Two accused has been arrested by the Mumbai police on charges of deceiving several banks customers. The accused, Samir Darekar (26), an employee of Resolutions Services and Vinod Kumar Patel (24), an MBA student, were arrested on the complaint of the manager from Resolution Services. The firm resolves outstanding bills and loans of various banks.
The two were produced before a metropolitan court on Thursday and later remanded to police custody.
According to the police report, Darekar's job was to approach bank customers, who had availed of credit cards but had not cleared outstanding payments. Once they made the payment, Darekar would provide them with a settlement letter, issued by the bank.
Officer Arvind Pawar of the Vakola police said, "Patel, who was friends with Darekar, came up with the plan of forging the settlement letter. Darekar would then convince some customers to make a settlement at a much lower amount and offer them the forged letter. The money earned was pocketed by the duo. The bank realized that they had been conned only when the customers approached them with the forged letters."
Wednesday, April 16, 2008
Monday, April 14, 2008
YES Bank in talks with foreign banks for investment and business relationships
Foreign banks are looking for opportunities for the expansion of their networks in India. After 2009 there are chances for the foreign banks to get more scope in expanding their network in India.
Even the small banks in India are looking for the bigger banks for increasing their retail business in the country. One such private sector YES Bank is in talks with foreign banks, both for strategic investment as well as for business correspondent relationships.
Speaking at a press conference to announce the bank’s fourth quarter results Mr Rajat Monga, Chief Financial Officer, YES Bank informed the reporters large MNC banks are interested in expanding in India and are looking for major minority or near majority stake in Indian banks. Therefore banks such as YES bank will be in a privileged position to talk to foreign banks when the Reserve Bank of India guidelines become favorable.
Mr Monga said by 2009, YES Bank will be in a better position to attract foreign partners, as it will have a bigger network and a larger share of SME and retail business. Mr Monga was talking to reporters at a press conference to announce the bank’s fourth quarter results.
For the quarter ended March 31, 2008 the net profit of the bank was more than doubled to Rs 64 crore from Rs 31 crore in the same period a year ago. The bank also reported a net NPA of 0.09 per cent for the first time and made higher provisions of Rs 22.8 crore as against Rs 12.7 crore.
Mr Rana Kapoor, Chief Executive Officer and Managing Director, said the bank did not have any failure in its marked-to-market (MTM) derivatives exposure. At present the bank is having 130 forex clients across large corporates and mid corporates. Out of the total MTM derivatives exposure, large corporates account for about 70 per cent, while mid-corporates or emerging corporates account for the remaining 30 per cent.
“We do not have a single derivatives exposure to the SME sector. We have filtered our clients very carefully,” Mr Kapoor said.
Even the small banks in India are looking for the bigger banks for increasing their retail business in the country. One such private sector YES Bank is in talks with foreign banks, both for strategic investment as well as for business correspondent relationships.
Speaking at a press conference to announce the bank’s fourth quarter results Mr Rajat Monga, Chief Financial Officer, YES Bank informed the reporters large MNC banks are interested in expanding in India and are looking for major minority or near majority stake in Indian banks. Therefore banks such as YES bank will be in a privileged position to talk to foreign banks when the Reserve Bank of India guidelines become favorable.
Mr Monga said by 2009, YES Bank will be in a better position to attract foreign partners, as it will have a bigger network and a larger share of SME and retail business. Mr Monga was talking to reporters at a press conference to announce the bank’s fourth quarter results.
For the quarter ended March 31, 2008 the net profit of the bank was more than doubled to Rs 64 crore from Rs 31 crore in the same period a year ago. The bank also reported a net NPA of 0.09 per cent for the first time and made higher provisions of Rs 22.8 crore as against Rs 12.7 crore.
Mr Rana Kapoor, Chief Executive Officer and Managing Director, said the bank did not have any failure in its marked-to-market (MTM) derivatives exposure. At present the bank is having 130 forex clients across large corporates and mid corporates. Out of the total MTM derivatives exposure, large corporates account for about 70 per cent, while mid-corporates or emerging corporates account for the remaining 30 per cent.
“We do not have a single derivatives exposure to the SME sector. We have filtered our clients very carefully,” Mr Kapoor said.
Wednesday, April 2, 2008
Separate laws needed for reverse mortgage
During the 70’s and 80’s having your own house as a property was looked up on as a big thing but it was not considered as an asset, one paid notional tax for living in one’s own property. But today, house as a property is a big asset and not a mere perception for the one who can weight the value of the house.
The people who rented their house, was at best an illiquid asset, at worst a liability. And the ones who lived happily in the house occupying an area of3500 sq. ft. at Rs 200-a month for twenty years — the perception was life couldn’t be better, till the realization that the asset lacked bank ability.
And the smart ones, who lived in their own house, avoided renting it, spent a major part of income on maintenance, and lived their old age between penury and pension. This was the time, when consumer loans were virtually non-existent, interest rates were very high, and acquirement of real estate without a black component almost impossible.
With the introduction of investment products, the returns have some what eased lifestyles, but fixed deposits and LIC returns may perhaps go so far and no further. High real estate rates effectively made the middle class citizen’s sole fixed asset to a shelter.
The limited cash resource is applied towards its preservation. How the asset can be best leveraged against the rising real estate prices to flow over the insufficiency of the current income is the problem.
The solution is the Finance Minister’s gift to senior citizens in last year’s budget — the reverse mortgage scheme. Earlier, such informal arrangements were worked out with property dealers or close relatives, but there was always a risk, whereas the reverse mortgage is a credit instrument under which, the owner of the house provides the property as security, and receives payments in installments, as a “loan”, while continuing to reside in the premises.
The qualifying criteria for reverse mortgage includes, other than the borrower’s age i.e. sixty plus, a clear, unencumbered title to the property having a residual life of twenty years. An independent valuation of the premises is carried out at market rates, and forms the basis on which the loan amount, interest components and installments are worked out.
Adequate flexibility is given in right of pre-payment without penalty, first right of settling loan with sale of security, which option is also made available to the legal heirs. On foreclosure and sale, any balance surplus is payable to the deceased’s legal heirs.
However, there are certain obligations on the Borrower’s part, most important being the restrictions on testamentary disposition. The Borrower has to keep the property fully insured, in proper state of repair and maintenance, and pay all taxes, electricity, water charges etc. The renting of the premises, changing user, deployment of the money for speculation is also not allowed otherwise it will lead to foreclosure.
This should have proved to be a bonanza for the target customer. Instead, the scheme flopped because of lack of clarity in the regulatory framework. According to the sources there were only hundred-odd takers, in the entire financial year.
The major concern of banks and beneficiaries is taxation issues. Is the amount of loan in the nature of a capital receipt? Is the creation of security by the borrower a transfer of capital asset under the Income Tax Act? If so, which is the point at which the tax is triggered and who is liable to pay? Does the tax arise on disbursements, or the sale of the property on foreclosure? What are the permissible deductions? Is indexation to be applied from the date of discharge of loan or date of acquisition by the original owner?
The tax issues have been touched in the current Financial Bill. For one, a proviso will be inserted in Section 47 of the Income Tax Act to clarify that the mortgage will not be treated as a transfer. Section 10 will also be amended to provide for exemptions from tax on capital receipt, to provide that disbursements are not treated as capital gain, which will arise only on sale of the property, for recovery of the loan.
The modalities of foreclosure and repossession however remain unclear. There is no concrete event of default as there is no regular repayment depicted.
Therefore, the only resultant stage of foreclosure is termination on owner’s death. Is the right under Section 13 of SARFAESI available for enforcement of security? Will banks be able to repossess a house property as they do vehicles? Guidelines or general laws are not enough, separate laws should be formulated to address these issues.
Lastly, with life expectancy over 80, 60-plus is not the time to go for reverse mortgage. This should be the last resort.
The people who rented their house, was at best an illiquid asset, at worst a liability. And the ones who lived happily in the house occupying an area of3500 sq. ft. at Rs 200-a month for twenty years — the perception was life couldn’t be better, till the realization that the asset lacked bank ability.
And the smart ones, who lived in their own house, avoided renting it, spent a major part of income on maintenance, and lived their old age between penury and pension. This was the time, when consumer loans were virtually non-existent, interest rates were very high, and acquirement of real estate without a black component almost impossible.
With the introduction of investment products, the returns have some what eased lifestyles, but fixed deposits and LIC returns may perhaps go so far and no further. High real estate rates effectively made the middle class citizen’s sole fixed asset to a shelter.
The limited cash resource is applied towards its preservation. How the asset can be best leveraged against the rising real estate prices to flow over the insufficiency of the current income is the problem.
The solution is the Finance Minister’s gift to senior citizens in last year’s budget — the reverse mortgage scheme. Earlier, such informal arrangements were worked out with property dealers or close relatives, but there was always a risk, whereas the reverse mortgage is a credit instrument under which, the owner of the house provides the property as security, and receives payments in installments, as a “loan”, while continuing to reside in the premises.
The qualifying criteria for reverse mortgage includes, other than the borrower’s age i.e. sixty plus, a clear, unencumbered title to the property having a residual life of twenty years. An independent valuation of the premises is carried out at market rates, and forms the basis on which the loan amount, interest components and installments are worked out.
Adequate flexibility is given in right of pre-payment without penalty, first right of settling loan with sale of security, which option is also made available to the legal heirs. On foreclosure and sale, any balance surplus is payable to the deceased’s legal heirs.
However, there are certain obligations on the Borrower’s part, most important being the restrictions on testamentary disposition. The Borrower has to keep the property fully insured, in proper state of repair and maintenance, and pay all taxes, electricity, water charges etc. The renting of the premises, changing user, deployment of the money for speculation is also not allowed otherwise it will lead to foreclosure.
This should have proved to be a bonanza for the target customer. Instead, the scheme flopped because of lack of clarity in the regulatory framework. According to the sources there were only hundred-odd takers, in the entire financial year.
The major concern of banks and beneficiaries is taxation issues. Is the amount of loan in the nature of a capital receipt? Is the creation of security by the borrower a transfer of capital asset under the Income Tax Act? If so, which is the point at which the tax is triggered and who is liable to pay? Does the tax arise on disbursements, or the sale of the property on foreclosure? What are the permissible deductions? Is indexation to be applied from the date of discharge of loan or date of acquisition by the original owner?
The tax issues have been touched in the current Financial Bill. For one, a proviso will be inserted in Section 47 of the Income Tax Act to clarify that the mortgage will not be treated as a transfer. Section 10 will also be amended to provide for exemptions from tax on capital receipt, to provide that disbursements are not treated as capital gain, which will arise only on sale of the property, for recovery of the loan.
The modalities of foreclosure and repossession however remain unclear. There is no concrete event of default as there is no regular repayment depicted.
Therefore, the only resultant stage of foreclosure is termination on owner’s death. Is the right under Section 13 of SARFAESI available for enforcement of security? Will banks be able to repossess a house property as they do vehicles? Guidelines or general laws are not enough, separate laws should be formulated to address these issues.
Lastly, with life expectancy over 80, 60-plus is not the time to go for reverse mortgage. This should be the last resort.
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