The Supreme Court has paved the way for banks and financial institutions to initiate recovery proceeding against individuals, who have guaranteed corporate loans by upholding the government notification of 15 November 2019.
How To Combat White Collar Crime and Financial Frauds
Ranganathan V
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We have seen an avalanche of corporate frauds since the outbreak of the IL&FS (Infrastructure Leasing & Financial Services) scandal in October 2018 and the aftermath is sitting as muck and filth (euphemistically termed non-performing assets, NPAs) in the books of banks and non-banking financial companies (NBFCs). The estimate is a mind-boggling sum and is far in excess of a full year’ revenue of the Central government.
Strangely, neither the Budget nor the Economic Survey that preceded it gave a full picture of this. The Reserve Bank of India (RBI)’s report on the financial sector did put out projections under different scenarios. None of the scenarios assumed provides any comfort on the figures.
BENGALURU: Shares in India s Dewan Housing Finance Corp Ltd (
DHFL) jumped on Monday after the troubled mortgage lender s creditors voted in favour of a $5 billion takeover bid from the Piramal Group. The stock, which gained 76 per cent last year after two years of sharp falls, rose 5 per cent in early trading and hit an upper price limit of 27.55 rupees. Once one of India s biggest non-banking financial companies (NBFCs), or shadow banks, DHFL had accumulated debts of almost 1 trillion rupees ($13.7 billion) before defaulting on payments to its creditors. The NBFC industry, a key source of credit to millions, has been plagued by a credit crunch triggered by the collapse of lending major IL&FS in 2018.
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An investor of Dewan Housing Finance Corp Ltd (DHFL) has urged Shaktikanta Das, governor of Reserve Bank of India (RBI) to stop self-serving fraud being allegedly perpetrated by the administrator, debenture trustees, banks and their advisers upon fixed deposit (FD) and non-convertible debenture (NCD)-holders of the crisis-hit company through illegal, unfair and inequitable resolution proposals put to vote before helpless FD and NCD holders.
In a letter to the RBI governor, Jyoti Khemka, the investor, alleges that bankers and their appointed advisers are ripping off the helpless FD and NCD-holders. DHFL was not an unregulated entity. The poor FD and NCD holders relied upon audited financial results, AAA credit ratings, trustee and regulatory bodies like SEBI, National Housing Bank (NHB) at the time of investing their hard-earned money. They cannot be placed now on an equal footing with banks who have the necessary wherewithal to carry out due diligence before lending