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  • Category: Miscellaneous

    SBI values Mallaya assets to 5800 cr whereas he owes 9000 cr to banks ?

    And we thought the Kingfisher boss Mallaya has much assets so that the amount he owe upto 9000 crores to the various banks in India. But the SBI consortium has come up with the latest figure that his assets and shares valued at 5800 cr rupees and that is 3200 crores short of actual amount he owes to the banks. We normally thinks that the assets and shares values would increase over the passage of time but in this case it is decresing and by this phase, Mallaya may declare himself as pauper and even taken shadow under that clause and the banks cannot take money out of his assets.
  • #734383
    People like Mallaya are more intelligent than our system and would transfer some of their assets and cash to destinations where they can use them after their local assets in the knowledge of banks are auctioned to realise the loan amount. So, these figures would not be the correct value of what he really has somewhere in the world. There are so many hawala and illegal financial transactions under which such people shift their money to various places and people who will never be caught by the system. This is not the first time that such things are happening. Many frauds are enjoying in foreign countries with the siphoned money from the bank coffers in India. These people get advices from the best brains in the financial sector who advise them all tricks to earn money through these fraudulent practices. They take advantage of varying regulations in different countries and settle at some place which encourages investment in real estate.
    Knowledge is power.

  • #734386
    And why the banks are delaying the auction as the case seems to be loosing.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #734396
    People like Mallaya are very shrewd and they know how to manage the bank officials. Many bank officials may be enjoying many benefits from this man in one form or the other. That is why they are giving him more and more time. Mallaya utilised this time to convert his Indian assets into some cash and send it to the foreign banks. He can enjoy his life. But poor people who invested their money in the bank will suffer.
    How the banks sanctioned such a big amount for him when he does not have assets worth the loan he is having. Probably he might have transferred some amounts to some dummy accounts. He might have sold some of his assets for a low value on paper and the remaining amount he might have kept in his foreign bank accounts.
    The banks should be more vigilant and should not give loans without having surety. They should go for a correct estimation of his worth and then only give the loans. These bank officials make the life of people who go for small loans miserable. But they sanction very big amounts easily to this type of people.

    drrao
    always confident

  • #734409
    Our banking system is losing its reputation. How big defaulters like Mallya, Chowksi, Nirav Modi etc ran away from india? Why indians are depositing their money in foreign banks e.g. Swiss Banks?
    They are big players of this game. They have snatched away people's money. Now they are enjoying their lives on foreign soil. Can these defaulters be brought back to india?

  • #734411
    If banks choose to be easy and lethargic in getting their money common man may shy away from deposits.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #734412
    Let us not believe what banking authorities say regarding the less recovery of dues from Malya. If such is the case, it might be due to generous help offered by the banking officials how to transfer money in the different hawala transactions. Mr Malya is shrewd person having the entire knowledge of the banking system and is aware of siphoning money from the Indian Banking System. If a common people approaches to a bank for a loan of mere two lakhs, he has to mortgage a property in favour of the bank so that the loan amount could be recovered fully. How in his case, related property documents could not be examined appropriately? The entire episode seems to be incredible. People like Malya, Choksi, Neeraj Modi can disrupt the economic activities of a country and hence no leniency is to be shown to these defaulters.

  • #735521
    There are many factors involved here.
    Banks provide fund to ventures which are normally feasible, and also as per the policies, norms and guidelines from time to time. All those business which failed were actually running well, giving employment to many, adding to the country's economic activities and GDP.

    When the business and the promoters are established and well known, and have good past records, then some deviation is allowed in norms, which is done at the higher or highest level like bank's director bard or top executive levels. The lower level officials cannot take such decisions and they do not have much command on such businessmen. There will be a mix of business and political considerations in such business proposals and sanctions. Mostly a consortium of banks will be the lenders.

    However the company laws right from registration have characteristics which are different from individua or partnership business.The accounting system and procedures have many loopholes helping opportunities for diversion of funds, misutilisation and even committing fraud.
    While a proprietor of a small business is not separate from the business, in the case of company, it is a separate independent entity different from the promoters, directors and shareholders. Unless very specifically tied they do no have any personal accountability. This is the greatest flaw and what contributes to all the misappropriations and misutilisations. Big business are able to start any number of paper companies, just in paper, for the sake of accounting and fund appropriation.

    It is just like saying'my left hand is different from my right hand'- even though both are of the same body. So just as we have separate specialists for different body parts, here each com[any ids dealt separately even though they are all integrated and have same umbilical chord. It is this delusive mechanism which is the safe cause of all the business failings. We need a thorough overhaul in our company laws and accounting system.

    Such business do not fail just like that one day. They send out signals of weakness and malfunction. The field level bank officials and the employees of the business definitely get such signals. But as the field level bank officials do not dare and do not have the freedom to act or respond based on the signals, and the matters are being pushed under carpet or ignored knowingly or for some justification or son some promise, the disease is diagnosed or found only when it is at the last stages of decay. By then the stage of medicine and treatment is over and only surgery or amputation is available.
    This is exactly happening in all such cases.

    First the business starts well, runs well,the business men(group) become well known, get political clout. Then there comes a bonding or quid pro quo between businessmen and politicians and some of the bureaucrats , chartered accountants and some bank officials also fall victims to temptations. There starts the free flow of the problem.Each of these participants turn blind to the signals or are under pressure to be silent.

    Then comes the legal system. Not only in our country, but even in countries abroad. Even if courts pronounce verdicts things go beyond courts to intergovernmental level also.

    Now coming to the present thread about assets, in the case of big companies it is the big valuers firms that give valuation of assets- not the middle level manager or credit officer. The shares will be artificially boosted to show high market value when asset valuation is taken. Slowly the liabilities grow beyond asses and the banks will not be able to assert for more collateral. As every bank has its growth target his goes on as a cycle, until the balloon bursts.

    When finally the asset is re-valued for realisation proceedings, naturally banks will value it less as a great caution because the assets are now under stress and may go for distress sale. The norms of taking 150% or 200% collateral for loans is generally not practised now, (for enabling more business) but practically no possible to insist with big business. Mostly it ill be just 100% . Naturally when the account becomes NPA, the account becomes overdrawn and with further addition of interest and charges goes very high which will not be covered by assets at that time.

    So if the banks truthfully valued the assets as 5800 crores I will say that is not bad.
    In our country, when an industry/business fails -only the employees and small shareholders lose, but the industrialist is not affected. This has to change. Things will change only when business and politics are delinked in all ways.


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