HDFC Bank probes lending practices at vehicle-financing operation

The bank decided against proceeding with an earlier proposal to extend the employment of Ashok Khanna, an 18-year veteran at the bank, after the investigation was completed.

HDFC Bank has conducted a probe into allegations of improper lending practices and conflicts of interests in its vehicle-financing operation involving the unit’s former head, according to people familiar with the matter.

The bank decided against proceeding with an earlier proposal to extend the employment of Ashok Khanna, an 18-year veteran at the bank, after the investigation was completed, said the people, who asked not to be identified as the information remains confidential. The vehicle financing unit he headed had outstanding loans of more than Rs 1.2 trillion ($16 billion) as of March 31.

HDFC Bank’s management had been discussing a proposal for Khanna to stay on as the unit’s head for six months until October. Khanna retired at the end of March in line with his contract, they added.

The result of the investigation isn’t public, but it followed issues thrown up by an internal audit of the bank’s vehicle-dealer lending, as well as allegations of conflicts of interest in the purchase of global positioning systems for vehicles financed by the bank, the people said, without disclosing what the probe uncovered.

HDFC Bank fell 2.3 per cent on Monday and its parent Housing Development Finance fell 2.1 per cent, among the three worst performers on the Sensex that gained 0.3 per cent.

A spokesman for HDFC Bank confirmed there had been an investigation into the vehicle-financing unit but declined to give details. In an emailed statement, he said Khanna had retired in March in line with the terms of his employment contract.

“The bank has a well-established process of investigating every complaint that it receives and takes actions as appropriate,” the spokesman said in the email.

IndusInd Bank says it is financially strong amid speculation around stock

On Wednesday, the bank's stock on the BSE fell by Rs. 61.10 or 9.20 per cent to close at Rs. 603.05 from its previous close.

Moneylender IndusInd Bank on Wednesday emphasized that it is "monetarily solid, all around promoted, productive, and a developing substance with solid administration". The bank's announcement comes in the wake of altogether more elevated level of hypothesis around its stock.

On Wednesday, the bank's stock on the BSE fell by Rs. 61.10 or 9.20 percent to close at Rs. 603.05 from its past close.

"Market bits of gossip about individual exposures doing the rounds are enlarged and amazing and not even close to reality," the moneylender said in an announcement.

"The Bank makes full divulgences each quarter on its advance book profile."

As indicated by the bank, in the last quarter its Gross NPA remained at 2.18 percent which was the second most reduced in the business among enormous private part moneylenders.

"We expect current quarter Gross NPA to be essentially in accordance with that of last quarter," the announcement said.

"We expect our Net NPA of 1.05 percent as at the last quarter to fall underneath 1 percent, in accordance with our aspiration to take arrangement spread past 60 percent."

According to the announcement, the bank's advertiser has looked for RBI endorsement to expand shareholding to 26 percent.

"Advertiser has just educated the trade about the concurrent arrival of non-removal undertaking with the making of a promise corresponding to 23.8mn portions of the Bank," the announcement included.

"No new getting was embraced and was just a formalization of a multi year old game plan. The cash was initially raised to make an abroad obtaining which didn't fructify - the vow is a little part of Promoter holding in the Bank."

Tamilnad Mercantile Bank to seek shareholders' approval for IPO again

TMB has 20,600 shareholders.

Ninety-nine-year old Tamilnad Mercantile Bank (TMB) is to again seek shareholders’ approval to become a public listed entity. It had done so in 2016, too, at its 93rd annual general meeting (AGM).

However, the shareholders, largely from the Nadar community, rejected the proposal for an Initial Public Offer (IPO) of equity by a majority.

The bank has since not held any AGM and is now scheduled, on April 9, to hold its 94th to 97th AGMS all together, for years 2015-16 to 2018-19.

This is a sequel to last month’s high court order, which allowed the conduct of all the pending AGMs, subject to specified conditions.

TMB has 20,600 shareholders. A majority reportedly voted against an IPO last time, so that the door is not opened to “outsiders” (non-Nadars). Their argument is TMB was meant for Nadars and should be owned by Nadars. Its earlier name was Nadar Bank.

The community has made significant strides through an emphasis on both education and entrepreneurship. The existing top management is from the same community. It had earlier said it was educating the shareholders on the need for additional funds, for both faster growth and for the benefit of all shareholders.

If share value rises (with an IPO), exit routes will be available; it is currently not easy to sell the shares, it had said.

Moody's sees credit crunch to prolong in India, pain for households

Ratings company cuts India's outlook to negative, says fewer jobs will be created.

Moody’s Investors Service said it doesn’t expect the credit squeeze among Indian shadow lenders to be resolved quickly, and warned that the squeeze may actually worsen and add to risks in the already flagging economy.

“Stress among non-bank financial institutions with the possibility of a more severe credit crunch that would affect credit supply, both directly and indirectly through linkages with non-banks and banks, adds to the downside risks to the medium-term growth outlook,” the ratings company said in a statement. It cut India’s outlook to negative, the first step toward a downgrade.

Moody’s comments come days after S&P Global Ratings warned that risks of contagion are rising in the Indian financial sector. The credit quality of Indian companies has plummeted to a record low as Prime Minister Narendra Modi’s government struggles to revive economic growth from a six-year-low.

With state-run banks still grappling with a pile of bad loans, credit supply is likely to remain impaired for “some time,” Moody’s said. Loan-growth in Asia’s No. 3 economy slumped to 8.8% in October, the lowest level in two years, RBI data show. Bank credit to private, non-financial companies accounts for more than half of India’s gross domestic product, according to data from the Bank for International Settlements.

The spread between the RBI’s key policy rate and the weighted average lending rate on outstanding loans from commercial banks is the highest in data going back to February 2012.

Indian households, which already have among the lowest per capita incomes for emerging markets, can’t fully absorb such shocks as fewer jobs will be created, Moody’s said.

Business Standard

Employee union opposes merger of Lakshmi Vilas Bank with Indiabulls

The union further alleged it (the merger) is obviously a short-circuit method by Indiabulls Housing Finance Ltd and manage to become a bank through this method.

Business Standard : All India Bank Employees Association (AIBEA) has opposed the proposed merger of Lakshmi Vilas Bank with Indiabulls Housing Finance Ltd. The association urged the Reserve Bank of India (RBI) not to give nod for the merger.

Lakshmi Vilas Bank had earlier said that it has received approval from the board to merge the bank with Indiabulls Housing Finance Ltd.

While RBI clarified that the Board has unanimously approved the resolution, the RBI nominee directors, as is the practice at the bank, did not have to participate in the voting or express any views. But the union said that the two nominee directors of RBI on the board of the bank were also present in the board meeting and the board's decision has been taken unanimously thereby implying that the proposal has the tacit approval of the RBI.

LVB may be a private Bank but the deposits in Bank (around Rs 30,000 crore) belongs to the people at large and is public money, said C H Venkatachalam, general Secretary, AIBEA.

RBI is aware of the financial health of Lakshmi Vilas Bank Ltd which has not been go0d at all, he added.

During the quarter ended December 2018, the bank has booked a net loss of Rs 373.49 crore. In 2017-18, the loss was Rs 584.87 crore.

The Bank is also suffering from Gross NPA of Rs. 3400 crore that is 14 per cent of the total advances.

"In this background, it is surprising that the Board of the Bank has taken the decision to merge with Indiabulls Housing Finance Ltd.

As it is already known that Indiabulls Housing Finance Ltd had applied for banking licence to start a bank on its own but the same was not sanctioned by the RBI, ostensibly for the reason that the company does not come under the fit and proper category to be granted a banking licence," said AIBEA in it's letter to RBI.

Having failed to get a banking licence, it is now found that IBH is trying to become a Bank by merging LVB with itself, alleged AIBEA.

The union further alleged it (the merger) is obviously a short-circuit method by Indiabulls Housing Finance Ltd and manage to become a bank through this method.

Taking into account the fragile health of Lakshmi Vilas Bank Ltd, it is necessary for RBI to take a holistic view and merge it with one of the public sector Banks in public interest instead of allowing LVB to merge with IBH, said the union.

World Consumer Day: What are your rights and what you need to know

However, in India, we celebrate National Consumer Day on December 24.

March 15 is observed as World Consumer Day. It is observed to promote the basic rights of the consumers and make them aware of the same. However, in India, we celebrate National Consumer Day on December 24. We have a Consumer Forum to address the issues and safeguard the rights of the consumers.

Here are a few things to know about consumer rights.

Claim can't be denied for an old machine

Abrol Engineering had taken a policy of Rs 40 lakh from New India Assurance to cover a CNC machine made by DMG Deckel Maho Gildemister. During the tenure of the policy, an abnormal noise suddenly started emanating from the spindle in the tool box. The manufacturer's service engineer, as well as the insurer, were intimated.

Consumer forum isn't for debt recovery cases

Aruna Trilok Shende had taken a housing loan of Rs 4,00,000 from State Bank of India, Chandrapur Branch. As she defaulted in making timely payment of the instalments, the bank approached the Debt Recovery Tribunal (DRT) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarafesi) Act.

Name change can't lead to claim rejection

Shreem Capacitors was in the business of manufacturing capacitors and supplying these to various state electricity boards, government undertakings, and railways. The company obtained a 220 KVA sub-station from Maharashtra State Electricity Transmission Company (MSETCL) to erect its factory at Yavatmal.

Delay alone cannot lead to rejection

Kuldeep Singh took a policy from Shriram General Insurance for his truck. The insurer issued a cover note on October 21, 2010, stating that the truck was insured for Rs 1.12 million from October 22, 2010, to October 21, 2011. The truck was stolen on the night of November 9 and 10, 2010.

Business Standard