquiry who apply their clever brain how to prepare files and noting so that the culprit gets acquitted and exonerated from humiliation and from punishment .* * The more one is clever in hiding bad debts, the happier will be his boss and faster will be his promotion. This art of living and technique to get faster promotion is not new in banking arena. And this bad culture has only resulted in big jump in bad assets in all banks. And finally it is taxpayer and investors who have to contribute more to keep these banks safe and sound.* *Unfortunately GOI and MOF, both are considering root cause of sickness as medicine to cure sickness. Whenever some exposure takes place, team of bankers come with banner shouting that bankers should be kept out of control from CBI and CVC otherwise credit growth will be adversely affected..* Highly positive says auditor on Kingfisher siphoning funds -DNA *According to a report in DNA, which quoted the finance ministry, the Rs 336 crore loan sanctioned by Union Bank of India (UBI) was withdrawn and deposited in another account with a private bank by Kingfisher, which is not allowed.* *Moneycontrol Bureau Audit firm Ernst & Young says chances of beleaguered Kingfisher Airlines siphoning off the loans it received from its lenders for purposes other than its sanctioned use is highly positive.* *According to a report in DNA , which quoted the finance ministry, the Rs 336 crore loan sanctioned by Union Bank of India (UBI), which is not part of the SBI led consortium, was withdrawn and deposited in another account with a private bank by Kingfisher, which is not allowed.* *In a similar fashion, the loans and advances taken from the banks in the SBI consortium has also been diverted, according to the findings of the report. The ministry is closely examining the report and we have already asked SBI to act fast on the NPA issue, a FinMin official was quoted in the DNA report.* *Three major PSU banks SBI , PNB and IDBI have initiated the process to declare Kingfisher Airlines and others as wilful defaulters after the firms failed to service their debt. As part of the process, E&Y was hired to conduct a forensic audit on the Vijay Mallya-led carrier to check and see whether there was any misuse of the loans.* *As per RBI guidelines, it would have to be proven that the borrower had diverted funds which he took from the bank and was not paying up despite having the ability to pay.* *The Department of Financial Services, after reviewing top 50 Non Performing Accounts (NPAs) of public sector banks, had asked the state-owned banks to initiate action against defaulters. According to a Business Standard report, Kingfisher is at the number one spot on defaulters.* *The list also has Winsome Diamond (Rs 3,243 crore), Electrotherm India (Rs 2,653 crore), Corporate Power (Rs 2,487 crore) and Sterling Biotech (Rs 2,031 crore).Kingfisher Airlines has an outstanding debt of about Rs 4,022 crore to a consortium of banks, led by SBI. United Bank of India , part of the consortium, has already initiated the process to declare the company a wilful defaulter.* *Once a company is declared wilful defaulter, criminal proceedings can be initiated against promoters and directors of the company. Besides, it would not be allowed to raise fresh funds from banks and set up new ventures for five years.* *As part of the recovery process, banks in February last year decided to sell a portion of the collateral with them, including shares of group companies United Spirits and Mangalore Chemicals & Fertilizers Ltd, Mallyas Goa villa, Kingfisher House in Mumbai and the Kingfisher brand, which was valued at over Rs 4,000 crore at the time it was pledged.* Read more at: moneycontrol/news/business/39highly-positive39-says-auditorkingfisher-siphoning-funds_1155780.html?utm_source=ref_article
Posted on: Fri, 15 Aug 2014 09:50:12 +0000
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