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Fraud Classification: Right to be heard Recently Supreme Court (SC)  upheld the decision of the Telengana High Court that the borrower must be given an opportunity and heard before declaring his account as fraud. Normally there is a time difference between 'fraud occurrence' and 'fraud detection'. Since internal sanctions and legal formalities take their own time for completion, there is again a gap of six months at least  before filing a complaint with the law enforcement agencies, after a fraud is detected. So naturally, bankers of yesteryears and those operating to-day are concerned, as any delay in action against unscrupulous borrowers by the investigative agencies impact, to a greater degree, the recovery aspects. Assets becoming non-available, borrowers vanishing from the scene, money trail getting cold for effective tracking are usually witnessed in cases of frauds. Delay in reporting to the regulator also delays the alerting of other FIs, which might be dealing ...

Penalty on loans:  Not as interest but as charges Wish it is available for COVID Restructured Loans also On 8th February 2023, Reserve Bank of India (RBI) informed that in order to ensure reasonableness and transparency in disclosure of penalty levied in loan accounts and to prevent Regulated Entities (REs) from using penal interest/charges as a tool to enhance their revenues over and above the contracted rate of interest, the instructions in respect of penalty are being revised. Accordingly, it  released a 'draft' circular on 12th April 2023, indicating the changes proposed in respect of 'penalty' levied in loan accounts and requesting for the comments of REs before 15th May 2023. The changes are sure to benefit the borrowers immensely. Salient Features: Rate of interest already includes appropriate credit risk premium reflecting the credit risk profile of the borrower. And if the credit risk profile undergoes a change, RE is always free to alter the credit risk premiu...

  5th April: SBH BIRTHDAY   I was remembering till yesterday and was reminded by a pleasant message from Shri Yadagiri today. (Shri Yadagiri is one of our esteemed staff members, assigned the duty of driving the bank's car for me, in my of stay of three years with the bank). Happy Birthday SBH 💐 I felt thrilled and thought Shri Yadagiri represents the 'invisible but ever present spirit' or  the 'Atma' of SBHians. Six years passed by,  since 31st March 2017,  the date of its merger with parent SBI. (Incidentally I also retired on 31st March 2017). Though I had my innings as a “deputationist” from SBT, I never felt I was ever treated as an outsider. Accepting me as one among the thousands of SBHians by all the staff was a rare privilege. The love and affection continues to pour from the likes of ‘Yadagiri’ at all levels. People from head offices to zones/ branches/unions/associations right across the length and breadth of the country do send me greetings/wishes o...

  REPO RATE: ‘PAUSE’ or ‘CHANGE’? As MPC (Monetary Policy Committee) of RBI (Reserve Bank of India) meets to-day to review the regulator’s policy rate, all eyes and ears, linked to finance in some way, are tuned to the ground to listen to the statement of RBI Governor at 10.00 a.m. on Thursday, the 6th  April 2023. Will it be an increase in the rate for the 7 th time in a row or a ‘pause’ to breathe normally for some time? (Factors that may influence the repo rate is given in Annexure) MPC in a dilemma: MPC has a mandate to keep the inflation at 4% with a lower and upper tolerance level of 2%.   The committee has an obligation to explain to the Parliament, if the actual inflation is not within the target level of 2-6% for three consecutive quarters. The average inflation in the last quarter was above the upper band of 6% and is likely to be so in the quarter ended Jan-Mar 23 as well. So, if the inflation breaches the 6% level for April-June 23, MPC has to face the Pa...