MCA scanner on banks lending to deregistered companies

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So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.

The corporate affairs ministry is likely to ask the department of financial services to take action against the banks which have continued lending to companies that have been deregistered.

The ministry is also likely to raise the issue of banks not showing urgency in sharing information on transactions of these companies before and after the announcement of demonetisation on November 8 last year.

The Registrar of Companies, which comes under the corporate affairs ministry, had struck off 2.09 lakh companies from the list of active establishments after they failed to comply with regulatory requirements. Banking transactions of these companies are restricted only for settling liabilities.

Despite this, according to sources, one government-owned bank has lent more than Rs 280 crore to a company after it was deregistered. Such transactions are likely to have occurred among other public sector banks as well, but the government still doesn’t have detailed data on the dealings, they said. “There is a need for greater transparency. We are simply waiting for the banks to come up with more information. Only a few have shared (the information) so far,” a senior government official said.

So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.

Earlier this month, the government said these 5,820 companies had deposited Rs 4,573 crore post demonetisation in banks and withdrew Rs 4,552 crore, even as they held balances of just Rs 22 crore on the day demonetisation was announced. This number is likely to go up manifold once the banks share more data.

The government is probing accounts of all the 2.09 lakh companies that were struck off the registry, which previously had about 13 lakh companies.

Four banks — Qatar National Bank, Doha Bank, Emirates NBD Bank and Punjab Gramin Bank — stated that they didn’t hold any accounts of the suspect companies.

A few companies were found to be having multiple accounts in some banks, like Bank of Baroda, where one company held as many as 915 accounts.

Banks’ auditors under lens: RBI seeks explanation on differences in write-downs

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According to RBI data, PSU banks in FY17 have written off Rs 81,683 crore against Rs 2.49 lakh crore in the past five years.

The Reserve Bank of India (RBI) has questioned scores of auditors at 27 public sector banks on the process and logic they had used to compute and report write-downs at the lenders, two people close to the development told ET.

The RBI has sought written explanation on differences in the write-down assessments by its own inspectors and those certified by the auditors. A write-down is a reduction in the estimated and nominal value of an asset, and is charged off as a loss to the profit and loss account for the relevant period. In some cases, the RBI has also questioned the provisioning methodology and non-performing asset (NPA) figures arrived at by the auditors at a few public sector banks, sources told ET.

The banking regulator is examining whether auditors at these state-run lenders followed RBI guidelines on write-downs, provisioning and NPAs. “This is part of RBI’s annual assessment. Auditors will have to explain how they provisioned for NPA and how they calculated write-downs,” said a person aware of the matter.

The write-downs, NPA and provisioning figures arrived at by the auditors and RBI inspectors differ by up to 10%.

WRITE-DOWNS & PROVISIONING
According to RBI data, PSU banks in FY17 have written off Rs 81,683 crore against Rs 2.49 lakh crore in the past five years. In a few cases, the audit reports of some of these lenders do not reflect these write-downs, said one of the persons cited above. Most banks do not separately report write-downs in their accounts, combining them often with quarterly provisioning.

Most Indian public sector banks use more than one auditor due to the enormous size of their balance sheets. Most auditors are mid-to-small Indian firms that audit several branches. The 27 public sector banks collectively employ 115 auditors, according to data analysed by the ET Intelligence Group.

According to the people in the know, auditors at State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Allahabad Bank and Bank of India (BoI) were sent the show-cause notices about two weeks ago.

ET’s detailed email queries to the regulator and the affected lenders – SBI, PNB, BoB, IDBI, Indian Overseas Bank, Canara Bank, BoI, Oriental Bank of Commerce (OBC) and Allahabad Bank – did not elicit any response.

REGULATOR HAS PRIVILEGED ACCESS’
According to a major bank’s auditor who did not wish to be identified, the differences are not unexpected. “The RBI has access to information an auditor may not. Like, if a loan in bank X has gone toxic, the auditor of bank Y may not know, but the RBI would,” he said. He added that there is a time lapse between auditors preparing an account and the RBI conducting inspections. “What you must look at is the impact on the P&L of a bank due to divergence. In most cases, that is not much,” he said.

To be sure, there may have been ‘technical’ errors in interpreting the writedown rules, resulting in the differences. “There is a direct impact of the new accounting standards on the way write-downs are arrived at,” said a senior executive at a top audit firm. “Under the old accounting system, the rules around write-downs were not as precise, and there is a possibility that some auditors may have ignored this.”

Source: Economic Times

RBI asks income tax assessees to pay dues in advance, 29 banks authorized to accept payments

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The Reserve Bank appealed to income tax assessees to pay dues in advance of the due date as well use alternate channels of authorized banks to avoid the rush during end of March.

“Pay I-T dues in advance at RBI or at authorized bank branches. Appeal to income tax assessees to remit their income tax dues sufficiently in advance of the due date,” RBI said in a release.

“It is observed that the rush for remitting Income-Tax dues through the RBI has been far too heavy towards the end of March every year and it becomes difficult for the RBI to cope with the pressure of issuing receipts although additional counters to the maximum extent possible are provided for the purpose”, it said.

RBI said assessees can use alternate channels like select branches of agency banks or the facility of online payment of taxes offered by these banks.

A total of 29 agency banks have been authorized to accept payments of Income-Tax dues. The authorised banks include SBI and its five associates, HDFC Bank, ICICI Bank, Axis, Bank, Punjab National Bank, Bank of Baroda, Bank of India, Indian Overseas Bank.

Among others are Corporation Bank, Dena Bank, Canara Bank, Central Bank of India, Syndicate Bank and others.
RBI said by remitting dues at the designated banks will obviate the I-T assessess’ inconvenience in standing in long queues at the RBI offices.

 

Source: http://www.firstpost.com/business/rbi-asks-income-tax-assessees-to-pay-dues-in-advance-29-banks-authorized-to-accept-payments-2628134.html?utm_source=FP_CAT_LATEST_NEWS