Conduct reaudit of heavy profit-making banks: Sharma
Press Trust of India / Thane Aug 06, 2009, 12:05 IST
The Bharatiya Banking Consumer Forum has urged the Union Finance Ministry to conduct a detailed reaudit of all such nationalised banks which have shown profits.
A memorandum to this effect has been sent to the Union Finance Minister by the President of the Forum Om Prakash Sharma.
Sharma told newsmen yesterday here that a number of nationalised banks have shown profit in their books of accounts.
This balance sheet with a profit in it is a matter of serious concern as the country is presently facing serious financial crisis.
There are several examples of the banks and financial institutions which have lost their investments to the various companies which have wound up and perished. To name a few he said one classic example was that of Satyam and Lehman Brothers where the banks and financial institutions had made enormous investments and are now repenting.
To add to this there are several defaulters in small loans and big loans too and the NPA of the banks are too high. When such is the case how can the banks earn so much profit, he said.
This means something is really fishy which needs to be investigated, he demanded and added that in order to save their skin the higher-ups in these banks were managing the audits, which is doubted he said.
The forum comprises of renown seniors like members of judiciary, financial experts, those retired from the IAS, IPS and IRS cadre.
The Retails Banks which have shown good Q1 09 Quarter profits recently, have shown major part of profits from non core areas such as Treasury. A Retail Bank is supposed to be in the business of retail banking, that is, get monies from depositors and use that money to lend at a higher rate and make profit from the interest difference and service fees. A Retail Bank can conduct Treasury operations mainly for Hedging but not for Trading, and Hedging cant give much profits but protects from probable losses. Why are Retail Banks are being allowed to conduct Treasury Trading operations and derive profits which is not sustainable. Who looks into this, Auditors, Govt?
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