Non performing assets (NPAs) or bad loans in the banking sector are set to shoot up by at least Rs 8,000 crore as advances to the scam-hit Gitanjali Gems group have turned bad during the quarter ended March 31.

Banks will have to make provisioning of Rs 8,000 crore for Gitanjali alone as there have been no servicing of the working capital loan during the fourth quarter of last fiscal, sources said.

Gitanjali, among others, is the major account which has turned bad in the fourth quarter of 2017-18.

Gross NPAs of all the banks in the country amounted to Rs 8,40,958 crore in December, led by industry loans followed by services and agriculture sectors, as per the government estimates.

Gitanjali is promoted by Mehul Choksi, uncle of billionaire diamantaire Nirav Modi, who defrauded Punjab National Bank (PNB) of over Rs 13,000 crore by getting fake Letters of Undertaking/Credit (LoU/LoCs) issued from one of the bank's branches in Mumbai.

A special CBI court in Mumbai has issued non-bailable warrants (NBWs) against Modi as well as Choksi.

A consortium of 21 banks led by Allahabad Bank had first extended a working capital loan to it in 2010-11. In 2014, ICICI Bank became the lead banker as it had highest exposure of about Rs 900 crore and in line with the revised guidelines of the Reserve Bank of India.

Till December 2017, the loans to Gitanjali Gems were standard and regular debt servicing was being done. There is no servicing of debt in the last quarter ended March 31, so it has to be declared NPA by all banks, said a senior bank official of the consortium.

In 2015, the consortium had restructured working capital loans given to Gitanjali under the joint lenders' forum (JLF) mechanism.

The Gitanjali exposure was classified as a special mention account-2 (SMA-2) in 2014 after the company failed to fulfil its payment obligations for more than 60 days, triggering the formation of a JLF.

As a result, the company announced the consolidation of the business at the group level to improve cash flows and reduce costs in various activities such as sourcing, manufacturing, distribution, exporting and retailing.

It proposed the merger of three of its subsidiaries Asmi Jewellery India and Spectrum Jewellery with Nakshatra Brands and also the merger of Gitanjali Jewellery Retail and Gitanjali Lifestyle with GILI India.

Different investigating agencies, including CBI, I-T and Enforcement Directorate, are probing the fraud, which came to light in January, dubbed as the biggest banking scam in the country.

PNB had issued as many as 1,590 LoUs to Modi, Choksi and their associates.

The total number of LoUs issued to the companies of Modi, his relatives and the Nirav Modi Group are 1,213, while those to Choksi, his relatives and the Gitanjali Group are 377.

Banks will have to make provisioning of Rs 8,000 crore for Gitanjali alone as there has been no servicing of the working capital loan during the fourth quarter of last fiscal, sources said

Non performing assets (NPAs) or bad loans in the banking sector are set to shoot up by at least Rs 8,000 crore as advances to the scam-hit Gitanjali Gems group have turned bad during the quarter ended March 31. Banks will have to make provisioning of Rs 8,000 crore for Gitanjali alone as there have been no servicing of the working capital loan during the fourth quarter of last fiscal, sources said. Gitanjali, among others, is the major account which has turned bad in the fourth quarter of 2017-18. Gross NPAs of all the banks in the country amounted to Rs 8,40,958 crore in December, led by industry loans followed by services and agriculture sectors, as per the government estimates. Gitanjali is promoted by Mehul Choksi, uncle of billionaire diamantaire Nirav Modi, who defrauded Punjab National Bank (PNB) of over Rs 13,000 crore by getting fake Letters of Undertaking/Credit (LoU/LoCs) issued from one of the bank's branches in Mumbai. A special CBI court in Mumbai has issued non-bailable warrants (NBWs) against Modi as well as Choksi. A consortium of 21 banks led by Allahabad Bank had first extended a working capital loan to it in 2010-11. In 2014, ICICI Bank became the lead banker as it had highest exposure of about Rs 900 crore and in line with the revised guidelines of the Reserve Bank of India. Till December 2017, the loans to Gitanjali Gems were standard and regular debt servicing was being done. There is no servicing of debt in the last quarter ended March 31, so it has to be declared NPA by all banks, said a senior bank official of the consortium. In 2015, the consortium had restructured working capital loans given to Gitanjali under the joint lenders' forum (JLF) mechanism. The Gitanjali exposure was classified as a special mention account-2 (SMA-2) in 2014 after the company failed to fulfil its payment obligations for more than 60 days, triggering the formation of a JLF. As a result, the company announced the consolidation of the business at the group level to improve cash flows and reduce costs in various activities such as sourcing, manufacturing, distribution, exporting and retailing. It proposed the merger of three of its subsidiaries Asmi Jewellery India and Spectrum Jewellery with Nakshatra Brands and also the merger of Gitanjali Jewellery Retail and Gitanjali Lifestyle with GILI India. Different investigating agencies, including CBI, I-T and Enforcement Directorate, are probing the fraud, which came to light in January, dubbed as the biggest banking scam in the country. PNB had issued as many as 1,590 LoUs to Modi, Choksi and their associates. The total number of LoUs issued to the companies of Modi, his relatives and the Nirav Modi Group are 1,213, while those to Choksi, his relatives and the Gitanjali Group are 377.

Bank 'bad loans' in India to rise by at least Rs 8,000 crore in Q4

Just when many Indian banks thought the worst of their bad debt woes were behind them, new central bank rules are stoking fears that the worst of the soured-loans buildup is yet to come.

The central bank surprised the financial sector this week by halting all of its existing loan-restructuring mechanisms with immediate effect, and rolling out new rules that will push more debt defaulters into bankruptcy courts.

To force its point home, the Reserve Bank of India (RBI) set strict timelines for lenders to take action against defaulters, threatening penalties if banks failed to act in a timely manner.

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Soured loans, which include non-performing, restructured or rolled-over loans, reached a record high of 9.5 trillion rupees ($148 billion) in the middle of last year before dipping slightly and prompting some relief among bankers that the worst was over. State-run lenders account for the bulk of these loans.

India&#39;s bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending - the combination has choked new lending and dragged on the economy.

Analysts say the actual level of bad loans is higher than the official figures suggest, pointing to central bank audits of banks, including State Bank of India, that showed non-performing loans were higher than reported for the financial year ended March 2017. Banks have also been blamed for perpetually renewing loans on soured assets.

Most of the loan-restructuring schemes that the central bank is withdrawing have seen little success. Analysts say banks will soon have to declare the loans in those schemes as non-performing loans, which will trigger the timeline for banks to take debtors to court.

That means the banking sector will have to recognise the new status of the loans and make provisions for them, said Rajkiran Rai, chief executive at state-run Union Bank of India.

&quot;When you look at the short term, yes, we will have issues with the existing accounts,&quot; Rai said.

Longer term, the RBI&#39;s measure will benefit banks, he said.

Indeed, the new rules would bring discipline to the banking sector, although provisioning costs will shoot up as more borrowers are taken to court, said R. Subramaniakumar, chief executive at Indian Overseas Bank, a state-run lender with the second-highest bad loan ratio among all banks.

&quot;Of course it&#39;s going to put pressure on bank&#39;s balance sheets,&quot; he said, adding capital injections announced by the government will help cushion the impact.

The RBI&#39;s decision to force more struggling borrowers into bankruptcy proceedings was its latest move to try to clean up India&#39;s bad loans mess.

Last year, it ordered about 40 of the country&#39;s largest debt defaulters into bankruptcy courts, demanding creditors put aside at least 50 percent of loan amounts in provisioning.

Under the new process, the RBI requires banks to figure out plans to resolve debts of defaulters with 20 billion rupees ($311 million) or more in outstanding debt by Sept. 1, or take them to bankruptcy court.

Since 50 percent provisioning will be required for these bankruptcy cases as well, the total funds that banks will have to set aside will shoot up, pressuring profits, analysts said.

Moody&#39;s Indian affiliate ICRA estimates the criteria would net 50 defaulting companies with combined outstanding debt of 2.46 trillion rupees ($38 billion), so banks&#39; credit provisions will spike.

India Ratings and Research, the local affiliate of Fitch, said banks&#39; non-performing loans and provisions will shoot up in coming months, said analyst Udit Kariwala.

Rajeev Kumar, the top government bureaucrat overseeing the banking sector, said the new rules will impact 2-3 percent of banks&#39; loan books, while provisions could rise a &quot;little&quot;, financial news service NewsRise reported.

Bank shares slid on Wednesday, with the sector index falling 1.4 percent compared with a 0.4 percent fall in the broader market.

New RBI rules are stoking the banks' fears that the worst of the soured-loans buildup is yet to come

Just when many Indian banks thought the worst of their bad debt woes were behind them, new central bank rules are stoking fears that the worst of the soured-loans buildup is yet to come. The central bank surprised the financial sector this week by halting all of its existing loan-restructuring mechanisms with immediate effect, and rolling out new rules that will push more debt defaulters into bankruptcy courts. To force its point home, the Reserve Bank of India (RBI) set strict timelines for lenders to take action against defaulters, threatening penalties if banks failed to act in a timely manner. India's bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending — the combination has choked new lending and dragged on the economy × Soured loans, which include non-performing, restructured or rolled-over loans, reached a record high of 9.5 trillion rupees ($148 billion) in the middle of last year before dipping slightly and prompting some relief among bankers that the worst was over. State-run lenders account for the bulk of these loans. India's bad loans have nearly doubled in the past four years following an economic slow down and years of profligate lending - the combination has choked new lending and dragged on the economy. Analysts say the actual level of bad loans is higher than the official figures suggest, pointing to central bank audits of banks, including State Bank of India, that showed non-performing loans were higher than reported for the financial year ended March 2017. Banks have also been blamed for perpetually renewing loans on soured assets. Most of the loan-restructuring schemes that the central bank is withdrawing have seen little success. Analysts say banks will soon have to declare the loans in those schemes as non-performing loans, which will trigger the timeline for banks to take debtors to court. That means the banking sector will have to recognise the new status of the loans and make provisions for them, said Rajkiran Rai, chief executive at state-run Union Bank of India. "When you look at the short term, yes, we will have issues with the existing accounts," Rai said. Longer term, the RBI's measure will benefit banks, he said. Indeed, the new rules would bring discipline to the banking sector, although provisioning costs will shoot up as more borrowers are taken to court, said R. Subramaniakumar, chief executive at Indian Overseas Bank, a state-run lender with the second-highest bad loan ratio among all banks. "Of course it's going to put pressure on bank's balance sheets," he said, adding capital injections announced by the government will help cushion the impact. The RBI's decision to force more struggling borrowers into bankruptcy proceedings was its latest move to try to clean up India's bad loans mess. Last year, it ordered about 40 of the country's largest debt defaulters into bankruptcy courts, demanding creditors put aside at least 50 percent of loan amounts in provisioning. Under the new process, the RBI requires banks to figure out plans to resolve debts of defaulters with 20 billion rupees ($311 million) or more in outstanding debt by Sept. 1, or take them to bankruptcy court. Since 50 percent provisioning will be required for these bankruptcy cases as well, the total funds that banks will have to set aside will shoot up, pressuring profits, analysts said. Moody's Indian affiliate ICRA estimates the criteria would net 50 defaulting companies with combined outstanding debt of 2.46 trillion rupees ($38 billion), so banks' credit provisions will spike. India Ratings and Research, the local affiliate of Fitch, said banks' non-performing loans and provisions will shoot up in coming months, said analyst Udit Kariwala. Rajeev Kumar, the top government bureaucrat overseeing the banking sector, said the new rules will impact 2-3 percent of banks' loan books, while provisions could rise a "little", financial news service NewsRise reported. Bank shares slid on Wednesday, with the sector index falling 1.4 percent compared with a 0.4 percent fall in the broader market.

For India's banks, worst of their bad-loan troubles may be still to come

The benchmark stock indices dropped nearly 1 per cent in morning trade due to selling in banking, auto, financial and telecom stocks after the budget proposal to impose a long-term capital gains (LTCG) tax on equity gains of more than Rs 1 lakh.

The 30-share BSE Sensex dropped by 328.24 points or 0.91 per cent to 35,578.42 in morning trade as 25 of its constituents declined.

The NSE Nifty fell below the key 11,000-mark as 38 of its components dropped. The 50-issue Nifty was trading down by 96.35 or 0.87 per cent at 10,920.55 at 1000hrs.

Among major losers, private banks Kotak Bank, IndusInd Bank Yes bank, Axis Bank, ICICI Bank and HDFC Bank fell up to 2.9 per cent.

Adani Ports, HDFC, L&amp;T and Reliance Industries, Maruti, SBI, Bajaj Auto, M&amp;M, Coal India and NTPC also declined up to 2 per cent.

IT major TCS and Infosys and drug makers Sun Pharma and Dr Reddy&#39;s, however, posted gains of up to 1.20 per cent on a weaker rupee.

Sentiment took a hit after Finance Minister Arun Jaitley yesterday announced long-term capital gains tax of 10 per cent on stock market gains exceeding Rs 1 lakh.

A weak trend in Asia also came as a dampener, traders said.

With the Budget out of the way, the focus turns to RBI&#39;s monetary policy to be released later this month.

Japan&#39;s Nikkei was down 1.30 per cent while Shanghai Composite Index shed 0.40 per cent in early trade today. Hong Kong&#39;s Hang Seng, however, up 0.20 per cent.

Most of the US stock indices dropped overnight after concerns over political crisis and rising US Treasury yields.&nbsp;

Among major losers, private banks Kotak Bank, IndusInd Bank Yes bank, Axis Bank, ICICI Bank and HDFC Bank fell up to 2.9 per cent.

The benchmark stock indices dropped nearly 1 per cent in morning trade due to selling in banking, auto, financial and telecom stocks after the budget proposal to impose a long-term capital gains (LTCG) tax on equity gains of more than Rs 1 lakh. The 30-share BSE Sensex dropped by 328.24 points or 0.91 per cent to 35,578.42 in morning trade as 25 of its constituents declined. The NSE Nifty fell below the key 11,000-mark as 38 of its components dropped. The 50-issue Nifty was trading down by 96.35 or 0.87 per cent at 10,920.55 at 1000hrs. Among major losers, private banks Kotak Bank, IndusInd Bank Yes bank, Axis Bank, ICICI Bank and HDFC Bank fell up to 2.9 per cent. Adani Ports, HDFC, L&T and Reliance Industries, Maruti, SBI, Bajaj Auto, M&M, Coal India and NTPC also declined up to 2 per cent. IT major TCS and Infosys and drug makers Sun Pharma and Dr Reddy's, however, posted gains of up to 1.20 per cent on a weaker rupee. Sentiment took a hit after Finance Minister Arun Jaitley yesterday announced long-term capital gains tax of 10 per cent on stock market gains exceeding Rs 1 lakh. A weak trend in Asia also came as a dampener, traders said. With the Budget out of the way, the focus turns to RBI's monetary policy to be released later this month. Japan's Nikkei was down 1.30 per cent while Shanghai Composite Index shed 0.40 per cent in early trade today. Hong Kong's Hang Seng, however, up 0.20 per cent. Most of the US stock indices dropped overnight after concerns over political crisis and rising US Treasury yields.

Budget aftermath: Sensex drops 324 points, Nifty below 11,000 on LTCG jitters

The benchmark Sensex staged a strong come back in early trade today gaining over 158 points on widespread buying by participants in banking, auto, pharma and oil and gas stocks.

Asian stocks notched moderate gains, tracking sizable increases seen on Wall Street overnight also boosted the sentiments.

The 30-share index was trading higher by 158.35 points, or 0.46 per cent at 33,970.61.

All the sectoral indices led by metal, consumer durables, power, bank and infrastructure were trading in the green with gains up to 0.79 per cent.

The 30-share Sensex had lost 244.57 points in the previous two sessions.

Also, the NSE Nifty went up by 43.30 points or 0.41 per cent to 10.485.50.

Major gainers were ICICI Bank, Reliance industries, SBI, Adani Ports, TCS, Tata Steel and Power Grid, rising up to 1.84 per cent.

Brokers said buying by domestic institutional investors (DIIs) and foreign funds amid a firm trend at other Asian bourses following yet another record close on Wall Street improved the market sentiment.

In the Asian region, Hong Kong&#39;s Hang Seng was up 0.23 per cent and Shanghai Composite Index by 0.82 per cent in early trade. Japan&#39;s Nikkei remained closed today.

The US Dow Jones Industrial Average ended 0.42 per cent higher yesterday.&nbsp;

The NSE Nifty was up by 43.30 points or 0.41 per cent to 10.485.50

The benchmark Sensex staged a strong come back in early trade today gaining over 158 points on widespread buying by participants in banking, auto, pharma and oil and gas stocks. Asian stocks notched moderate gains, tracking sizable increases seen on Wall Street overnight also boosted the sentiments. The 30-share index was trading higher by 158.35 points, or 0.46 per cent at 33,970.61. All the sectoral indices led by metal, consumer durables, power, bank and infrastructure were trading in the green with gains up to 0.79 per cent. The 30-share Sensex had lost 244.57 points in the previous two sessions. Also, the NSE Nifty went up by 43.30 points or 0.41 per cent to 10.485.50. Major gainers were ICICI Bank, Reliance industries, SBI, Adani Ports, TCS, Tata Steel and Power Grid, rising up to 1.84 per cent. Brokers said buying by domestic institutional investors (DIIs) and foreign funds amid a firm trend at other Asian bourses following yet another record close on Wall Street improved the market sentiment. In the Asian region, Hong Kong's Hang Seng was up 0.23 per cent and Shanghai Composite Index by 0.82 per cent in early trade. Japan's Nikkei remained closed today. The US Dow Jones Industrial Average ended 0.42 per cent higher yesterday.

Sensex rises 158 points in early trade

Stocks lost early gains to trade flat in the morning session as banking, auto, FMCG and energy shares witnessed selling despite strong global cues.

The BSE Sensex was trading down by 36.06 points or 0.11 per cent at 33,776.69 at 09:50 am.

The 30-share index had risen by 148.38 points, or 0.43 per cent, to 33,961.13 in opening trade with all sectoral indices led by realty, power and infrastructure advancing by up to 0.82 per cent.

The broader Nifty also surrendered gains to trade down by 3.95 points or 0.04 per cent at 10,431.60.

SBI dropped the most by over 1 per cent among Sensex scrips. Hindustan Unilever, Kotak Bank and Asian Paints also dropped up to 1 per cent.

Stocks failed to hold onto gains after positive core industry data. Infra sector grew at the fastest pace in more than a year at 6.8 per cent in November 2017 on the back of robust performance in segments like refinery, steel and cement.

The big gainers that supported the Sensex include ONGC, NTPC, Coal India, Dr Reddy&#39;s, HDFC Bank, IndusInd Bank, and Bharti Airtel, rising by up to 1.87 per cent.

In the auto space, Bajaj Auto, Tata Motors and M&amp;M too were in keen demand largely on the back of encouraging sales data for December and gained up to 1.51 per cent.

Elsewhere in Asia, Hong Kong&#39;s Hang Seng rose 1.58 per cent while Shanghai Composite index up 1.18 per cent in early trade today. Japanese markets remained closed today for an extended new year holiday.&nbsp;

The big gainers that supported the Sensex include ONGC, NTPC, Coal India, Dr Reddy's, HDFC Bank, IndusInd Bank, and Bharti Airtel, rising by up to 1.87 per cent

Stocks lost early gains to trade flat in the morning session as banking, auto, FMCG and energy shares witnessed selling despite strong global cues. The BSE Sensex was trading down by 36.06 points or 0.11 per cent at 33,776.69 at 09:50 am. The 30-share index had risen by 148.38 points, or 0.43 per cent, to 33,961.13 in opening trade with all sectoral indices led by realty, power and infrastructure advancing by up to 0.82 per cent. The broader Nifty also surrendered gains to trade down by 3.95 points or 0.04 per cent at 10,431.60. SBI dropped the most by over 1 per cent among Sensex scrips. Hindustan Unilever, Kotak Bank and Asian Paints also dropped up to 1 per cent. Stocks failed to hold onto gains after positive core industry data. Infra sector grew at the fastest pace in more than a year at 6.8 per cent in November 2017 on the back of robust performance in segments like refinery, steel and cement. The big gainers that supported the Sensex include ONGC, NTPC, Coal India, Dr Reddy's, HDFC Bank, IndusInd Bank, and Bharti Airtel, rising by up to 1.87 per cent. In the auto space, Bajaj Auto, Tata Motors and M&M too were in keen demand largely on the back of encouraging sales data for December and gained up to 1.51 per cent. Elsewhere in Asia, Hong Kong's Hang Seng rose 1.58 per cent while Shanghai Composite index up 1.18 per cent in early trade today. Japanese markets remained closed today for an extended new year holiday.

Sensex, Nifty flat in early trade; auto, banking shares retreat

When Indian Prime Minister Narendra Modi announced the withdrawal of ?500 (US$7.40) and ?1,000 (US$15) banknotes from circulation in November 2016, the government said its demonetisation drive would curb India&rsquo;s shadow economy and suppress the use of illicit and counterfeit cash in the economy.

If there&rsquo;s one sector that&rsquo;s done particularly well as a result of government&rsquo;s move, it&rsquo;s the banking sector.

Banks received deposits worth ?6 trillion (US$88 billion) and overall banking deposits with the Reserve Bank of India reached a record high of ?4.3 trillion (US$63.1 billion) within two weeks of the currency ban.

So the demonetisation was a well-planned move in terms of the health of the Indian banking system. Five months before the drive, the total amount of gross non-performing assets (loans are classified like this after 90 days of non-payment of interest or principal) for public and private sector banks was around ?6lakh crore (US$88 billion).

To understand how big this problem was, one needs to see the figure against the total loans given out by India&rsquo;s banking system. That ratio corresponded to 11.8 per cent of total credit advanced in September 2016, and it&rsquo;s expected to reach 12.5 per cent by March 2017.

The bulk of these non-performing assets are from public sector banks, and were mainly lent to finance the basic metal and metal products sector, the textile industry and the beverages sector.

In its December 2016 Financial Stability Report, the Reserve Bank noted that the asset quality of public sector banks had deteriorated further between March and September 2016. This reflected the failing health of the Indian banking system, which is a major provider of credit to industry and business. If not checked in time, it can have serious repercussions for the economy.

Bringing currency back

So calling the demonetisation drive a complete failure, as many economists and financial analysts have done then, is to fail to respect this well thought-out strategy for saving India&rsquo;s banks. Demonetisation has fulfilled the objective of bringing currency back into the banking system.

Within the first month, practically all demonetised currency notes in the country were back in the bank vaults. The sudden flow of cash to public sector banks gave them an instant lifeline clearly visible across the banking system.

Enriched by these higher deposits, the country&rsquo;s largest lender, the State Bank of India, slashed its benchmark lending rate by 0.9 per cent. In other words, after difficulty dealing with bad loans, after demonetisation banks are now able to provide cheap financing.

Not only did lending rates get slashed, the overnight marginal cost of funds-based lending rate (the minimum interest rate below which a bank cannot lend) fell to 7.75 per cent from 8.65 per cent. Meanwhile, three-year loan rates came down to 8.15 per cent from 9.05 per cent. While these percentages may seem small, it was a huge turnaround, which were reeling under the pressure of the bad loans.

Another winning sector

Amid the frenzy after demonetisation, another sector that got a big boost was that of financial technology start-ups, including digital wallet and other mobile payment companies. Due to the cash crunch, many people turned to digital wallets that can be used in conjunction with mobile payment systems, allowing them to pay for purchases with their smartphones.

Digital wallet companies saw an unprecedented surge in the number of people signing up for their services and adding money to their wallets after demonetisation.

Among mobile wallet companies, Paytm was the biggest beneficiary. We can gauge the impact of the demonetisation drive on its business by looking at the company&rsquo;s user base, which has reached 160 million &ndash; a fourfold increase since May 2016. Paytm&rsquo;s traffic rose by 435 per cent, app downloads grew by 200 per cent, and the company saw a 250 per cent rise in overall transaction value.

In fact, &ldquo;Paytm karo&rdquo; (literally, &ldquo;do Paytm&rdquo;) became one of the most common phrases during the early parts of the demonetisation drive, and sectors that have been traditionally cash-based, for example, small shopkeepers and public transport, such as taxis and auto-rickshaws, started accepting Paytm.

Such was a stardom of Paytm that it featured in a Harvard Business School case study of the company&rsquo;s transformation from online recharge platform to India&rsquo;s largest mobile payments platform.

Ultimate failure

The demonetisation drive, then, could be seen as a blessing for India&rsquo;s move towards a cashless economy and for encouraging consumers to use digital payment platforms. It also supports the government&rsquo;s Digital India initiative, which aims to encourage cashless payment solutions across the country by putting technological infrastructure in place.

But it&rsquo;s difficult to assess whether India is ready for a cashless economy. Traders tend not to reveal their actual income to avoid taxes and people are so used to paying for services in cash that for them to shift to new mode of payments requires a big habitual change.

The government&rsquo;s demonetisation drive, then, can be seen as an effort to curb the corruption and the flow of black money as stated, but also to force the general population to embrace digital payment options.

Unfortunately, it seems to have failed in both aspirations. Even though the main stated aim of demonetisation was to curb the extent of black money in the economy, during the first two months of the drive, almost 90 per cent of the scrapped and demonetised notes were back in the banking system. This stands in contrast to the government&#39;s expectation that roughly ?3 lakh crore (US$44 billion) of the scrapped notes would never return because they would be part of black money hoards.

The second consequence of moving towards a cashless economy may also be a failure. When cash returns to the system, many Indians are likely going back to the cash-based transactions given the over-dependence on cash-based transactions in the country due to limited connectivity and privacy issues related to transactions.

Ultimately, the demonetisation drive has been successful in making the banking sector healthier, but not what it was projected to do in terms of bringing in &ldquo;black money&rdquo; and turning the country into &ldquo;digital India&rdquo;.

This article was originally published on <a href="http://theconversation.com" rel="nofollow" target="blank">The Conversation</a>. Read the <a href="https://theconversation.com/indias-demonetisation-drive-has-boosted-banks-and-start-ups-but-its-still-a-failure-71704" rel="nofollow" target="blank">original article</a>.

The demonetisation drive has made the banking sector healthier but failed to curb 'black money'

When Indian Prime Minister Narendra Modi announced the withdrawal of ?500 (US$7.40) and ?1,000 (US$15) banknotes from circulation in November 2016, the government said its demonetisation drive would curb India’s shadow economy and suppress the use of illicit and counterfeit cash in the economy. If there’s one sector that’s done particularly well as a result of government’s move, it’s the banking sector. Banks received deposits worth ?6 trillion (US$88 billion) and overall banking deposits with the Reserve Bank of India reached a record high of ?4.3 trillion (US$63.1 billion) within two weeks of the currency ban. So the demonetisation was a well-planned move in terms of the health of the Indian banking system. Five months before the drive, the total amount of gross non-performing assets (loans are classified like this after 90 days of non-payment of interest or principal) for public and private sector banks was around ?6lakh crore (US$88 billion). To understand how big this problem was, one needs to see the figure against the total loans given out by India’s banking system. That ratio corresponded to 11.8 per cent of total credit advanced in September 2016, and it’s expected to reach 12.5 per cent by March 2017. The bulk of these non-performing assets are from public sector banks, and were mainly lent to finance the basic metal and metal products sector, the textile industry and the beverages sector. In its December 2016 Financial Stability Report, the Reserve Bank noted that the asset quality of public sector banks had deteriorated further between March and September 2016. This reflected the failing health of the Indian banking system, which is a major provider of credit to industry and business. If not checked in time, it can have serious repercussions for the economy. Bringing currency back So calling the demonetisation drive a complete failure, as many economists and financial analysts have done then, is to fail to respect this well thought-out strategy for saving India’s banks. Demonetisation has fulfilled the objective of bringing currency back into the banking system. Within the first month, practically all demonetised currency notes in the country were back in the bank vaults. The sudden flow of cash to public sector banks gave them an instant lifeline clearly visible across the banking system. Enriched by these higher deposits, the country’s largest lender, the State Bank of India, slashed its benchmark lending rate by 0.9 per cent. In other words, after difficulty dealing with bad loans, after demonetisation banks are now able to provide cheap financing. Not only did lending rates get slashed, the overnight marginal cost of funds-based lending rate (the minimum interest rate below which a bank cannot lend) fell to 7.75 per cent from 8.65 per cent. Meanwhile, three-year loan rates came down to 8.15 per cent from 9.05 per cent. While these percentages may seem small, it was a huge turnaround, which were reeling under the pressure of the bad loans. Another winning sector Amid the frenzy after demonetisation, another sector that got a big boost was that of financial technology start-ups, including digital wallet and other mobile payment companies. Due to the cash crunch, many people turned to digital wallets that can be used in conjunction with mobile payment systems, allowing them to pay for purchases with their smartphones. Digital wallet companies saw an unprecedented surge in the number of people signing up for their services and adding money to their wallets after demonetisation. Among mobile wallet companies, Paytm was the biggest beneficiary. We can gauge the impact of the demonetisation drive on its business by looking at the company’s user base, which has reached 160 million – a fourfold increase since May 2016. Paytm’s traffic rose by 435 per cent, app downloads grew by 200 per cent, and the company saw a 250 per cent rise in overall transaction value. In fact, “Paytm karo” (literally, “do Paytm”) became one of the most common phrases during the early parts of the demonetisation drive, and sectors that have been traditionally cash-based, for example, small shopkeepers and public transport, such as taxis and auto-rickshaws, started accepting Paytm. Such was a stardom of Paytm that it featured in a Harvard Business School case study of the company’s transformation from online recharge platform to India’s largest mobile payments platform. Ultimate failure The demonetisation drive, then, could be seen as a blessing for India’s move towards a cashless economy and for encouraging consumers to use digital payment platforms. It also supports the government’s Digital India initiative, which aims to encourage cashless payment solutions across the country by putting technological infrastructure in place. But it’s difficult to assess whether India is ready for a cashless economy. Traders tend not to reveal their actual income to avoid taxes and people are so used to paying for services in cash that for them to shift to new mode of payments requires a big habitual change. The government’s demonetisation drive, then, can be seen as an effort to curb the corruption and the flow of black money as stated, but also to force the general population to embrace digital payment options. Unfortunately, it seems to have failed in both aspirations. Even though the main stated aim of demonetisation was to curb the extent of black money in the economy, during the first two months of the drive, almost 90 per cent of the scrapped and demonetised notes were back in the banking system. This stands in contrast to the government's expectation that roughly ?3 lakh crore (US$44 billion) of the scrapped notes would never return because they would be part of black money hoards. The second consequence of moving towards a cashless economy may also be a failure. When cash returns to the system, many Indians are likely going back to the cash-based transactions given the over-dependence on cash-based transactions in the country due to limited connectivity and privacy issues related to transactions. Ultimately, the demonetisation drive has been successful in making the banking sector healthier, but not what it was projected to do in terms of bringing in “black money” and turning the country into “digital India”. This article was originally published on The Conversation. Read the original article.

India's demonetisation drive has boosted banks and start-ups, but it's still a failure

By Saurabh Goenka

It&rsquo;s been 30 days since an unscheduled&nbsp;address to the nation by Prime Minister Narendra Modi turned 86 per cent&nbsp;of India&rsquo;s currency to scrap.&nbsp;

Since then, everyone of us has been caught up in discussions around demonetisation. From tea stalls to board rooms, from coffee tables to bank branches, everyone seems to be updated.&nbsp;

Fourteen lakh crore (money in circulation in now-old notes as on March 2016) has become a number which almost everyone has become familiar with. Economics rather than polity has become the favourite subject of country. But sometimes it gets difficult to remain updated with things changing so fast and where there&rsquo;s so much to take in. So here is a &lsquo;cheat sheet&rsquo; that will make you talk like an economist in front of your awestruck friends.&nbsp;

Enjoy the read!

1) Deposits and money supply: Around Rs. 11,500 billion ($172.5 billion) has been deposited into several banks till date, which 74.48 per cent of the Rs. 15,440 billion ($231.6 billion) that was in circulation before the government decided to flush out mid- to high-value banknotes. On the other hand, 19 billion new notes have been issued by the Reserve Bank of India -- the country&#39;s central banking institution. That amounts to around Rs&nbsp;4,000 billion ($60 billion).

2) Jan Dhan Accounts: More than 2.7 million new Jan Dhan Accounts were opened between November 10 and November 30. Deposits in Jan Dhan Accounts grew by 63 per cent -- that means&nbsp;around Rs. 290 billion ($4.35 billion) was deposited in them between November 10 and November 30.

3) Income tax: More than 400 cases are being investigated by the Income Tax department and around 30 cases have been referred to the Central Bureau of Investigation and Enforcement Directorate (ED). Around Rs. 1.3 billion ($19.5 million) in cash and jewellery have been seized and roughly Rs&nbsp;20 billion ($300 million) of unaccounted wealth has been disclosed.

4) Municipal corporations: Forty seven&nbsp;municipal corporations have seen an overall increase of 268 per cent&nbsp;in revenues till November 19 as compared to the previous month of October. Hyderabad registered the highest growth -- a whopping 2,500% -- followed by Delhi Municipal Corporation (equally staggering rise of 2,434 per cent). Rajkot and&nbsp;Surat, two cities in west India, were not too far behind.

5) Banking: Around 27 bank officials have been suspended and two transferred across various government-controlled banks in India due to suspected financial malfeasance. Around 50 branches of 10 banks were raided by the ED to probe alleged money laundering and other irregularities.

6) Cashless economy: There was a triplefold increase in RuPay card transactions. There were around 1 million transactions per day on such cards.

Transactions at SBI Point of Sale (PoS) swipe machines&nbsp;increased from 0.35 million daily to 1-1.2 million. As per data released by the RBI, use of debit cards and credit cards at PoS of four&nbsp;major banks stood at 205.5 million transactions, amounting to Rs. 352.4 billion ($5.29 billion) in November.

7) Toll plazas: All national toll roads were made free between November 9 and December 2. NHAI had to suffer a loss of around Rs 12 billion ($180 million).&nbsp;

8) Industry: The FMCG (fast moving consumer goods) industry slumped by 20-30 per cent.&nbsp;

The telecom industry also felt the pressure of liquidity crunch where mobile phone shipment from abroad fell down by 26 per cent&nbsp;in November as compared to October.

The auto industry has been hit harder.&nbsp;Tata Motors posted a 17 per cent&nbsp;decline in commercial vehicle sales in November.&nbsp;&nbsp;

For the online retail market, sales fell by 40-50 per cent&nbsp;in first few weeks after demonetisation. It was particularly bad because the retail sector was&nbsp;in the middle of their biggest quarter for sales.

The real estate sector has also experienced&nbsp;a slowdown, with property rates in some areas falling by as much as 50 per cent.

9) GDP: The GDP growth rate estimates are expected to slide due to demonetisation. As per a Bloomberg survey of various economists, the growth rate in the coming quarter could be around 6.5 per cent&nbsp;while Goldman Sachs further reduced the projection from 6.8 per cent to 6.3 per cent. However, the slowdown is not expected to continue for more than the next 2 quarters (6 months).

10) E-wallets: E-wallet or digital payment company Paytm&nbsp;experienced a great boost in its business post-demonetisation. Where average number of transactions before demonetisation was between 2.5 to 3 million, it rose to 7 million per day amounting to Rs 1.2 billion ($18 million). As per Paytm, more than 45 million people used Paytm and there have been 5 million new users who have used the service in first 10 days post demonetisation.

FreeCharge said it has registered a ninefold jump in merchant transactions on its platform and MobiKwik reported an overall 18-times increase in its transaction volume. Oxigen Services, which also has a digital wallet, said transactions increased to Rs 6 billion ($90 million) in November from an average of Rs 4.5 billion ($67.5 million) a month earlier.&nbsp;As per RBI data, in the first four days of December, the volume of transactions done daily through eight leading mobile wallets and prepaid payment instruments (PPI) was about 2.5 million, amounting to Rs 0.6 billion ($9 million).

11) Stock market: Yields of the benchmark 10-year bonds have fallen by nearly 56 basis points to 6.24 per cent&nbsp;on December 2 from 6.79 per cent on November 8. However, the rates have seen a jump after RBI kept the policy rates unchanged and was around 6.5% on December 8. BSE Sensex which was around 27,500 on November 8 has fallen to 26,600 post demonetisation.

Nifty also fell by around 3% from 8486.65 on November 8. Reality and FMCG index fell by 16 per cent&nbsp;and 4 per cent&nbsp;respectively while PSU Banks index rose by 2.5 per cent. Gold which has seen a jump for a couple of days post demonetisation is trading at around 6.5 per cent&nbsp;below the November 8 figures. &nbsp;

12) Farm sector: Govt has allowed farmers to purchase seeds from state-run outlets with old 500 rupee notes till Dec 15 th . In the wake of demonetisation and resulting cash crunch NABARD sanctioned Rs 210 billion ($3.15 billion) to district central cooperative banks in order to grant loans to farmers for the rabi season. However as per media reports, of the targeted Rs. 180 billion ($2.7 billion) of crop loan for rabi season, banks have disbursed only over Rs 15 billion ($0.23 billion) in October while no significant amount was released as crop loans after November 8. It is estimated that raw jute supplies to the market are tapering, with only 40-45 per cent of the stock reaching for trade.&nbsp;In value terms, Rs 40 billion ($0.6 billion) of raw jute is held up in the rural and secondary markets due to shortage of cash for payments.

13) Service Sector: The Nikkei India Services Business Activity index, which measures activity in the services sector, fell to 46.7 in November from 54.5 in October. New business inflows and output at services firms contracted for first time in 17 months. A reading below 50 signifies contraction from the previous month, while one above 50 indicates expansion.

14) Vegetable Prices:&nbsp;Where the model wholesale price of Potato in Delhi stood at Rs. 1400 ($21) per qtl on 9th Nov, it reduced to Rs. 570 ($8.55) per qtl on 8th December which is a 59.29% fall. Similarly the prices of Onion have reduced from Rs 1062 ($15.9) per qtl to Rs 812 ($12.18) per qtl depicting a 23.54% fall in prices. Although the retail prices have not changed accordingly the prices of vegetables and fruits has witnessed a fall.

15) Transporters: The All India Motor Transport Congress a representative body for 9.3 million truckers, and more than five million bus operators, tourist taxis and maxi cabs recently claimed that 70% of their members are off the road post demonetisation. It is interesting to note that this industry adds Rs 14.92 billion ($223.8 million) to the GDP of the country daily and since 80% of the transactions are in cash, around Rs 11.94 billion ($179.1 million) of cash is needed on a daily basis to sustain operations.

(WION)

A look at how demonetisation has affected the Indian economy as a whole

By Saurabh Goenka It’s been 30 days since an unscheduled address to the nation by Prime Minister Narendra Modi turned 86 per cent of India’s currency to scrap. Since then, everyone of us has been caught up in discussions around demonetisation. From tea stalls to board rooms, from coffee tables to bank branches, everyone seems to be updated. Fourteen lakh crore (money in circulation in now-old notes as on March 2016) has become a number which almost everyone has become familiar with. Economics rather than polity has become the favourite subject of country. But sometimes it gets difficult to remain updated with things changing so fast and where there’s so much to take in. So here is a ‘cheat sheet’ that will make you talk like an economist in front of your awestruck friends. Enjoy the read! 1) Deposits and money supply: Around Rs. 11,500 billion ($172.5 billion) has been deposited into several banks till date, which 74.48 per cent of the Rs. 15,440 billion ($231.6 billion) that was in circulation before the government decided to flush out mid- to high-value banknotes. On the other hand, 19 billion new notes have been issued by the Reserve Bank of India -- the country's central banking institution. That amounts to around Rs 4,000 billion ($60 billion). 2) Jan Dhan Accounts: More than 2.7 million new Jan Dhan Accounts were opened between November 10 and November 30. Deposits in Jan Dhan Accounts grew by 63 per cent -- that means around Rs. 290 billion ($4.35 billion) was deposited in them between November 10 and November 30. 3) Income tax: More than 400 cases are being investigated by the Income Tax department and around 30 cases have been referred to the Central Bureau of Investigation and Enforcement Directorate (ED). Around Rs. 1.3 billion ($19.5 million) in cash and jewellery have been seized and roughly Rs 20 billion ($300 million) of unaccounted wealth has been disclosed. 4) Municipal corporations: Forty seven municipal corporations have seen an overall increase of 268 per cent in revenues till November 19 as compared to the previous month of October. Hyderabad registered the highest growth -- a whopping 2,500% -- followed by Delhi Municipal Corporation (equally staggering rise of 2,434 per cent). Rajkot and Surat, two cities in west India, were not too far behind. 5) Banking: Around 27 bank officials have been suspended and two transferred across various government-controlled banks in India due to suspected financial malfeasance. Around 50 branches of 10 banks were raided by the ED to probe alleged money laundering and other irregularities. 6) Cashless economy: There was a triplefold increase in RuPay card transactions. There were around 1 million transactions per day on such cards. Transactions at SBI Point of Sale (PoS) swipe machines increased from 0.35 million daily to 1-1.2 million. As per data released by the RBI, use of debit cards and credit cards at PoS of four major banks stood at 205.5 million transactions, amounting to Rs. 352.4 billion ($5.29 billion) in November. 7) Toll plazas: All national toll roads were made free between November 9 and December 2. NHAI had to suffer a loss of around Rs 12 billion ($180 million). 8) Industry: The FMCG (fast moving consumer goods) industry slumped by 20-30 per cent. The telecom industry also felt the pressure of liquidity crunch where mobile phone shipment from abroad fell down by 26 per cent in November as compared to October. The auto industry has been hit harder. Tata Motors posted a 17 per cent decline in commercial vehicle sales in November. For the online retail market, sales fell by 40-50 per cent in first few weeks after demonetisation. It was particularly bad because the retail sector was in the middle of their biggest quarter for sales. The real estate sector has also experienced a slowdown, with property rates in some areas falling by as much as 50 per cent. 9) GDP: The GDP growth rate estimates are expected to slide due to demonetisation. As per a Bloomberg survey of various economists, the growth rate in the coming quarter could be around 6.5 per cent while Goldman Sachs further reduced the projection from 6.8 per cent to 6.3 per cent. However, the slowdown is not expected to continue for more than the next 2 quarters (6 months). 10) E-wallets: E-wallet or digital payment company Paytm experienced a great boost in its business post-demonetisation. Where average number of transactions before demonetisation was between 2.5 to 3 million, it rose to 7 million per day amounting to Rs 1.2 billion ($18 million). As per Paytm, more than 45 million people used Paytm and there have been 5 million new users who have used the service in first 10 days post demonetisation. FreeCharge said it has registered a ninefold jump in merchant transactions on its platform and MobiKwik reported an overall 18-times increase in its transaction volume. Oxigen Services, which also has a digital wallet, said transactions increased to Rs 6 billion ($90 million) in November from an average of Rs 4.5 billion ($67.5 million) a month earlier. As per RBI data, in the first four days of December, the volume of transactions done daily through eight leading mobile wallets and prepaid payment instruments (PPI) was about 2.5 million, amounting to Rs 0.6 billion ($9 million). 11) Stock market: Yields of the benchmark 10-year bonds have fallen by nearly 56 basis points to 6.24 per cent on December 2 from 6.79 per cent on November 8. However, the rates have seen a jump after RBI kept the policy rates unchanged and was around 6.5% on December 8. BSE Sensex which was around 27,500 on November 8 has fallen to 26,600 post demonetisation. Nifty also fell by around 3% from 8486.65 on November 8. Reality and FMCG index fell by 16 per cent and 4 per cent respectively while PSU Banks index rose by 2.5 per cent. Gold which has seen a jump for a couple of days post demonetisation is trading at around 6.5 per cent below the November 8 figures. 12) Farm sector: Govt has allowed farmers to purchase seeds from state-run outlets with old 500 rupee notes till Dec 15 th . In the wake of demonetisation and resulting cash crunch NABARD sanctioned Rs 210 billion ($3.15 billion) to district central cooperative banks in order to grant loans to farmers for the rabi season. However as per media reports, of the targeted Rs. 180 billion ($2.7 billion) of crop loan for rabi season, banks have disbursed only over Rs 15 billion ($0.23 billion) in October while no significant amount was released as crop loans after November 8. It is estimated that raw jute supplies to the market are tapering, with only 40-45 per cent of the stock reaching for trade. In value terms, Rs 40 billion ($0.6 billion) of raw jute is held up in the rural and secondary markets due to shortage of cash for payments. 13) Service Sector: The Nikkei India Services Business Activity index, which measures activity in the services sector, fell to 46.7 in November from 54.5 in October. New business inflows and output at services firms contracted for first time in 17 months. A reading below 50 signifies contraction from the previous month, while one above 50 indicates expansion. 14) Vegetable Prices: Where the model wholesale price of Potato in Delhi stood at Rs. 1400 ($21) per qtl on 9th Nov, it reduced to Rs. 570 ($8.55) per qtl on 8th December which is a 59.29% fall. Similarly the prices of Onion have reduced from Rs 1062 ($15.9) per qtl to Rs 812 ($12.18) per qtl depicting a 23.54% fall in prices. Although the retail prices have not changed accordingly the prices of vegetables and fruits has witnessed a fall. 15) Transporters: The All India Motor Transport Congress a representative body for 9.3 million truckers, and more than five million bus operators, tourist taxis and maxi cabs recently claimed that 70% of their members are off the road post demonetisation. It is interesting to note that this industry adds Rs 14.92 billion ($223.8 million) to the GDP of the country daily and since 80% of the transactions are in cash, around Rs 11.94 billion ($179.1 million) of cash is needed on a daily basis to sustain operations. (WION)

Demonetisation: 15 key points

Three senior Irish bankers were jailed on Friday for up to three-and-a-half years for conspiring to defraud investors in the most prominent prosecution arising from the 2008 banking crisis that crippled the country&#39;s economy. 
 
The trio will be among the first senior bankers globally to be jailed for their role in the collapse of a bank during the crisis. 
 
The lack of convictions until now has angered Irish taxpayers, who had to stump up 64 billion Euros, almost 40 per cent of annual economic output, after a property collapse forced the biggest state bank rescue in the euro zone. 
 
The crash thrust Ireland into a three-year sovereign bailout in 2010 and the finance ministry said last month that it could take another 15 years to recover the funds pumped into the banks still operating. 
 
Former Irish Life and Permanent Chief Executive Denis Casey was sentenced to two years and nine months following the 74-day criminal trial, Ireland&#39;s longest ever. 
 
Willie McAteer, former finance director at the failed Anglo Irish Bank, and John Bowe, its ex-head of capital markets, were given sentences of 42 months and 24 months respectively. 
 
&quot;Dishonest, Deceitful&nbsp;and Corrupt&quot; 
 
All three were convicted of conspiring together and with others to mislead investors, depositors and lenders by setting up a 7.2-billion-Euro circular transaction scheme between March and September 2008 to bolster Anglo&#39;s balance sheet. 
 
Irish Life placed the deposits via a non-banking subsidiary in the run-up to Anglo&#39;s financial year-end, to allow its rival to categorise them as customer deposits, which are viewed as more secure, rather than a deposit from another bank. 
 
&quot;By means that could be termed dishonest, deceitful and corrupt they manufactured 7.2 billion Euros in deposits by obvious sham transactions,&quot; Judge Martin Nolan told the court, describing the conspiracy as a &quot;very serious crime&quot;. 
 
&quot;The public is entitled to rely on the probity of blue chip firms. If we can&rsquo;t rely on the probity of these banks we lose all hope or trust in institutions,&quot; said Nolan. 
 
None of the defendants reacted visibly to the sentencing before being led away by officers to Mountjoy Prison, the country&#39;s largest, and used in the past to hold Irish Republican Army prisoners. 
 
&#39;Green Jersey&nbsp;Agenda&#39; 
 
Lawyers for the accused argued during the trial that their motivation in authorising the deal was the &quot;green jersey&quot; agenda, the financial regulator&#39;s request for Irish banks to support one another as the financial crisis worsened. 
 
McAteer was convicted in 2014 of illegal lending and providing unlawful assistance to investors, but sentenced to perform community service when a judge ruled he was &quot;led into error and illegality&quot; by the Irish regulator. 
 
Scandal-hit Anglo-Irish, described by Nolan as &quot;probably the most reviled institution in the state&quot;, was put into liquidation in 2013 and remains subject to other criminal trials. 
 
Irish Life and Permanent was broken up during the restructuring of Ireland&#39;s financial sector and its banking arm, permanent tsb, remains under 75 per cent state ownership. 
 
Two other Anglo-Irish bankers, chief operations officer Tiarnan O&#39;Mahoney, 56, and former company secretary Bernard Daly, 67, earlier this year had their sentences quashed on appeal after spending several months in prison. 
 
Banks in the United States and Britain have paid billions of dollars in fines and settlements connected to wrongdoing over their handling of subprime loans that helped cause the crisis. But no senior industry executives in those countries have been sent to jail. 
 
(Reuters)

Banks in the US and Britain have paid billions for their handling of subprime mortage loans but no senior execs from there have gone to jail

Three senior Irish bankers were jailed on Friday for up to three-and-a-half years for conspiring to defraud investors in the most prominent prosecution arising from the 2008 banking crisis that crippled the country's economy. The trio will be among the first senior bankers globally to be jailed for their role in the collapse of a bank during the crisis. The lack of convictions until now has angered Irish taxpayers, who had to stump up 64 billion Euros, almost 40 per cent of annual economic output, after a property collapse forced the biggest state bank rescue in the euro zone. The crash thrust Ireland into a three-year sovereign bailout in 2010 and the finance ministry said last month that it could take another 15 years to recover the funds pumped into the banks still operating. Former Irish Life and Permanent Chief Executive Denis Casey was sentenced to two years and nine months following the 74-day criminal trial, Ireland's longest ever. Willie McAteer, former finance director at the failed Anglo Irish Bank, and John Bowe, its ex-head of capital markets, were given sentences of 42 months and 24 months respectively. "Dishonest, Deceitful and Corrupt" All three were convicted of conspiring together and with others to mislead investors, depositors and lenders by setting up a 7.2-billion-Euro circular transaction scheme between March and September 2008 to bolster Anglo's balance sheet. Irish Life placed the deposits via a non-banking subsidiary in the run-up to Anglo's financial year-end, to allow its rival to categorise them as customer deposits, which are viewed as more secure, rather than a deposit from another bank. "By means that could be termed dishonest, deceitful and corrupt they manufactured 7.2 billion Euros in deposits by obvious sham transactions," Judge Martin Nolan told the court, describing the conspiracy as a "very serious crime". "The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all hope or trust in institutions," said Nolan. None of the defendants reacted visibly to the sentencing before being led away by officers to Mountjoy Prison, the country's largest, and used in the past to hold Irish Republican Army prisoners. 'Green Jersey Agenda' Lawyers for the accused argued during the trial that their motivation in authorising the deal was the "green jersey" agenda, the financial regulator's request for Irish banks to support one another as the financial crisis worsened. McAteer was convicted in 2014 of illegal lending and providing unlawful assistance to investors, but sentenced to perform community service when a judge ruled he was "led into error and illegality" by the Irish regulator. Scandal-hit Anglo-Irish, described by Nolan as "probably the most reviled institution in the state", was put into liquidation in 2013 and remains subject to other criminal trials. Irish Life and Permanent was broken up during the restructuring of Ireland's financial sector and its banking arm, permanent tsb, remains under 75 per cent state ownership. Two other Anglo-Irish bankers, chief operations officer Tiarnan O'Mahoney, 56, and former company secretary Bernard Daly, 67, earlier this year had their sentences quashed on appeal after spending several months in prison. Banks in the United States and Britain have paid billions of dollars in fines and settlements connected to wrongdoing over their handling of subprime loans that helped cause the crisis. But no senior industry executives in those countries have been sent to jail. (Reuters)

Ireland jails three top bankers over 2008 banking meltdown

Private equity investments in January-March amounted to $3.1 billion through 160 transactions, registering a moderate two per cent decline in terms of deal value over last year, says a PwC report.&nbsp;PwC is India&#39;s one of the leading auditing and consulting firms. 
 
In comparison with the year-ago period, there was a considerable decline of 24 per cent in terms of deals numbers. January-March 2015 quarter had seen 211 deals worth $3.16 billion. 
 
&quot;Indian macros continue to gain health and this is likely to spur M&amp;A and funding activities over the next few months - however we expect this to be sectoral,&quot; PwC India leader Private Equity Sanjeev Krishan said. 
 
A sectoral analysis shows despite a shortfall in big deals in e-commerce, the information technology &amp; IT-enabled services (IT&amp;ITeS) sector continued its dominance with an investment flow totaling $1.26 billion in 92 deals. 
 
&quot;The Digital India programme and ongoing efforts on Smart Cities are driving spending on software and IT services,&quot; Sandeep Ladda, leader - Technology, PwC India said. &quot;The expected growth in the sector will provide more opportunities for investors.&quot; 
 
Banking, financial services and insurance sector (BFSI) came a distant second, attracting $430 million. With a single deal, the travel and tourism sector added $321 million to its account. 
 
&quot;There has been a definite slowdown in the e-commerce/ digital and consumer internet deals and the next few months are likely to see some consolidation in the sector,&quot; Krishan said. 
 
According to PwC MoneyTree India report, a quarterly study of private equity investment activity based on data provided by Venture Intelligence, appetite for private equity continued to be strong with late-stage investments of $1.32 billion invested into mature companies. 
 
Growth-stage investments also played a significant role, attracting $918 million in the first quarter of this calender year, the report said. 
 
From a regional standpoint, Delhi-National Capital Region had an edge over others in January-March with $914 million, whereas Bengaluru saw investments of $875 million. 
(PTI)

Information technology, banking and tourism firms bagged a total of $3.1 billion fund in the first three months of 2016

Private equity investments in January-March amounted to $3.1 billion through 160 transactions, registering a moderate two per cent decline in terms of deal value over last year, says a PwC report. PwC is India's one of the leading auditing and consulting firms. In comparison with the year-ago period, there was a considerable decline of 24 per cent in terms of deals numbers. January-March 2015 quarter had seen 211 deals worth $3.16 billion. "Indian macros continue to gain health and this is likely to spur M&A and funding activities over the next few months - however we expect this to be sectoral," PwC India leader Private Equity Sanjeev Krishan said. A sectoral analysis shows despite a shortfall in big deals in e-commerce, the information technology & IT-enabled services (IT&ITeS) sector continued its dominance with an investment flow totaling $1.26 billion in 92 deals. "The Digital India programme and ongoing efforts on Smart Cities are driving spending on software and IT services," Sandeep Ladda, leader - Technology, PwC India said. "The expected growth in the sector will provide more opportunities for investors." Banking, financial services and insurance sector (BFSI) came a distant second, attracting $430 million. With a single deal, the travel and tourism sector added $321 million to its account. "There has been a definite slowdown in the e-commerce/ digital and consumer internet deals and the next few months are likely to see some consolidation in the sector," Krishan said. According to PwC MoneyTree India report, a quarterly study of private equity investment activity based on data provided by Venture Intelligence, appetite for private equity continued to be strong with late-stage investments of $1.32 billion invested into mature companies. Growth-stage investments also played a significant role, attracting $918 million in the first quarter of this calender year, the report said. From a regional standpoint, Delhi-National Capital Region had an edge over others in January-March with $914 million, whereas Bengaluru saw investments of $875 million. (PTI)

India attracted $3.1 billion worth private equity investment from January to March: PwC

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