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The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>) on Thursday cancelled the licence of The Laxmi Co-operative Bank Ltd in <keyword id="13126" type="General" weightage="50" keywordseo="maharashtra" source="Orion">Maharashtra</keyword>'s Solapur. Consequently, the bank ceases to carry on banking business, with effect from the close of business on September 22. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. Following are the reason the central bank stated for cancelling the licence: - The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949. - The bank has failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949; - The continuance of the bank is prejudicial to the interests of its depositors; - The bank with its present financial position would be unable to pay its present depositors in full; and - Public interest would be adversely affected if the bank is allowed to carry on its banking business any further. On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the <keyword id="2321861" type="General" weightage="50" keywordseo="deposit-insurance-and-credit-guarantee-corporation" source="Orion">Deposit Insurance and Credit Guarantee Corporation</keyword> (<keyword id="75345" type="General" weightage="80" keywordseo="dicgc" source="Orion">DICGC</keyword>) subject to the provisions of DICGC Act, 1961. As per the data submitted by the bank, about 99 per cent of the depositors are entitled to receive full amount of their deposits from the DICGC. As on September 13, the DICGC has already paid Rs 193.68 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/four-billionaires-debut-on-rich-list-after-ipos/articleshow/94384190.cms">Four billionaires debut on rich list after IPOs</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/sony-wh-1000xm5-review/articleshow/94378638.cms">Sony WH-1000XM5 headphones review: Still the ANC king of premium headphones</a>

RBI cancels licence of Laxmi Co-operative Bank, Solapur

Reserve Bank Governor <keyword id="6359111" type="UNKNOWN" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword> on Saturday advocated the creation of a '<keyword id="1704908" type="COMPANY" weightage="20" keywordseo="Resolution-Corporation">resolution corporation</keyword>' with legislative backing for resolution and revival of stressed financial firms. The government in August 2017 had introduced the Financial Resolution and Deposit Insurance (FRDI) Bill in Parliament which, among other things, proposed setting up of a resolution corporation. However, after a year, the government decided to withdraw the bill as there were concerns raised about the protection of depositors' money if it was passed with the controversial "bail-in" clause, under which a bank's liabilities could be cancelled/modified to shore up its finances. "Going forward, we need the legislative backing to have some kind of a resolution corporation, which has to deal with resolution and revival of stressed financial firms," Governor Das said at the 7th SBI Banking and Economics Conclave. He said the regulator can issue early warning signals and flag the emerging risks. "The regulator will continue to take necessary measures, continue to engage with the management of the bank or NBFCs to identify the vulnerabilities, but there has to be a legally-backed arrangement," he noted. The governor said setting up a resolution corporation was earlier part of the FRDI Bill which the government withdrew because there were certain issues which needed closer examination. He further said the notification issued under Section 227 of the Insolvency and Bankruptcy Code (IBC) has given additional powers to the RBI to deal with non-banking financial companies (NBFCs) and housing finance companies (HFCs). By using those powers, the RBI had appointed an administrator for Dewan Housing Finance (DHFL) and that has been referred to the National Company Law Tribunal (NCLT), he said. DHFL, the third-largest pure-play mortgage player, is the first NBFC/HFC to face the corporate insolvency resolution process. Das said the resolution of DHFL is on stream now. "That is going on fairly well. We review it, we do monitor it from time to time," he added. The Reserve Bank Governor said as far as banks and other financial institutions are concerned, the approach traditionally has been to merge a failed bank with a larger lender. "While that definitely protects the depositors' interest but it also tends to pull down the balance sheet of the larger bank to which the smaller bank or the failed bank is merged," he noted. Giving the example of Yes Bank, Das said initially a market-based resolution was tried out for the lender where investors had shown interest. It was thought as the best way of going ahead with the process wherein a new investor would come in, put money and take it forward but it did not materialise, he said. "We then, without adversely impacting the balance sheet of any participating bank, worked out this arrangement of public private partnerships," the Governor said. Under the bailout plan, Yes Bank had received around Rs 10,000 crore from eight financial institutions, including Rs 6,050 crore from SBI. "The Yes Bank reconstruction scheme forged a unique public private partnership between leading financial entities of India, and it was implemented in a very quick time, which helped the bank's revival, successfully safeguarded the interest of the bank's depositors and ensured financial stability," Das said. With regard to the Punjab and Maharashtra Co-operative Bank, the RBI is engaged with all stakeholders to find out a workable solution as losses are very high, eroding deposits by more than 50 per cent, he added. Das further said the RBI's focus now is to identify the vulnerability from a very incipient stage, and then engage with the management of a bank or financial entity to ensure that the problem does not become larger. "Having said that, I must say that a bigger responsibility lies with the banks and the financial entities themselves," he emphasised. He added that many banks, both in the public and private sectors, have improved their internal risk management systems and procedures, and are able to take pre-emptive action. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/rbi-governnor-shaktikanta-das-explains-how-to-detect-bad-loans-off-site/articleshow/76906892.cms" style="">As RBI works from home, Governor Das is relying on off-site surveillance to 'smell the distress'</a> <a href="https://www.businessinsider.in/business/news/indian-economy-showing-signs-of-returning-to-normalcy-rbi-governor/articleshow/76905988.cms">Indian economy showing signs of returning to normalcy: RBI Governor</a>

RBI Governor advocates for a legally-backed 'resolution corporation' to deal with stressed financial firms

Equity benchmark Sensex plummeted over 1,400 points in early trade on Monday, tracking losses in index-heavyweights HDFC twins, <keyword id="6653" type="DOMAIN" weightage="20" keywordseo="ICICI-bank">ICICI Bank</keyword> and <keyword id="6355199" type="DOMAIN" weightage="20" keywordseo="reliance-industries">Reliance Industries</keyword> as spiking COVID-19 cases in the country spooked investors amid negative cues from global markets. The 30-share BSE index was trading 1,427 points or 2.88 per cent lower at 48,164.32. Similarly, the broader <keyword id="372424" type="COMPANY" weightage="20" keywordseo="NSE-Nifty">NSE Nifty</keyword> plunged 431.90 points or 2.91 per cent to 14,402.95. IndusInd Bank was the top loser in the Sensex pack, tanking around 8 per cent, followed by SBI, <keyword id="111876" type="DOMAIN" weightage="20" keywordseo="Bajaj-Finance">Bajaj Finance</keyword>, Bajaj Auto, Titan, ICICI Bank, <keyword id="85462" type="DOMAIN" weightage="20" keywordseo="Bajaj-FinServ">Bajaj Finserv</keyword> and Maruti. On the other hand, <keyword id="6354512" type="DOMAIN" weightage="20" keywordseo="Infosys">Infosys</keyword> was the sole gainer. In the previous session, Sensex had settled 154.89 points or 0.31 per cent lower at 49,591.32, and <keyword id="6354813" type="COMPANY" weightage="20" keywordseo="Nifty">Nifty</keyword> slipped 38.95 points or 0.26 per cent to 14,834.85. Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 653.51 crore on Friday, according to provisional exchange data. "Since the second wave of the pandemic is turning out worse than expected, there is profound uncertainty about its impact on the economy and markets, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The situation is the worst in economically significant <keyword id="13126" type="COMPANY" weightage="20" keywordseo="Maharashtra">Maharashtra</keyword>. This can impact the market's assumption of around 11 per cent GDP growth and above 30 per cent earnings growth, he added. Elsewhere in Asia, bourses in Shanghai, Hong Kong and Tokyo were in the red in mid-session deals, while Seoul was trading with mild gains. Meanwhile, international oil benchmark Brent crude was trading 0.05 per cent higher at USD 62.98 per barrel. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/founders-take-note-heres-why-most-startups-fail/articleshow/81981138.cms">Founders, take note: here’s why most startups fail</a> <a href="https://www.businessinsider.in/tech/apps/news/google-phone-app-now-lets-you-record-calls-automatically-from-unknown-numbers/articleshow/81982791.cms">Google Phone app now lets you record calls automatically from unknown numbers</a> <a href="https://www.businessinsider.in/business/startups/news/adar-poonawalla-serum-institute-of-india-has-bought-stake-policybazaar/articleshow/81985425.cms">Serum Institute of India buys into IPO-bound insurance unicorn PolicyBazaar, as True North sells part stake in secondary sale</a>

Sensex crunches over by 1,400 points in early trade, Nifty tests 14,400 — IndusInd Bank, SBI, Bajaj Finance, Bajaj Auto, Titan, ICICI Bank down

<ul><li> As part of the merger, <keyword id="3660661" type="General" weightage="80" keywordseo="clix-capital" source="Orion">Clix Capital</keyword> Services will also need to take on Suryoday <keyword id="6382595" type="General" weightage="20" keywordseo="small-finance-bank" source="Orion">Small Finance Bank</keyword>’s gross bad loans worth ₹381 crore. That's nearly a quarter of Clix Capital’s own net worth.</li><li>Both the entities are into completely different lines of business. <keyword id="9295768" type="General" weightage="20" keywordseo="Suryoday-SFB" source="Orion">Suryoday SFB</keyword> is essentially a micro-lender, while Clix Capital is a non-banking financial company that is into MSME and consumer lending.</li><li>Besides Clix Capital getting an indirect banking licence, the deal would help Suryoday SFB diversify its loan book and strengthen its digital presence.</li></ul>AION Capital-backed Clix Capital Services Pvt. Ltd., a non-bank lender, has been out in the market to acquire a banking licence since last year. After a failed attempt to acquire distressed Lakshmi Vilas Bank in November last year, it has now set its eyes on another bank ⁠— Suryoday <keyword id="3896843" type="General" weightage="20" keywordseo="small-finance-bank-ltd" source="Orion">Small Finance Bank Ltd</keyword>. The proposed merger, according to a source directly aware of the development who spoke on condition of anonymity, is in advanced stages, with Centrum Capital acting as an advisor to the deal. The development was first <a href="https://www.business-standard.com/article/companies/clix-capital-suryoday-sfb-in-merger-talks-deal-in-advanced-stage-121091300045_1.html">reported</a> by Business Standard on Sep. 13 that said, citing unnamed sources, that both parties were engaged in due diligence for the transaction. Even as the deal would help micro-lender turned banker Suryoday to expand its loan book, the deal comes at a heavy price for Clix Capital. This, as the Gurugam-based non-bank lender will also have to absorb Suryoday’s gross bad loans worth ₹381 crore. That's nearly a quarter of Clix Capital’s own net worth. The cost of the merger, and its own deteriorating asset quality due to the pandemic, will be over and above that. But experts are divided on the benefits of the merger. “There are no visible synergies between Suryoday SFB and Clix Capital, as both have completely different business models,” said <keyword id="12088598" type="General" weightage="20" keywordseo="anand-dama" source="Orion">Anand Dama</keyword>, research analyst at brokerage firm Emkay Global Securities. “The only plausible explanation for the deal is that it would help Clix Capital indirectly acquire a banking license, while Suryoday will be able to diversify its lending portfolio. But a regulatory approval for the deal could be an arduous task,” he said. There are others who believe Clix Capital will benefit from both cheaper capital, thanks to the banking licence, and new set of borrowers. After the deal was reported, Suryoday SFB’s stock jumped almost 20% to close at Rs 179.40 apiece on the BSE on Monday. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div class="flourish-embed flourish-chart" data-src="visualisation/7252296"></div>]]></cdata></div> <cmsannotation type="cmsannotation" annotationid="What’s On The Table?" comment="subhead" text="What’s On The Table?">What’s On The Table?</cmsannotation> Suryoday SFB is essentially a micro-lender with close to 68% of its loan book worth ₹4,004 crore dedicated to providing micro-loans to women in urban and semi-urban areas, under the joint liability group model. Clix Capital, on the other hand, is mainly into small business and consumer lending that form 82% of its loan book worth ₹4,249 crore. The proposed merger, said Siji Philip, senior research analyst at Axis Securities, may mean a riskier loan book with possible pressure on asset quality metrics, which would need to be resolved over time. “If a deal fructifies, it would also mean that the combined loan book of Suryoday and Clix Capital could face asset quality headwinds and more clarity is awaited on this front. Besides, the merger will create a loan book comprising microfinance from Suryoday, and MSME (micro, small and medium enterprises) and consumer finance from Clix, which have been some of the heavily impacted segments during the pandemic,” she said. As of June 30, Suryoday reported gross non-performing assets at 9.5% of its total advances, while it wrote-off loans worth nearly Rs 79 crore. Its GNPA in the quarter ended March, too, was largely the same at 9.4%. “Delinquency in the portfolio increased due to the impact of the second Covid wave. Collections were difficult in the majority of the places across the country in April and May which led to increased PAR (portfolio-at-risk),” said <keyword id="11017591" type="General" weightage="20" keywordseo="baskar-babu-ramachandran" source="Orion">Baskar Babu Ramachandran</keyword>, managing director and chief executive at the bank during its earnings con-call on Aug. 12. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div class="flourish-embed flourish-table" data-src="visualisation/7252787"></div>]]></cdata></div> Compare that to Clix Capital, which had gross NPA at 3.37% as on March 31, or about Rs 143 crore, as per a June 29 <a href="https://www.careratings.com/upload/CompanyFiles/PR/12072021061939_Clix_Capital_Services_Private_Limited.pdf">note</a> by Care Ratings. The asset quality numbers as on June 30, 2021 were not available in public domain for Clix Capital. <cmsannotation type="cmsannotation" annotationid="The Road Ahead" comment="subhead" text="The Road Ahead">The Road Ahead</cmsannotation> As the contours of the deal get worked out, combining Suryoday and Clix Capital may even help the two entities build a more resilient loan book, said Hemindra Hazari, an independent banking analyst. “Suryoday SFB would need to expand its loan offerings beyond microfinance to build a more resilient loan book, and a deal with Clix Capital would help it do just that,” he said. Besides helping with loan book diversification, the merger would also help Suryoday improve its digital capabilities and lower its operating costs, said Philip. Whereas Clix, said Hazari, will be able to take advantage of lower cost of funds available to a bank. “At a time when non-bank lenders are struggling with liquidity constraints, a merger would go a long way in bringing down the cost of funds,” he said. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<div class="flourish-embed flourish-table" data-src="visualisation/7252363"></div>]]></cdata></div> So far, Suryoday, focused on Maharashtra and Tamil Nadu, has expanded its book into commercial vehicles, affordable housing and small business loans. But since a bulk of its business is unsecured micro-loans, its asset quality has remained weak. Clix, however, managed to shrink its stressed corporate loan book to 18% as of fiscal 2021, compared to 27% in fiscal 2020. But despite being more efficient with its lending, the cost of capital has increased to 4.53% of total assets, as against 1.23% in the previous fiscal. The credit costs, Care Ratings said in its July note, inched up mainly due to higher provisioning costs amid the pandemic that affected the businesses of its underlying MSME and retail borrowers. The deal, said Hazari, is borne more out of need than synergy between the two lenders. “Though the Reserve Bank of India has been conservative in granting banking licences to NBFCs, acquiring or merging with a bank has become a convenient backdoor entry for some. For Clix, this is a similar opportunity, even if it means absorbing the bad loans of another bank,” he said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/online-pharmacy-startup-pharmeasy-is-looking-to-hire-200-engineers-in-hyderabad-pune-and-delhi-before-the-ipo/articleshow/86168091.cms">Online pharmacy Startup PharmEasy is looking to hire 200 engineers in Hyderabad, Pune and Delhi before the IPO</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/how-to-take-screenshots-on-windows-10-8-and-7/articleshow/86168223.cms">How to take screenshots on Windows 10, 8 and 7</a>

Clix Capital's urge to be a bank must be too intense for it to merge with Suryoday

New Delhi, Feb 5 () In order to protect interest of depositors, the Union Cabinet on Wednesday approved amendment to Banking Regulation Act to strengthen cooperative banks and avoid PMC Bank like crisis.There are 1,540 cooperative banks with depositor base of 8.60 crore having total savings of about Rs 5 lakh crore.The proposed law seeks to enforce banking regulation guidelines of the RBI in cooperative banks, while administrative issues will still be guided by Registrar of Cooperative, Information and Broadcasting Minister Prakash Javadekar said while briefing media about the Cabinet decisions.Observing that the changes will help strengthen financial stability, he said qualifications would be set for appointing CEO of cooperative banks and the RBI permission would be sought before appointment as followed in case of commercial banks.Audit would be as per the RBI guidelines and the central bank can also supersede the board if any cooperative bank is under stress, he said.Cooperative bank will be given time to comply with the RBI guidelines in phased manner, he added.The cabinet approval is in line with the Budget announcement made by Finance Minister Nirmala Sitharaman on Saturday."To strengthen the Cooperative Banks, amendments to the Banking Regulation Act are proposed for increasing professionalism, enabling access to capital and improving governance and oversight for sound banking through the RBI," she had said in the Budget 2020-21.The decision assumes significance in the wake of a scam in the Punjab and Maharashtra Cooperative (PMC) Bank affecting lakhs of customers who are facing difficulties in withdrawing their money due to restrictions imposed by the Reserve Bank of India.Javadekar further said this is the second important measure taken by the government to protect the interest of depositors within a week.Sitharaman proposed in the Budget to raise the insurance cover on saving deposits five times to Rs 5 lakh."I wish to inform this august House that robust mechanism is in place to monitor the health of all Scheduled Commercial Banks and that depositors' money is safe."Further, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been permitted to increase Deposit Insurance Coverage for a depositor, which is now Rs 1 lakh to Rs 5 lakh per depositor," she said in Budget 2020-21.At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and credit Guarantee Corporation if a bank fails. However, deposits maintained with different banks are not clubbed. DP BAL

Cabinet clears amendment to banking laws to strengthen cooperative banks

New Delhi, Mar 6 () Paytm Payments Bank Ltd (PPBL) on Friday restricted transaction settlements, including those done through UPI platform, into cash-strapped Yes Bank's accounts. The decision by PPBL follows the Reserve Bank of India's move to cap withdrawals from Yes Bank accounts at Rs 50,000 per depositor for a month and imposed strict limits on operations at the country's fourth-largest private lender that faced "regular outflow of liquidity" after an effort to raise new capital failed. "Paytm Payments Bank Ltd (PPBL) today (Friday) announced that they are restricting transaction settlements, including UPI, into Yes Bank accounts to safeguard their users' money," PPBL said in a statement. Yes Bank has been seeking funding since last year to bolster its financial ratios and quell questions about its stability due to its exposure to the non-banking financial company sector entangled in a prolonged crunch in the local credit market. "While third-party apps that rely on Yes Bank have also been affected, the UPI ecosystem has been designed in a way where customers can continue using other UPI apps to transact on UPI. Paytm customers continue to use Paytm UPI and wallet service without any interruption as before," the statement said. The Indian banking system is currently under stress due to rising non-performing assets (NPAs) and other issues, it added. The case of restrictions on Yes Bank is second within a year after the Punjab and Maharashtra Co-operative Bank crisis in September 2019. PPBL said that in a scenario where banks have been facing crisis in India, payment banks are safe and offer more safety and security to the deposited money. Earlier in the day, PPBL took a dig on its rival PhonePe in the wake of obstruction it faced due to using cash-strapped Yes Bank's platform for transactions. It said payments banks are not allowed to lend and, therefore, do not have the problem of NPAs. PPBL also added that such banks have to necessarily invest 75 per cent of customers' deposit money into government securities, which is the safest form of investment. "Safety and security of our users' money are of utmost importance to us. We have stopped all transactions in Yes Bank accounts so that the money doesn't get blocked. We are also requesting users to change their primary bank account to some other bank. However, these restrictions are temporary in nature till the time we get more clarity on the situation," Satish Gupta, managing director and chief executive officer of PPBL, said. PRS HRS

Paytm Payments Bank restricts transaction settlements into Yes Bank accounts

<ul><li>The Yes Bank crisis could have a cascading effect on the stock markets. </li><li>Businesses with deposit accounts at Yes Bank may not be able to make payments on loans taken from other financial institutions. </li><li>Mutual funds have a total exposure of ₹2,848 crore, and most are already side-pocketing the risk. </li></ul>As the Yes Bank crisis continues to unfold, not everyone is on board with the Reserve Bank of India’s (RBI) scheme to restructure the troubled bank. Mutual funds stand to lose millions and the moratorium limiting withdrawals to ₹50,000 could spell trouble for companies who are using the bank’s services. “With large-sized withdrawals disallowed, a number of companies availing of facilities from Yes Bank could face disruption in their operations, which may constrain their ability to service financial obligations on time,” said global rating firm CRISIL in a statement. As the fourth largest private sector bank in the country, Yes Bank has an asset book of more than ₹3.45 crore and deposits exceeding ₹2 lakh crore. CRISIL believes that the moratorium has “material implications” for companies using Yes Bank for loans, deposits, bonds and other instruments. How Yes Bank crisis could affect other banks The fall out from funds being stuck at the troubled bank could result in companies defaulting on their loans from other financial institutions since their payments are linked to deposit accounts at Yes Bank. It may further aggravate liquidity issues for the already cash-starved non-banking lenders, according to a report by <a href="https://www.businessinsider.in/business/news/yes-bank-reconstruction-may-further-aggravate-liquidity-issues-for-nbfcs-report/articleshow/74579814.cms">Fitch Ratings.</a> “There could also be a marginal uptick in delinquencies in retail loans of banks and non-banks,” said CRISIL. Companies using Yes Bank’s letters of credit and bank guarantees to leverage their businesses may also have to rethink their plans. “There are also some securitisation transactions of other originators where Yes Bank is a counterparty - either as the bank where credit enhancement in the form of fixed deposits is being maintained, or as the collection and paying agent for the transaction,” said CRISIL. NSE Clearing (NCL) and India Clearing Corporation (ICCL), the biggest clearing firms in the country, have told members that any existing benefit toward bank guarantees and fixed deposit receipts issued by Yes Bank were to be squared off by Wednesday, March 11. “The RBI decision has a cascading effect on trading members and their clients at large since they may not be able to cover their positions from their own funds,” Association of National Exchanges (ANMI) president Vijay Bhushan told <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-bank-fds-bank-guarantees-no-longer-valid-traders-have-to-arrange-funds-by-wednesday/articleshow/74545067.cms">ET.</a> Bonding over bonds Nearly 32 mutual funds are exposed to Yes Bank’s debt with a total exposure of ₹2,848 crore. Many of them are AT 1 (Additional 1) bonds, set to be written off completely. Mutual funds owned by Nippon, Kotak, and Franklin <a href="https://economictimes.indiatimes.com/markets/stocks/news/yes-banks-at1-bond-write-down-these-mfs-pension-funds-stand-to-lose-most/articleshow/74555609.cms">have the most to lose</a>. After news broke of RBI superseding Yes Bank’s board, rating agency ICRA downgraded Yes Bank’s debt instruments to a “D” — below investment grade. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td colspan="2" style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mutual fund owners with the most to lose from RBI’s scheme to restructure Yes Bank: </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mutual fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Loss </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nippon Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2,500 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Franklin Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹590 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Barclays Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹246 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Mutual Fund </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹130 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Industries </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹100 crore </td></tr></tbody></table> Nippon India Mutual Fund, which has the largest exposure, was the first to side-pocket the risk. The move prevents distressed assets, like Yes Bank, from damaging returns generated from better-performing assets. PGIM India Mutual Fund, UTI Mutual Fund, Franklin Templeton Mutual Fund and Baroda Mutual Fund <a href="https://www.bloombergquint.com/business/yes-bank-news-two-more-mutual-funds-side-pocket-exposures-to-yes-bank-bonds">soon followed suit</a>. Axis Trustee Services, on the other hand, filed a petition to delay any action until its bond investors have had the time to review its impact. It asks the court to give enough time for bond investors to review the proposed plan. <div type="twitter" handle="LiveLawIndia" handlename="Live Law" image="http://pbs.twimg.com/profile_images/897707258334916608/nMQWwGlo_normal.jpg" favoritecount="11" retweetcount="6" status="Axis Trustee Services Ltd, a debenture trustee of #Yes_Bank , on Monday petitioned the Bombay High Court against th… https://t.co/pE53lzxTwl" createdat="1583913099000" id="1237647359091195905"></div>

 According to Axis, the proposal to write off the value of over ₹8,000 AT-1 bonds is unjustified and goes against global best practices. It argues that the scheme put forth by the RBI gives preference to Yes Bank promoters despite their shady record and mismanagement of resources — which landed the bank in hot water, to begin with. The possibility of the moratorium being cut short The proposed restructuring of Yes Bank includes recapitalisation of ₹20,000 crore with equity contribution and bulk deposits of around ₹30,000 crore by multiple-state owned banks. “If equity commitments are in place and CD funds flow in, the moratorium may be lifted by the end of the week,” RBI administrator of Yes Bank told reporters on March 10. CRISIL believes that the challenges in the face of the Yes Bank crisis are likely to be temporary, since they are a direct result of a crunch in liquidity and cash flow. Nonetheless, the temporary crunch will result in systemic risk until the moratorium is resolved — like the cost of borrowing and capital-raising becoming tougher for other banks Sources told <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/under-the-scanner-rbi-to-check-if-yes-bank-auditor-bsr-had-raised-red-flags/articleshow/74568396.cms">ET</a> that RBI is checking with Yes Bank’s auditor — BSR &amp;Co, which is a part of KPMG India — whether or not the proposal for SBI to buy a stake in Yes Bank will have any “material impact” on the existing accounts with the bank. Another one bites the dust The repeated incidents of large — supposedly ‘too big to fail’ — companies are becoming increasingly rampant. Last September, the Mumbai-based Punjab and Maharashtra Cooperation (PMC) Bank faced a similar crisis. It was placed under an RBI administrator for six months after under-reporting of loans going bad. However, banks aren’t the only ones going down. The collapse of Jet Airways and Cox &amp; Kings left many investors — and travelers — stranded. Even stockholders in IL&amp;FS and DHFL saw their money disappear overnight due to mismanagement, fraud and corruption within the companies. More than just getting Yes Bank on its feet, the central government and the RBI will have to address the trust deficit that now plagues the market. See also: <a href="https://www.businessinsider.in/finance/news/indias-largest-bank-stock-sees-the-sharpest-fall-in-over-7-years-investors-want-to-say-no-to-yes-bank/articleshow/74504449.cms">India's largest bank stock sees the sharpest fall in over 7 years — investors want to say 'no' to Yes Bank</a> <a href="https://www.businessinsider.in/finance/news/finance-minister-assures-employment-and-salary-at-yes-bank-at-least-for-one-year/articleshow/74514015.cms">Finance Minister assures employment and salary at Yes Bank at least for one year</a> <a href="https://www.businessinsider.in/finance/news/yes-bank-share-price-falls-10-after-rbi-limits-withdrawals/articleshow/74504094.cms">Yes Bank share price nose dives 72% after RBI limits withdrawals</a>

Yes Bank crisis and its domino effect on bonds, mutual funds and other corporate defaults

Reserve Bank deputy governor B P Kanungo on Thursday said the five-fold <keyword id="8731822" type="UNKNOWN" weightage="20" keywordseo="hike-in-deposit-insurance">hike in deposit insurance</keyword> to Rs 5 lakh will not have much impact on bank balance sheets. Following the failure of a number of cooperative banks, with the city-based PMC Bank being the latest and the largest last year, the budget had permitted the Deposit Insurance and Credit Guarantee Corporation (<keyword id="75345" type="ORGANIZATION" weightage="20" keywordseo="DICGC">DICGC</keyword>) to raise deposit insurance coverage to Rs 5 lakh from Rs 1 lakh. "The revision in deposit insurance will not impact banks' balance sheets much," Kanungo told reporters during the post policy conference. The crisis at the Punjab &amp; Maharashtra Cooperative (PMC) Bank has brought to the fore the need to increase deposit insurance coverage. The DICGC, a wholly-owned subsidiary of the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword>, provides insurance cover on bank deposits. At present, the DICGC provides Rs 1 lakh insurance to a depositor regardless of the deposit amount, in case the lender fails or gets liquidated. The corporation insured each bank depositor up to a maximum of Rs 1 lakh for both principal and interest amount held by them as on the date of liquidation/cancellation of a bank's licence or the date on which the scheme of amalgamation/merger comes into force. See also: <a href="https://www.businessinsider.in/business/news/deposit-insurance-corporation-sees-rs-14100-cr-claims-amid-pmc-crisis/articleshow/73016977.cms">Deposit Insurance Corporation sees Rs 14,100-cr claims amid PMC crisis</a> <a href="https://www.businessinsider.in/business/news/dicgc-collected-rs-88523-cr-premium-from-banks-payout-towards-claim-totalled-rs-296-cr/articleshow/72457314.cms">DICGC collected Rs 88,523 cr premium from banks, payout towards claim totalled Rs 296 cr</a> <a href="https://www.businessinsider.in/business/news/govt-permits-five-fold-increase-in-deposit-insurance-cover-to-rs-5-lakh-per-depositor/articleshow/73835231.cms">Govt permits five-fold increase in deposit insurance cover to Rs 5 lakh per depositor</a>

Hike in deposit insurance won't hit bank balance sheets: RBI

Mumbai, Mar 6 () Even as the RBI and the government are assuring the public of their money being safe in Yes Bank, depositors continue to queue up outside branches of the troubled private lender.Several customers are now contemplating opening up new accounts in other banks.There were cases of heated exchange between bank staff and customers, who failed to withdraw money.On Thursday, the Reserve Bank of India (RBI) superseded the board of Yes Bank and imposed a 30-day moratorium after the Rana Kapoor-promoted bank failed to raise capital to address potential loan losses.The bank's depositors are allowed to withdraw cash up to Rs 50,000 from their accounts during the 30-day moratorium period, according to a government gazette.The withdrawal limit, however, can be relaxed up to Rs 5 lakh in case of medical emergencies, higher education and for expenses related to marriages, it said.The rush to withdraw money from the bank continued despite Finance Minister Nirmala Sitharaman, Chief Economic Advisor Krishnamurthy Subramanian and Reserve Bank Governor Shaktikanta Das trying to allay the fear among the depositors."Our salary gets credited on 21st of every month. I am a little worried about my upcoming salary as I have a salary account with Yes Bank. I am going to provide details of my other bank account to HR today so that my money doesn't get blocked," said an MNC employee who was standing in a queue at one of the branches in suburban Mulund.Pradeep Kumar, an engineer by profession, working with a large real estate developer, said, "I have some money right now but I have come to withdraw more since it is the beginning of the month and there are some payments lined up."Kumar had tried to withdraw money yesterday night but ATM went dry before his turn came. Yes Bank has 1,000 branches across the country.To streamline the withdrawal process, some of the branches are giving limited tokens to the customers."The branch manager has refused to give me a token since I reached late. They are giving tokens to up to 130 people," said a customer who was seen fighting with the manager of the branch in suburban Mumbai.Security was also tightened at the bank's headquarters, its branches and ATMs across the city. It's not just salaried customers, but entrepreneurs and small businessmen are also affected."We are a start-up having a current account with the bank. We recently raised money from investors which is lying in the account but we are unable to use it," said a customer who came to a branch in Powai to withdraw cash. He said the company gave salaries to employees two days back but there are payments to be made to vendors."Our clients make payments to us which get deposited into our current account with the bank. We are now sending out communications to our clients not to make payments to our present account," said a visibly disturbed customer who has an IT hardware business.Amidst all of this, she is also trying to get her current account open with other bank so that her clients can transfer the money.One customer at the Kharghar branch said he hopes the country's largest lender State Bank of India will not allow the bank to fail. On Thursday, the SBI board gave its "in-principle" approval to exploring investment opportunities in Yes Bank.The customers said even the mobile and internet banking are shutdown.There was a posse of security men outside the RBI headquarters at Mint Road, which has experienced protests by depositors during the PMC Bank crisis in the recent past.Diagonally opposite, at a Yes Bank branch, a huge stream of depositors could be seen queued up to withdraw their money.At a bank's branch in Colaba, there were similar scenes with a longish queue of depositors.Yes Bank's share tanked 56 per cent to end at Rs 16.20 apiece on the BSE on Friday.While talking to reporters in New Delhi, the Finance Minister said she was in continuous interaction with the RBI who are fully seized of the matter and has assured for a quick resolution."I want to assure every depositor that their money shall be safe. Their monies are safe," she said.The RBI Governor said the resolution of the bank will be done very swiftly."Thirty days which we have given is the outer limit. You will see a very swift action from RBI to put in place a scheme to revive Yes Bank," Das told reporters here.Chief Economic Advisor Krishnamurthy Subramanian also said all options are under consideration for restructuring Yes Bank and assured that depositors' money is safe.This situation reminds one of the plights of depositors of Punjab and Maharashtra Cooperative Bank six months ago.The customers of Mumbai-based urban cooperative bank also went through a similar hardships after the RBI, in September 2019, had superseded the board and the management of the bank.The central bank had put a six-month regulatory restriction on the cooperative bank after it found out certain financial irregularities, hiding and mis-reporting of loans given to real estate developer HDIL.The restriction included barring PMC Bank from lending and accepting fresh deposits. HV BEN AA DC MKJ

Assurances aside, Yes Bank customers queue up outside branches

New Delhi, Jun 11 () Worried over death of bank employees due to coronavirus, the United Forum of Bank Unions (UFBU) has demanding regular sanitisation of branches, Rs 1,000 daily allowance and Rs 50 lakh insurance cover for bank staff as provided to healthcare workers. In a letter to the Department of Financial Services, the UFBU has said 11 bank employees have already died due to coronavirus and additional steps are needed to ensure safety of staff. The UFBU, an umbrella organisation of bank unions, said bank employees and branches are facing problems due to non-availability of transport and reduced number of security staff and workers responsible for cleanliness of branch premises. Among other things, the UFBU demanded that bank branches to be regularly sanitised and provided adequate security for regulating entry. Also, senior and women employees be allowed to work from home and those attending the duty at branches be given a daily allowance of Rs 1,000. According to the last week's letter to the ministry, the bank union also demanded that transport facility be provided to bank employees, and the central government compensation scheme of Rs 50 lakh insurance be extended to bank employees along with compassionate appointment in case of death. "All the centres such as Mumbai, Nasik, Aurangabad, Pune and similar such places be covered under above provisions of work such as 50 per cent attendance, work from home facility, alternate day attendance, flexi timings, and the same be implemented uniformly in all banks at all such areas," the union said. Bank employees from Maharashtra and more particularly from Mumbai are striving their level best to provide continued banking services to the common people despite the numerous difficulties faced by them and in the process, 11 bank employees have lost their lives due to COVID-19, it said. As per the letter, these deceased staff include three from State Bank of India, one from Punjab National Bank, one from Federal Bank, one from Central Bank of India, two from Bank of India, one from IDBI, one from Canara Bank, and one from Bank of Maharashtra. Also, one employee from Federal Bank and an executive from Central Bank of India, even though were not diagnosed as coronavirus-affected, were suspected to have died of the same, it said. "In view of increasing deaths of the bank employees from the Mumbai Metropolitan Area employees have become perturbed and in this background, there is a need to give them some comfort in attending their duties, failing which it will be difficult to give uninterrupted services," the letter said. The union has also demanded that bank employees be permitted to travel by state transport buses. NKD HV CS HRS

Bank unions demand regular sanitisation of branches, daily allowance during coronavirus pandemic

<ul><li>The <keyword id="53232" type="COMPANY" weightage="20" keywordseo="BSE-sensex">BSE Sensex</keyword> tanks 8% or over 2700 pts and <keyword id="6354813" type="UNKNOWN" weightage="20" keywordseo="Nifty">Nifty</keyword> was down by 750 points </li><li>The decline in Indian stock markets was in line with the freefall in Asian and European <keyword id="35144" type="COMPANY" weightage="20" keywordseo="indices">indices</keyword> </li><li>During the meeting today at 4pm , the central bank is expected to cut rates and announce measures to boost sentiment. </li></ul>BSE Sensex tanked 8% or over 2700 points today and NIfty was down by 750 points. This is in spite of rumours that RBI will announce an interest rate cut at its press conference today at 4 pm. However, both the news of Fed cutting interest rates to zero and RBI’s possible announcement did nothing to warm the sentiment of investors. The number of <keyword id="1754604" type="PERSON" weightage="20" keywordseo="coronavirus">Coronavirus</keyword> cases went up to 116 as of now and Maharashtra is the worst affected with 37 where the epidemic is spreading far and wide. Thanks to more bad news, stock markets opened in the red and tanked in the afternoon. At 3.25 pm, Sensex was trading at 31,386.08, and Nifty was at 9,199 points. The decline in Indian stock markets was in line with the freefall in Asian and European indices, despite the second emergency rate cut announced by the US Federal Reserve. The top losers on the Sensex were IndusInd Bank, Axis Bank, ICICI Bank, Tata Steel and Tech Mahindra. Amid the melee, Yes Bank stock which was hammered down for the last few weeks, went up by a massive 46% to Rs 37.35 in the afternoon. This was after Federal Bank announced that it would invest Rs 300 crore in the troubled bank. Added to that, the government said that a moratorium on bank withdrawals will be lifted by Wednesday (March 19). However,<a href="https://www.businessinsider.in/business/news/idfc-first-to-invest-rs-250-cr-in-yes-bank/articleshow/74636590.cms"> the market regulator curbed t</a>he party saying that investors can sell only 25% of their holdings in this extremely volatile stock. During the last trade on Friday (March 13), trading was halted for 45 mins as a result of the first-ever circuit breaker in the last 12 years. However, the markets rebounded, registering the biggest ever recovery in the Indian stock markets. IANS reported that the market observers predict a temporary bounce back in the key Indian stock indices — S&amp;P BSE Sensex and the NSE Nifty50— as they might get a reprieve from the massive bouts of volatility that have been witnessed lately. The two key indices had witnessed heavy sell-off last week due to the global outbreak of Coronavirus and its impact on the world economy. "However for a sustained rise, we will need more confirmation of the scare reducing drastically and economies getting back on their feet," said Deepak Jasani, head of retail research, <keyword id="103838" type="COMPANY" weightage="20" keywordseo="HDFC-Securities">HDFC Securities</keyword> told IANS. The Indian currency was trading <a href="https://www.businessinsider.in/business/news/rupee-plunges-45-paise-to-74-20-against-us-dollar-in-early-trade/articleshow/74646615.cms">at 74.20 against a US dollar.</a> Last week, Rupee touched a new low after the value downgraded to 73 against the dollar. SEE ALSO: <a href="https://www.businessinsider.in/topic/coronavirus">coronavirus: Latest News, Articles on coronavirus | Business Insider India</a>

Sensex tanks 2,700 points and Nifty loses 750 as a possible rate fails to raise spirits

New Delhi, Mar 9 () S&amp;P Global Ratings on Monday said quick resolution of Yes Bank's insolvency will keep India's banking sector contagion at bay, but as credit markets tighten there could be a possibility of wider economic pain in the country. The Reserve Bank last week imposed a moratorium on the capital-starved Yes Bank, capping withdrawals at Rs 50,000 per account and superseding the board of the private sector lender with immediate effect. Following this, country's largest lender State Bank of India (SBI) on Saturday said it will invest Rs 2,450 crore in the troubled private sector bank against 245 crore shares. "The Indian government is working with the SBI to inject capital into Yes Bank, a troubled private-sector bank with 1.8 per cent of the country's bank deposits (as of March 31, 2019). "Quick resolution of Yes Bank's insolvency will keep India bank-sector contagion at bay, though it poses pain for investors in bank hybrid securities. As credit markets tighten, we also see a possibility of wider economic pain in the country," S&amp;P Global Ratings said. It said the Indian government has consistently supported weak commercial banks by promoting the merger of distressed institutions with stronger lenders and has historically not allowed commercial banks to fail and has in the past swiftly stepped in to address trouble. "The current weak economic and high-fear global investment environment, in our view, has prompted the government to support the recovery of Yes Bank. However, in better times, we believe the government would think twice about pushing such a package for relatively small banks," S&amp;P said. SBI will own a minimum of 26 per cent of Yes Bank for the next three years. SBI's ownership should give confidence to depositors and lenders about the bank's solvency, it added. The Reserve Bank has put out a draft resolution plan for Yes Bank allowing SBI to acquire 49 per cent stake. The ents follow Yes Bank's failure to raise capital to address loan losses, sparking a withdrawal of deposits. India's central bank has highlighted serious governance issues at Yes Bank, lapses that have contributed to the institution's steady decline in recent years. Any delay in, or uncertainty about, the implementation of the resolution plan may roil markets, S&amp;P said. "In our view, India's financial sector broadly needs to raise governance standards and restore trust. In the past few years, regulators have identified many governance shortcomings among Indian lenders, most recently at Punjab and Maharashtra Cooperative (PMC) Bank Ltd," S&amp;P said. It said if Yes Bank's resolution process is prolonged, there is a risk the broader banking environment may take a hit. This may raise investors' perception of credit risk in the system, tightening funding. "Many mutual funds hold Yes Bank securities, including subordinated debt and AT-1s. A depreciation in the value of these instruments would hurt credit funds, potentially triggering capital outflows. This could widen spreads and drain the credit available to lower-rated entities," S&amp;P said. The speed of the government action will be critical to provide clarity, it noted. In the past cases of bank failures--such as the collapse of Global Trust Bank Ltd., Nedungadi Bank Ltd., United Western Bank Ltd., Bank of Rajasthan Ltd. and Sangli Bank Ltd.--we have seen swift action that nipped contagion in the bud, S&amp;P added. JD ANSANS

Yes Bank insolvency may tighten credit mkt, widen economic pain: S&P

<ul><li>Number of bad loans alone was close to $149 billion last year.</li><li> <keyword id="571991" type="ORGANIZATION" weightage="20" keywordseo="Nirav-Modi">Nirav Modi</keyword> and his uncle Mehul Choksi allegedly defrauded Punjab National Bank of over <a href="http://www.thehindu.com/business/Industry/all-you-need-to-know-about-nirav-modi-and-the-177-billion-pnb-fraud/article22753973.ece" data-type="tilCustomLink">₹1.77 billion</a>. </li><li>According to proxy advisory firm Institutional Investor Advisory Services (IiAS), in 2016-17 alone the Indian banking sector reported 12,553 frauds aggregating to Rs 181.7 billion. </li></ul> India’s already troubled banking sector is being demolished by the surging number of bad loans and/or bank frauds that are coming to light. Though this is not at all a new phenomenon, the Nirav Modi case has opened up a Pandora’s box full of dodgy transactions -- that typically involves cases where the borrower intentionally tries to deceive the lending bank and does not repay the loan -- that run in millions and even billions. As a result of which, the CBI is on an overdrive to nab these offenders. According to data from the Reserve Bank of India (RBI), accessed through a right-to-information request by a <a href="https://in.reuters.com/article/india-banks-fraud/exclusive-unpublished-data-shows-indias-fraud-problems-extend-far-beyond-pnb-idINKCN1G00SJ">Reuters</a> reporter, in the five financial years leading up to 31 March 2017 showed that state-run banks reported 8,670 “loan fraud” cases totalling ₹612.6 billion. And the number of bad loans alone was close to a whopping <a href="https://www.ndtv.com/india-news/unpublished-data-shows-indias-fraud-problems-extend-far-beyond-pnb-1813569" data-type="tilCustomLink">$149 billion</a> last year. According to proxy advisory firm Institutional Investor Advisory Services (IiAS), in 2016-17 alone the <a href="https://www.firstpost.com/business/frauds-cost-rs-18170-cr-in-12553-cases-to-banking-sector-in-fy17-advisory-firm-report-4411267.html">Indian banking sector reported 12,553 frauds aggregating to Rs 181.7 billion</a>. Here’s are of the biggest frauds that came to light in the past financial year. Kanishk Gold Pvt Ltd./consortium of 14 banks led by <keyword id="6354731" type="UNKNOWN" weightage="20" keywordseo="state-bank-of-india">State Bank of India</keyword> (SBI): Kanishk Gold Pvt Ltd. has been <a href="https://timesofindia.indiatimes.com/business/india-business/jewellery-chain-kanishk-gold-defrauds-14-banks-to-tune-of-rs-824-15-crore/articleshow/63394221.cms" data-type="tilCustomLink">accused</a> by a consortium of 14 banks led by SBI of defaulting on a loan of ₹8241.5 million. While the principal loan amount is about ₹8241.5 million, adding the interest due would indicate a loss of more than ₹10 billion. In a letter dated 25 January 2018 to the CBI, SBI charged Kanishk with "manipulating records, shutting shop overnight." Nirav Modi / <keyword id="6476298" type="UNKNOWN" weightage="20" keywordseo="Punjab-National-Bank">Punjab National Bank:</keyword> The all-too-famous case in which companies owned by billionaire jeweller Nirav Modi and his uncle Mehul Choksi allegedly defrauded India's second-biggest state-run bank of over <a href="http://www.thehindu.com/business/Industry/all-you-need-to-know-about-nirav-modi-and-the-177-billion-pnb-fraud/article22753973.ece" data-type="tilCustomLink">₹1.77 billion</a>, making it India's biggest detected loan fraud. Apparently, two junior officers at a single branch had illegally issued fraudulent “letters of undertaking” (a guarantee that a bank is obliged to repay the loan if the actual borrower fails) without any collateral to the accused. When the accused failed to pay up, the bank employees involved issued more LoUs on behalf of PNB, asking other banks to give out fresh loans to the firms. The Central Bureau of Investigation (CBI) registered the case on 31 January 2018. Vikram Kothari / consortium of 7 banks led by Bank of India: The CBI arrested <keyword id="5888255" type="COMPANY" weightage="20" keywordseo="Rotomac">Rotomac</keyword> owner Vikram Kothari and his family in the alleged “willful” loan default to the tune of ₹ 36950 million on 22 Feb 2018. As alleged, the case relates to bank loans <a href="https://thewire.in/banking/banking-sector-hit-second-scam-rs-3695-cr-rotomac-promoters-probed" data-type="tilCustomLink">worth ₹ 29190 million</a> from 2008 onwards taken by Mr Kothari’s companies from a consortium led by Bank of India and comprising Bank of Baroda, Indian Overseas Bank, Union Bank of India, Allahabad Bank, Bank of Maharashtra and Oriental Bank of Commerce. This amount inflated to ₹ 36950 million after including accrued interest, because of repeated defaults on payment. Dwarka Das Seth International Pvt Ltd / Oriental Bank of Commerce: On 24 February 2018, the CBI registered a case against Delhi-based diamond exporter, Dwarka Das Seth International Pvt Ltd, for an alleged <keyword id="77600" type="PERSON" weightage="20" keywordseo="bank-fraud">bank fraud</keyword> to the tune of <a href="https://economictimes.indiatimes.com/news/politics-and-nation/cbi-approaches-interpol-to-locate-promoter-of-dwarka-das-seth-jewellers/articleshow/63129931.cms" data-type="tilCustomLink">₹3898.5 million</a>. The company was supposedly using letters of credit (LoCs) to pay off other creditors against the purchase of gold and other precious stone and transfer gold and funds outside the country using fictitious transactions. The company was also engaging in business transactions with non-existent entities, it said. Totem Infrastructure Ltd / consortium of eight banks led by Union Bank of India: CBI arrested the promoters of Totem Infrastructure Ltd — Tottempudi Salalith and Tottempudi Kavita — on 23 March 2018 in connection with an alleged <a href="https://timesofindia.indiatimes.com/business/india-business/cbi-arrests-promoters-of-totem-infra-in-rs-1394-crore-fraud-case/articleshow/63433753.cms" data-type="tilCustomLink">₹13940 million</a> fraud perpetrated against a consortium of eight banks. They were also accused of using the funds that were loaned to them for purposes other than what they were meant for. Aircel promoter C Sivasankaran and more / IDBI Bank: The CBI on Thursday (26 April 2018) registered a case against 15 former and serving senior IDBI Bank officials along with 24 others including former Aircel promoter C Sivasankaran, the heads of two public sector banks — Melwyn Rego of Syndicate Bank and Kishor Kharat of Indian Bank — and former CMD of IDBI Bank M S Raghavanand in an alleged <a href="http://www.thehindu.com/business/Industry/idbi-bank-fraud-case-cbi-books-indian-bank-and-syndicate-bank-chiefs-aircel-founder/article23684141.ece" data-type="tilCustomLink">₹6-billion</a> bank fraud case. The CBI claims loans worth ₹3220 million and ₹5230 million were given to Sivasankaran’s two offshore companies – Axcel Sunshine Limited (British Virgin Islands) and Finland-based Win Wind Oy respectively – which turned non-performing assets.

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