Indian Banks & Financial System

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Manish_P
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Re: Indian Banks & Financial System

Postby Manish_P » 25 Apr 2018 13:00

Mumbai hawala ‘king’ arrested for Rs 2,000 crore laundering

Mohammad Farooq alias Farooq Shaikh, one of the city’s biggest hawala operators, was arrested by the Enforcement Directorate (ED) on Tuesday in a Rs 2,253-crore money laundering case involving his Stelkon Infratel Pvt Ltd. Stelkon was part of Farooq’s network of 160 shell companies and was run from a one-room office in Zaveri Bazaar.

Farooq was on the radar of various probe agencies since 2014 and is believed to be associated with underworld elements, said officials.The Directorate of Revenue Intelligence had investigated the case of inflated remittances abroad and submitted a report to the ED in 2016 for action under the Prevention of Money Laundering Act. Last May, the CBI registered a case as it suspected the role of bank officials in the scam (see box). Subsequently, ED too registered a money laundering case against the same set of the accused.


ED officials said Farooq used his accounts with co-operative banks to deposit cash collected from his clients. After routing the money through several layers of transaction, he would bring the money into his accounts, mainly in nationalized banks, and then make the remittances after submitting forged documents. The CBI FIR says it appears that the banks did not exercise any due diligence in verifying the genuineness of the importers and the documents submitted during the request for remittances. “There appears to be no cross-checking regarding the veracity of the bill of entry before permitting the amount to be remitted,” it added. Sometimes, against a single bill of entry, the fraudsters remitted money several times through multiples banks or branches. Or, based on forged documents, the importers inflated the value of the imports and remitted this inflated amount.

chetak
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Re: Indian Banks & Financial System

Postby chetak » 25 Apr 2018 13:15

^^^^^^^

It only means that politically connected folks benefited from his business and it was in their interest to keep it running.

Some poor low level joe will be jugged and hauled over the coals and everyone will then pretend that all have done a great job in the fight against black money.

Business as usual and now, on to the next "grand" secular scheme of money making.

Same actors, same script but different shell company and different bank.

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Re: Indian Banks & Financial System

Postby Supratik » 08 May 2018 21:26

Vijay Mallya looses a lawsuit in UK.

https://economictimes.indiatimes.com/ne ... 080899.cms

Manish_P
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Re: Indian Banks & Financial System

Postby Manish_P » 09 May 2018 12:48

Over 2000 ATMs shut down by banks in just 10 months

More than 2000 ATMs were closed in the ten months between May 2017 and February 2018 in different locations of the country, RBI data examined by FE Online said. The total number of onsite bank ATMs now stand at 107,630 from nearly 110,116 in May 2017, as on February 2018. The number of offsite bank ATMs have in fact increased and are now 99,029 from 98,360 in May 2017. The ATMs which are located at the branch premises are called on-site ATMs and the ATMs located away from the branch is called off-site ATM.


In order to reduce the cost associated with setting up and maintaining ATMs banks are shutting them down, said DT Franco, General Secretary, All India Bank Officers’ Confederation (AIBOC) told FE Online.

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Re: Indian Banks & Financial System

Postby Vasu » 28 May 2018 13:54

Aadhaar has emerged as key document for new bank accounts: Survey

Image

Aadhaar has emerged as an enabler for financial inclusion with 76% to 95% of new accounts opened in different states relying on biometric identification but steps are needed to improve continued usage of these bank accounts, says a survey that analysed three-year data from rural Andhra Pradesh, Rajasthan, and West Bengal.

Use of Aadhaar, the 12-digit biometric identity number issued by the Unique Identification Authority of India, is likely to widen for delivery of public services with the government planning major welfare schemes like the Ayushman Bharat National Health Protection Mission that will cover 500 million people.

Despite growing access to bank accounts among Indian adults, the survey found only a subset of accounts were actively in use—66.6% in Andhra Pradesh, 58.1% in West Bengal, and 44.9% in Rajasthan. “The next major challenge in financial inclusion is active participation in the financial ecosystem,” it said.

Thakur_B
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Re: Indian Banks & Financial System

Postby Thakur_B » 19 Jun 2018 14:03

Word in the market is that the PSU Bank's that have gone under PCA or likely to do do will be cutting down perks of the employees (lease, petrol, telephone) to a tune of 15-20% resulting in pay cut of ₹4-5k on the juniourmost officers. This will put significant pressure on employees who already have to put up with staff shortages and frankly brutal work environment on top of already low pay.

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Re: Indian Banks & Financial System

Postby Raveen » 19 Jun 2018 21:06

Thakur_B wrote:Word in the market is that the PSU Bank's that have gone under PCA or likely to do do will be cutting down perks of the employees (lease, petrol, telephone) to a tune of 15-20% resulting in pay cut of ₹4-5k on the juniourmost officers. This will put significant pressure on employees who already have to put up with staff shortages and frankly brutal work environment on top of already low pay.


...and yet manage to remain the most unproductive, unfocused, and plain offensive gavermint folks you'll deal with

Neshant
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Re: Indian Banks & Financial System

Postby Neshant » 23 Jul 2018 08:01

Its getting to the point when we can ask - do we even need banks?

Technology already exists to connect borrower to creditor directly and automate the enforcement of contracts without the need of middlemen skimming fees and becoming corrupt.

Naturally, the vast number of middlemen who profit from the current system are dead set against it as it would mean the end of their livelyhoods.

nachiket
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Re: Indian Banks & Financial System

Postby nachiket » 23 Jul 2018 22:24

Neshant, please take your "All bankers are crooks" theories to the Perspectives on Global Economic changesthread. No more here.

ArjunPandit
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Re: Indian Banks & Financial System

Postby ArjunPandit » 28 May 2019 18:32

https://www.hindustantimes.com/business ... U9sUJ.html

This is to ensure NBFCS have enough liquid assets that can be converted to cash to fund the outflows for 30 days in a scenario of acute liquidity stress. With these guidelines, NBFCS will need to stick to ALM and liquidity discipline at all times. More importantly, this will provide comfort to debt market participants that NBFCS will always be prudent on liquidity,” said Kotak in a note.


Analysts note that it will also have an impact on margins. “The need to hold liquid assets will be a drag on margins and may also push some of them to consolidate even more and increase desperation to securitise. Those NBFCS with ALM gaps, lower ratings, and higher funding cost are worse off. NBFCS with better ratings, balanced ALMS, and diversified funding mix are better off,” said CLSA, a capital markets and investment group, in a recent report.


for depositors, it is a good move. On one hand, they will be offered higher interest rate and on the other hand, the balance sheet of NBFCS will get stronger. The changes of defaults on the depositors’ money will go down,”

In general i have not seen this happening in global context. Not sure the same will happen in indian context either

Manish_P
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Re: Indian Banks & Financial System

Postby Manish_P » 11 Jun 2019 14:09

This looks like a ponzi scam added to a political scam but is 'Islamic Banking' allowed in India? Looks like probably the 'owner' has done a post ramadan flight to purer lands..

Bengaluru: After raising Rs 2,000 crore, owner of 'bank' threatens suicide

Hundreds of investors gathered at the office of financial firm I Monetary Advisory (IMA) in Shivajinagar, Bengaluru, on Monday morning after its founder-owner, Mohammed Mansoor Khan , purportedly stated in an audio clip that he was ending his life as he was "tired of bribing corrupt politicians and bureaucrats".

In the audio clip, reportedly addressed to the city police commissioner, Khan alleged senior Congress leader and Shivajinagar MLA R Roshan Baig had refused to return the Rs 400 crore he had taken and that there was a threat to his life. The police are yet to ascertain if Khan has indeed ended his life and have intensified their search for the founder-owner and his family members.

Launched in 2006, IMA, an Islamic banking and halal investment firm, promised returns ranging from 14% to 18% per month before its operations turned into a sort of Ponzi scheme.

ArjunPandit
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Re: Indian Banks & Financial System

Postby ArjunPandit » 11 Jun 2019 18:45

^^PSBs can't but NBFCs can..RBI said no to it. Anyways Indian financial system is not straight fwd to add another layer of complexity to it, esp in high interest regime. With the level of operational risks embedded in Indian system it would be a recipie of disaster unless backed by sharia punishment mechanism

http://www.livemint.com/Industry/GSa1m3 ... s-RBI.html

and then the usual suspects dissing bjp govt

https://thewire.in/banking/islamic-banking-rbi

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Re: Indian Banks & Financial System

Postby Sachin » 18 Jun 2019 15:03

Manish_P wrote:This looks like a ponzi scam added to a political scam but is 'Islamic Banking' allowed in India? Looks like probably the 'owner' has done a post ramadan flight to purer lands..

The latest update is that Bangalore Police actually hired a wedding hall to setup counters to receive complaints from the people (mainly from Muslim community) who lost their deposits in the scam. And there is a Karnataka local act which kinds of give "protection" to people who invest in various deposit funds etc. But that act is not going to be of any help, because the "Islamic banker" added the members not as depositors (who deposit money earning interest), but as "share holders" :lol:. Now do share holders get their money back, when the company goes kaput?

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Re: Indian Banks & Financial System

Postby JTull » 18 Jun 2019 16:18

Most Islamic bonds resemble equity investments as interest is not sharia-compliant. They must be invested in businesses and real assets (which must in-turn be sharia compliant) as income from real assets is allowed. For example, return from a business or rent. Consequently, returns may be high (equity-like) but loss of capital is also possible. This is just Islamic banking 101. Please google sukuk for more info.

I think Islamic banking has lot of potential in country like India, and must be tapped. It will ensure a large part of the population to have a stake in local economy. Problem in Bengaluru was that the 'banker' was unscrupulous. Govt needs to appoint a regulator for the sector so that the downstream investments can be audited and tracked properly. First task of any regulator is usually to require a compliance officer in regulated entities. Fraud is still possible, but without regulation there's no deterrence.

nandakumar
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Re: Indian Banks & Financial System

Postby nandakumar » 18 Jun 2019 17:38

I remember as a school kid, I once went along with my mom to a house a few blocks up the street. Apparently my mom and few others were part of a group that contributed Rs 5 every month and members would gather at this particular house where the lady of the house would organise the auction to bid for this amount. Since there is usually more than one member wanting the pool the winning bidder must be one who is prepared to suffer the maximum discount. The resultant discount is then distributed to other members with the lady organising the pool also getting an equal share. Nobody minds it as each one gets a share every month including the winner of each month as they all gain in the other months to the one where they bid for the pool at a discount. Did the lady break the law on banking? No. Because she didn't call her venture as a bank. Did she break the SEBI law? No. Because she did not make a public announcement. Is it sharia compliant? Of course. Because the discount every one earns is not interest. Now multiply this model by a factor of 'n', the answer is still the same. Modify it slightly in the sense you say they Group members can SMS the bids and it would still be legal. Modify it ever more slightly in that there is actually no real group but the few gullible investors think there is one. That would still not be breaking any law on banking or capital markets. You bet word of mouth soon results in every one wanting a piece of the action.

JTull
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Re: Indian Banks & Financial System

Postby JTull » 18 Jun 2019 18:24

nandakumar wrote:I remember as a school kid, I once went along with my mom to a house a few blocks up the street. Apparently my mom and few others were part of a group that contributed Rs 5 every month and members would gather at this particular house where the lady of the house would organise the auction to bid for this amount. Since there is usually more than one member wanting the pool the winning bidder must be one who is prepared to suffer the maximum discount. The resultant discount is then distributed to other members with the lady organising the pool also getting an equal share. Nobody minds it as each one gets a share every month including the winner of each month as they all gain in the other months to the one where they bid for the pool at a discount. Did the lady break the law on banking? No. Because she didn't call her venture as a bank. Did she break the SEBI law? No. Because she did not make a public announcement. Is it sharia compliant? Of course. Because the discount every one earns is not interest. Now multiply this model by a factor of 'n', the answer is still the same. Modify it slightly in the sense you say they Group members can SMS the bids and it would still be legal. Modify it ever more slightly in that there is actually no real group but the few gullible investors think there is one. That would still not be breaking any law on banking or capital markets. You bet word of mouth soon results in every one wanting a piece of the action.


Please take adequate legal advice before embarking on such a venture. Taking deposits or receiving lumpsum payments on large scale with WhatsApp will run foul of securities and IT laws. There are both Contract and Tort law implications. Offers such as these or holding (/organising) an auction (invitation to treat) can be binding contracts. Your diligence, intent and will are questioned if any of the parties do not fulfill their obligations.

nandakumar
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Re: Indian Banks & Financial System

Postby nandakumar » 18 Jun 2019 21:25

JTull
No I am not embarking on any such venture. All that I am saying is that accepting deposits and on lending is not against the law as long as you are not adding the word "bank" to whatever you are doing. Equally what constitutes public solicitation of funds has been a problematic issue for SEBI. Surely Sahara would not have happened nor indeed Sarada unless there was a structural problem?

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Re: Indian Banks & Financial System

Postby ArjunPandit » 19 Jun 2019 16:36

https://www.livemint.com/industry/banki ... 23645.html

The committee reports that India’s central bank is yet to publish the securitisation framework and rules on total loss-absorbing capacity (TLAC) requirements. Globally, the norms on securitisation exposures held in the banking book had come into effect on 1 January, 2018.

The RBI also missed the deadline for meeting the TLAC requirement, which ensures that G-Sibs have adequate loss absorbing and recapitalisation capacity so that critical functions can be continued without taxpayers’ funds or financial stability being put at risk. These include instruments that can be either written down or converted into equity, like capital instruments and long-term unsecured debt. The TLAC constitutes 16% to 20% of a group's consolidated risk-weighted assets.

The RBI is also yet to come out with draft regulations on revised Pillar 3 disclosure requirements, which took effect from end-2016. Pillar 3 disclosures aim at ensuring market discipline through disclosures in prescribed format, while Pillar1 focuses on capital adequacy and Pillar 2 looks at the supervisory review process.

According to the report, India’s G-sibs are in the process of implementing rules on interest rate risk in the banking book (IRRBB). These regulations refer to the current or prospective risk to the bank’s capital and earnings arising from adverse movements in interest rates that affect the bank’s book positions. The central bank had issued draft guidelines in February 2017 and is yet to come out with final guidelines.

Globally the rules were effective from end-2018.

The reporter hasn't gone beyond the sensationalism and even bothered to even cold search the BCBS report for 5 mins, which BS (bhediya samachar) did
1. The link here gives the report for other countries
https://www.bis.org/bcbs/publ/d464.pdf
China the other peer country we should be looking to is more red
2. Even developed countries like SoKo (assuming NoKo is not referred as Korea) is also red in the areas
3. Most EU countries are yellow because the guidelines and many of the work gets done by EU and banks have common operations acorss diff countries
4. Indian govt is a lot more invested in the banks and would be unlikely that any bank will be allowed to fail, even if pvt so TLAC, while helpful and transparent and a good to have measure is not absolutely essential
5. Disclosure requirements, i think they wiull come but the costs right now are not justified esp in a global economy headed to recession


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