Page 7 - Banking Finance AUGUST 2015

BANK UPDATE

Banks finding tough to locate buyers for seized Banks may get to pledge
assets of defaulters
claim on benami property
The Indian banks are finding it tough to recover assets through auction of
seized properties due to bad loans. There are few buy- The Banks, which currently find it diffi-
ers because of the slowdown in the economy, legal cult to recover money from promoters
hurdles and problems related to acquisition of land. of wilfull-defaulter companies, or other
borrowers, might get some relief if the
Seized assets of at least five big defaulters - Zoom Benami Transactions (Prohibition)
Developers Pvt Ltd, Deccan Chronide Holding Ltd, Cen- Amendment Bill, recently tabled in the
tury Communication Ltd, Mahua Medias Pvt Ltd and Biotor Industries Ltd Lok Sabha, is enacted.
have had no takers for more than a year, according to bankers and recovery
agents. This might allow lenders to stake claim
to benami properties of defaulters. At
While some of these properties are located in far-flung areas, even those in present, they have claims only over
prime locations such as Bandra in Mumbai and Noida in the National Capital those properties that have been held
Region have no takers. Most of these properties have been put up for e-auc- as collateral.
tions by banks more than once.

PSU banks soon to adapt '4D' model

The Indian banking industry, which is has led to the reduction in household

going through tough times must follow services.

the "4D model" deregulation, The government's report card
differentiation, diversification also pointed out that there is
and disinterring, according to lack of competition, which is
the latest survey. reflected in the private sector

Deregulation and differentia- banks' inability to increase Benami properties are the ones held in
the name of persons other than those
tion would be because of the their presence, while there is who are ultimate beneficiaries.

high level of inconsistency in operation wide variation in the performance of Banks claims to benami properties of
borrowers will be heard by an adjudi-
and performance of public sector the public sector banks measured in cating authority to be set up under the
proposed Act.
banks. terms of prudence and profitability.
"The adjudicating authority after pro-
It has been believed that the banking As per the survey the requirement of viding an opportunity of being heard to
sector is limped by policy, which has statutory liquidity ration, a portion of the alleged "benamidar", or the ben-
created "double financial repression" - deposits that banks have to invest in eficial owner, any interested party, in-
reducing returns to depositors and government securities, can be gradu- cluding a banking company; and any
misallocating capital to investors due ally relaxed, with the view to enhance other person who makes a claim in
respect of the property, shall pass an
to depressed returns on assets which liquidity in lenders. order within one year, holding the
property to be a benami property or
Bank union demands merger of Dhanlaxmi bank with a PSB otherwise", says the Bill moved in the
House on May 13, the last day of the
A bank union demanded the merger of interests in managing the affairs of the Budget session.
beleaguered Kerala-based lender bank by the board and top manage-
Dhanlaxmi Bank with a nationalised ment. The properties could be tangible such
bank, alleging mismanagement. The as real estate and gold or intangible,
All-India Bank Officers Association It said that the number of officers such as financial securities.
(AIBOA), which claims to be the second working on contractual basis is more
largest union of bank officers, urged than the ones employed under the
the RBI "to initiate immediate steps to scales laid down by the Indian Banks
merge Dhanlaxmi Bank with a Association, while acknowledging that
nationalised bank" to avoid conflict of in 2010, some officers were absorbed
into the IBA scale by the bank.

BANKING FINANCE | AUGUST | 2015 | 7