Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
2-min read

It's 'Fearmongering': BSE CEO on Talk of India's Banking Sector Crisis Post PNB Fraud

India's second-largest state-run lender Punjab National Bank (PNB) was hit by the country's biggest-ever banking fraud of more than Rs 13,000-crore allegedly perpetrated by billionaire diamantaire Nirav and his associates in connivance with some bank officials.

PTI

Updated:April 9, 2018, 2:16 PM IST
facebookTwitterskypewhatsapp
It's 'Fearmongering': BSE CEO on Talk of India's Banking Sector Crisis Post PNB Fraud
File photo of BSE CEO Ashish kumar Chauhan. (Photo: Getty image)

Washington: The talk of India's banking sector plunging into a financial crisis is nothing but "fearmongering" as the amount of fraud in the Nirav Modi case is equivalent to just three days of interest of the country's "solid" banking sector, BSE CEO Ashish Chauhan has said here.

India's second-largest state-run lender Punjab National Bank (PNB) was hit by the country's biggest-ever banking fraud of more than Rs 13,000-crore allegedly perpetrated by billionaire diamantaire Nirav and his associates in connivance with some bank officials.

A special CBI court has issued non-bailable warrants against Nirav and his uncle Mehul Choksi.

Addressing the Massachusetts Institute of Technology (MIT) students at the annual MIT India Conference on Sunday, Chauhan, the Bombay Stock Exchange (BSE) head, said that India's banking sector is fairly strong and regulated.

In fact, the amount of fraud being talked about in the PNB case is just three days of interest of the country's banking sector, he said.

Chauhan, however, said the scandal would not have taken place had appropriate reforms in the banking sector including the RBI been taken after the 1992 Harshad Mehta scam.

"We should have reformed the banking sector in 1992. This (Nirav Modi scam) would not have taken place if we had carried out the reforms then. But we have woken up now, we are doing a good job. One of them is demonetisation, other is the GST and third one is bankruptcy code," Chauhan told participants of the day-long conference on the theme of Pioneering Innovation.

Chauhan said that the size of the Indian banking system is "Rs one crore crore".

"In India we (banks) charge 12 per cent per annum from people who borrow. People who lend to the banks, we give them only four per cent. So basically, the banks earn eight per cent (profit).

"So, on Rs one crore core, how much interest you get in one year at 12 per cent? Rs 12 lakh crore. In one month, how much you would get? Rs one lakh crore. In three days, how much you would get? Rs 10,000 crore. What is the size of the Punjab National Bank's this particular scam? It's three days interest of the Indian banking system, which will take care of this (scam)," the BSE head said.

It happens. It is a commercial thing. When they (banks) are taking eight per cent margins, they are assuming that one out of 12 guys are going to be a defaulter. And still they would be okay. They will pay the principal back. One out of those 12 guys in that year has to default, Chauhan said.

"This (Nirav) guy has defaulted over 10 years. So effectively its 1/10th of the banks. The banking actually works on this. They think, it's the public money. They have already taken the money out of you by not paying the interest.

"Effectively there is nothing there (in the scam). It's fearmongering. The banking sector in India is so solid. It's over regulated, just to ensure that if ever anything happens there is enough money to take care (of)," Chauhan said.

"This kind of scams also give (banks) enough ammunition to take more money out of you. Instead of four, you will get three per cent (interest on deposits) and if you want to borrow, instead of 12 you will get it at 15 per cent. So, do not be panicky, it's the other way round," Chauhan added.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

| Edited by: Ahona Sengupta
Read full article
Next Story
Next Story

Also Watch

facebookTwitterskypewhatsapp
Most Active
Company Price Change %Gain
Yes Bank 51.40 8.44
Reliance 1,416.35 1.42
Indiabulls Hsg 231.20 16.80
Zee Entertain 250.20 -5.39
Maruti Suzuki 7,302.30 2.50
Company Price Change %Gain
HDFC AMC 2,882.20 6.11
Yes Bank 51.40 8.44
Indiabulls Hsg 231.50 17.42
Reliance 1,415.30 1.37
IRCTC 779.20 7.57
Top Gainers
Company Price Change %Gain
Yes Bank 51.40 8.44
Coal India 205.95 3.28
Adani Ports 421.70 3.07
Grasim 746.50 3.03
Maruti Suzuki 7,302.30 2.50
Company Price Change %Gain
Yes Bank 51.40 8.44
Coal India 205.95 3.31
Maruti Suzuki 7,318.15 2.74
Power Grid Corp 202.55 2.45
NTPC 121.00 2.02
Top Losers
Company Price Change %Gain
Zee Entertain 250.20 -5.39
Tata Motors 136.85 -1.90
Eicher Motors 20,275.90 -1.05
Bajaj Auto 3,087.05 -0.79
Hindalco 187.40 -0.74
Company Price Change %Gain
Tata Motors 136.70 -1.05
Bajaj Auto 3,088.80 -0.69
Bharti Airtel 383.25 -0.65
ICICI Bank 437.75 -0.64
Axis Bank 709.20 -0.19

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results