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July 28, 2012

Unexpected Speech at reliving farewell party

Scene : One of our senior AGM being transferred from Branch and we all are standing in his farewell party. Sh Mohinder lal g is hosting the event.

Me: Thank god Aman yeh ja raha hai.. Mujhe yeh banda pata nahin kyun pasand nahin tha..

Aman : Abe yaar yeh aisa banda hai ki kisi ko bhi pasand nahin hoga..

Me : Bhagwan bachaye future branch k staff ko unhe pata nahin hai ki kya musibat aa rahi hai unke upar

He he he (Both Laughing)

Aman : Saaley iske jaisa Hitler banda maine aaj tak nahin dekha..

Me : Aafat muki

Suddenly Mohinder lal g announces : Koi staff member agar inki tarriff mein kuch kehna chahta hai to most welcome... Ankit g aap kuch kehna chahenge...

Me : (Caught with fish in my mouth... Saaley mein hi mila tha inte bade crowd mein.. Yahan prepare kar k speech nahin boli jaati.. tu acchanak bulwa raha hai)

Me : Sh XX has been very friendly, cooperative, helpful, polite, unselfish, guiding light.... Blah Blah.... Blah Blah....

July 27, 2012

Level of NPA's Reasons for NPA

The bad loans of public sector banks grew by a whopping 56% during 2011-12.

On the face of it, it appears as if public sector banks (PSBs) have managed to keep their head above water in the past year. However, a closer look reveals that their operations are dangerously vulnerable to the economic uncertainties in India today. After eliminating the last minute window-dressing by banks, deposit growth looks halting and growth in advances below par. However, the shocker is the whopping increase in their non-performing assets (NPAs) which reflect the health of a bank’s asset portfolio. Here are the numbers. While the total loans and advances of public sector banks grew by 17.37% during 2011-2012, their gross NPAs increased by a huge 56.95%. This is nothing short of daylight robbery. If NPAs of public sector banks gallop at this rate, it will not be long before many PSBs return to being deeply in the red. Central Bank of India, dogged by a series of controversies over actions and decisions of the past two chairmen, has already earned the ignominy of declaring a net loss of Rs105 crore in the 31 March 2012 quarter, as against a net profit of Rs132 crore during the corresponding quarter of the previous year—a sharp reversal of its situation.

In banking, loans going bad are part of the business risk; NPAs are inevitable, but they should remain within limits. A bank’s lendable resources are mainly public deposits and, unless these deposits are profitably deployed with proper checks and balances to keep NPAs low, a capsizing bank can cause systemic banking failure. NPAs have to be taken seriously because loss-making banks are inevitably bailed out and capitalised with the taxpayers’ money in India. There is another major issue that most analysts miss—banks are allowed large write-offs against NPAs which reduce their tax liability. Lower taxes paid means fiscal stress that has to be borne by taxpayers either as inflation or by higher tax rates. Preventing a further downgrade of their credit rating is important not only from the perspective of retaining public confidence but also the impact it has on the bank’s resource-raising cost. As India remains mired in poor economic growth, where are we on the issue of bank NPAs?

The following two tables give details of the growth of the advances portfolio and the corresponding rise in gross NPAs of all the public sector banks (first table) for and private sector banks (second table) for the year ending March 2012. A quick look would reveal that there is a marked contrast between the performance of PSBs and private banks. Although the total advances of private sector banks were less than 25% of those of PSBs, private sector banks, as a whole, have done better on the NPA front. This is reflected in the significantly higher valuation of their shares on the bourses

It is clear that performance of the PSBs has deteriorated considerably during the past year.
Indeed, the private sector banks have, in fact, improved their position over the past two years. If credit growth slows down during the current year, the position of PSBs will worsen, unless banks are able to recover or upgrade a substantial part of their existing NPAs. Mind you, this position is after writing off substantial NPAs as being irrecoverable last year.

Besides NPAs, every bank has a sizeable portfolio of restructured advances, not included in the NPAs at present. Restructured advances are those that were prevented from being classified as NPAs by rescheduling them by giving extended holiday for repayment of loan instalments as well as interest to give the borrowers some more time to meet their commitments. Until 2001, these restructured accounts were considered NPAs, but to provide reprieve to banks and borrowers, the Reserve Bank of India (RBI) magnanimously took a decision to permit these loans to be treated as standard so long as they were rescheduled before becoming NPAs. Banks were allowed to do this if they considered the projects to be viable and believed that the cash flow problems faced by these borrowers were temporary. This amounted to the regulator’s nod to ‘ever-greening’ of loans and officially postpone the problem. More often than not, a sizeable chunk of these loans becomes non-performing—RBI officials themselves concede that 15% of restructured assets become bad debts.
As on 31 March 2012, restructured advances of State Bank of India (SBI) alone grew to Rs37,168 crore. This helps to camouflage the ugly face of the Bank’s performance, fools investors and creates a false sense of complacency. If you add up SBI’s NPAs and restructured loans, it is a massive Rs76,849 crore which is over 91% of the total net worth of the Bank!

The obvious question is: Why do PSBs suffer from this malaise? They point out to sluggish economic environment which makes loans turn sticky. But this is only an excuse; private banks have performed better in the same environment. Indeed, they have improved their gross and net NPA ratios. Another excuse trotted out by PSBs is the use of technology: that shift to core banking solutions led to higher reported NPAs! Does this mean that the banks were deliberately suppressing NPAs so far? Does it also mean that auditors (and RBI inspectors) were sleeping or certifying false disclosure of NPAs without verification? The problem is endemic. The way PSBs operate inevitably leads to several functional deficiencies:

1. Credit assessment in PSBs is inadequate. Decisions with regard to large value loans usually get clouded by internal and or external pressures. It is often said that the large value loans in PSBs are often fixed in advance—much like match-fixing. This puts public resources at risk for the personal gain of industrialists with political clout. The ‘cash for loan’ scam unearthed last year revealed how this works. Most loans that are granted under (political or corporate) pressure often turn into NPAs within about a year. RBI should, therefore, ask each bank to make an independent study of all large-value loans that have turned non-performing within a year and investigate each of these cases to ascertain whether there was any violation of the laid down norms and regulations. A periodic inspection by an outside agency will serve as a deterrent and prevent the operating staff from deviating from prudent principles.

2. Keeping a close watch on the end-use of funds is the most important role of the banks’ operating staff, since any misuse of funds leads to default. While this is the primary responsibility of branch offices, the central office cannot absolve itself of the responsibility. Most often, financial mismanagement by borrowers results in loan default. If bank branches take cognizance of the symptoms of financial difficulty, such as dishonour of cheques for lack of funds, delayed submission of stock statements, etc, many accounts can be saved from turning into non-performing ones.

3. All large branches of PSBs are brought under concurrent audit as per the guidelines of RBI, at substantial cost; but the contribution from these concurrent auditors in identifying and reporting potential NPAs is poor. It is necessary to widen their role and responsibilities and make it mandatory for concurrent auditors to examine in depth the utilisation of loan proceeds in all large value accounts and their operations, and report to the board of directors where an RBI nominee is ever-present. This will help banks initiate corrective steps long before the account goes bad.

4. There are generally two types of recalcitrant borrowers and banks do categorise them as such in their records. The first is an unintentional defaulter, who becomes sick due to factors beyond his control. The second one is a wilful defaulter, who, by mismanagement or intention, makes his company sick and seeks all sorts of concessions from the bank. In such cases, it can often be seen that the company turns sick but the promoters remain healthy and lead a life of luxury. Unfortunately, the Companies Act currently does not allow lenders to remove wilful defaulters from the management. Banks remain silent spectators to such loot. It is desirable that the names of all wilful defaulters be put on the website of RBI, so that they are exposed and ostracised by the banking community.

5. In the United Kingdom, once a company’s net worth turns negative, it is considered insolvent and its directors become personally liable for all the actions (from that day), if they continue in the management. Usually, the directors resign immediately and hand the company over to the lending bank which, in turn, appoints an administrator until it is sold through a public auction. This ensures that the company survives and banks realise their dues. In India, this was done only in the case of Satyam Computers after its promoter Ramalinga Raju admitted to fraud. There is a need to introduce legal provisions in our Companies Act so that the entire hoax of companies becoming sick and carrying on business from the comfort of a five-star hospital called BIFR (Board for Industrial and Financial Reconstruction) for years together at the expense of the exchequer is put an end to. The ministry of corporate affairs should include these provisions as in the UK Companies Act in the revised Companies Bill under the consideration of our government.

6. The introduction of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) has helped banks in improving recovery of dues. However, borrowers can obtain stay orders from higher courts and prevent banks from enforcing the securities. This leads to delays of several years.
Meanwhile, moveable securities charged to the bank slowly disappear and operations come to a standstill. The government must stipulate a maximum limit of, say, six months for the higher courts to dispose cases filed under the SARFAESI Act to ensure that projects are still viable when sold. However, the fact that NPAs have ballooned even after the SARFAESI Act, shows that banks are not known to invoke the Act quickly and effectively against those borrowers who bring political pressure to bear or obtain loans by dubious means.

7. Debt Recovery Tribunals (DRTs) are specialised courts for speedy disposal of recovery cases filed by banks. There are 33 DRTs in the country with as many as 67,000 cases involving over Rs1,36,000 crore pending before them as on 31 March 2012. The finance minister, while addressing the presiding officers of these DRTs recently, expressed concern over the large pendency of cases and asked them to suggest ways to unlock banks’ resources. While there is an urgent need to set up more DRTs in tier-II cities and fill up the existing positions (several DRTs are headless), to ensure that cases are disposed of within two years, the fact is corruption has affected DRTs too. Cases are deliberately dragged on either due to the interests of the parties or simply incompetence of the judges, giving the impression that DRTs are overloaded with work. If the speedy disposal of cases makes some of this disputed Rs1,36,000 crore available to the banks within the next two years, the government will not have to pump additional capital into banks. This will save taxpayers’ money and bring down fiscal deficit substantially.

8. The appointment of chief executive officers (CEOs) of PSBs is a game of musical chairs. Selection is either without application of mind or due to political lobbying. Many continue to be appointed for a term of around one year. A chairman appointed with a 12-15-month tenure ends up spending six months to understand the bank’s culture and the remaining period in making retirement plans. This includes lobbying for post-retirement government sinecures or seeking lucrative private sector directorships. What is the incentive for such CEOs to be involved with the bank in any constructive manner? The government should ensure a minimum tenure of three to five years for bank CEOs with clear accountability for its functioning in critical areas like profitability and NPAs. If they fail in the task then  they should not be considered for any assignment post-retirement. The incentive scheme applicable to chairmen and managing directors and executive directors of PSBs should also be broadened and there should be negative marks for failure to achieve pre-set goals. Only this will ensure better performance.
Rot at the Top

One obvious reason for bank bad loans: controversial appointments, says Sucheta Dalal

If public sector banks (PSBs) are in trouble again, despite frequent recapitalisation by the government at the taxpayers’ expense, it is due to two major factors—rising NPAs caused by behest lending, and dubious loans (which are not meant to be repaid) sanctioned by senior bankers as the price of chairmanship. Corporate debt restructuring (CDR) was supposed to be a one-time affair and, along with the SARFAESI Act to help recovery of loans, it was supposed to be the end of excessive NPAs. Instead, banks have found a way around it all. CDRs are frequent and neither the regulator nor the government seems inclined to question them.

The main article has already pointed out how banks have blamed the rise in NPAs on the automated tracking system through core banking solutions (CBS). Now, RBI deputy governor, KC Chakrabarty has lashed out at banks for this. Bankers point out that repeated restructuring of loans is followed by deliberate devious acts such as feeding wrong data into the CBS system to hide stressed loan accounts. Friendly auditors also help camouflage bad loans and, when things begin to get really sticky, banks simply off-load the bad loan to an asset reconstruction company at a huge loss. This is the price for getting the loan off the bank’s books.

According to media reports, the real-estate sector is a big beneficiary of restructuring, accounting for about a tenth of the sticky loans. RBI officials admit that loans to loss-making state electricity boards ($5.5 billion outstanding) are a big problem, as is the huge bailout of Air India ($4 billion) in the public sector and Kingfisher (Rs7,500 crore after restructuring) in the private sector. There is also Paramount Airways, which cost New India chairman M Ramadoss his job, because he disguised a loan of several hundred crores of rupees as an insurance product (some say at the behest of a powerful minister and for the privilege of heading a larger insurance company). Corporation Bank chairman, Ramnath Pradeep, is another one who quit after an indictment by the Central Vigilance Commission.

A Reuters report in June 2012 quotes State Bank of India’s deputy managing director as saying that 43% of loans that the Bank restructured in March 2010 were declared non-performing within two years. The report also cites several cases of restructuring turned bad including Hotel Leelaventure, Electrotherm and some electricity companies. One of the most extraordinary cases was that of Central Bank of India which announced a net loss of Rs105 crore for the 31 March 2012 quarter, in its 101st year. Its bad loan provision has doubled, restructured loans trebled and slippages, despite restructuring, are a massive Rs3,300 crore in this quarter. Central Bank of India, which was headed by two controversial chairpersons, also had the ignominy of having MS Johar, an independent board director (a chartered accountant), being arrested by the Central Bureau of Investigation (CBI) in 2010 on charges of facilitating loans for a price. The arrest focused attention on several shady chartered accountants who are inexplicably appointed as directors on PSBs. A former bank chairman tells us that many of them broker dubious loans for corporate houses in return for choice appointments for bankers. The arrest of Mr Johar in 2010 has apparently made no difference to the system. A blog named, which has put out a long list of potential candidates to head banks, says, “The million dollar question is whether the lobby of corrupt bankers will be able to continue to dominate the scene and will have its own way” or will the prime minister “be able to exclude” some of the known corrupt names.

July 25, 2012

Winsxs Folder Free up your Hard disk

When can easily free up 2-3GB of Hard disk by running following commands which deletes the temporary and redundant files of windows 7..

Click start> Type " cleanmgr "


 Click start> Copy Paste " DISM /online /Cleanup-Image /SpSuperseded "

Both are Built in Microsoft's utilities and are completely safe...

July 23, 2012

India Adament to go blindly for IFRS adoption

India is likely to be guided by the International Financial Reporting Standards (IFRS), which are accepted by over a hundred countries. This is even as the US’ commitment to the adoption of IFRS is in doubt. As long as the US does not adopt IFRS, there is no need for India to rush into it, say India Inc insiders. Critics point out that people who do not want Indian accounting standards, Ind-AS, are arguing that the US itself is distancing from IFRS. This is a dim view and India’s interests will be well served if convergence with IFRS is achieved, say IFRS supporters.

The CA Institute President, Mr Jaydeep Shah, asserts that India’s decision on aligning with IFRS will not be dictated by the US stance on the matter.
‘Holistic view’
“Our decision will be taken by the Corporate Affairs Ministry. It will be done after taking a holistic view and not be country-based. The Ministry will certainly evaluate the international scenario”, he said when asked if India will put the brakes on IFRS, now that the US’ commitment is in doubt. Currently, the US, Japan and India are the three main economies that have not adopted IFRS. Canada, Brazil and Russia moved to IFRS last year.
For some years now, India has been developing its own accounting standards (Ind-AS) that seeks to converge with the IFRS. But the implementation date of Ind-AS is yet to be finalised. Mr Shah said the implementation date would be decided by the Corporate Affairs Ministry. He added that he hoped IFRS convergence will get a leg up once the new Companies Bill is enacted. Policymakers here have taken the stance that they would not adopt IFRS, but would only look to converge with it. Ind-AS has many carve-outs from the internationally accepted reporting rules.
A recent 137-page report released by the staff of the US Securities and Exchange Commission (SEC) had declined to recommend IFRS. There is no recommendation on moving US GAAP (Generally Accepted Accounting Principles) to the international reporting rules, which has led many to conclude that the US SEC will not accept IFRS. This will put convergence attempts between US GAAP and IFRS on the backburner. Currently, there is a gap in accounting treatment in such areas as leasing, insurance and losses on financial instruments.
The convergence process, which started in 2010, has dragged on without any success. Accounting experts point out that it would not be proper to compare India’s approach with the US stance. The US concerns are different in the sense that the US GAAP is far more advanced than IFRS. The US GAAP has for long been based on fair value. India has not even migrated to fair value, it was pointed out.
India is yet to take a final stance on the latest US position on IFRS. But there is every possibility that it will continue its march towards convergence with IFRS, despite roadblocks, say experts in the accounting community.

It must be noted that as per IFRS fixed assets are required to be valued at fair market value, that is recognizing even unrealized profits which is against the basic principal to recognize all probable losses and book profit only when realized.    

July 17, 2012

CDR Route and Asset reconstruction Companies ARC

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act) was born out of the Narasimham Committee-II recommendations after some modifications. Asset reconstruction companies are set up, and registered with the Reserve bank of India (RBI) as a securitisation company (SC) and reconstruction company (RC) to acquire distressed secured financial assets (both moveable and immovables).

The banks which transfer the assets are paid off by way of security receipts (SRs), debentures, bonds, etc as stipulated in the Act, which are subscribed to by only Qualified Institutional Investors and redeemed in due course of time, some of which would mature soon. These are treated as non-SLR securities and their valuations, provisions against fall in value, etc, are to be done as per the rules applicable to any other non-SLR security.

ARCs are deemed to be the lenders and have all the rights of the original lending banks. There are 14 ARCs in India, some of them promoted by some banks coming together; the first one was ARCIL, sponsored by SBI, ICICI Bank, IDBI Bank and PNB.

The underlying idea of bringing into fruition ARCs under SARFAESI Act is to enable banks to clean up their balance sheets, pass on the burden of recovery to an agency which could give full-time attention  to realize a higher amount than what the borrower is willing to offer and thus generally help faster resolution of NPA.

Where the assets are charged to several banks under multiple banking arrangements, ARCs endeavour to aggregate them to help better realisation from the eventual buyers which individual banks might not be able to get. In the case of security charged to a consortium of banks, once 75% of lenders (by value) agree to sell the assets to ARCs, other members do not have option to differ.

Despite the apparent advantages of transfer of assets to ARCs, banks, after the initial period now seem reluctant to pass on the NPAs to them for various reasons. There is a feeling that ARCs’ offer price is low and worse still that the assets are sold by them eventually to original promoters of the companies or their relatives in some “sweet heart deal” as they know the value of the assets especially of the land and buildings. Besides, bank officials have a fear that if the realisation of NPAs is low, they could be questioned on the deals struck with ARCs.

In a meeting called by the Central Vigilance Commission (CVC) in May 2010, and attended by CMDs of some banks, the Indian Banks Association (IBA) and CBI officials expressed the opinion that “some ARCs were found to be directly helping the defaulter in getting back the properties by paying very low amounts to banks and thereafter mark up and sell the property back to the borrower”.

It is well-known that sale of land involves considerable portion of consideration being in paid by way of unaccounted money. Yet another reason for the luke-warm relationship with ARCs is that banks which are mostly working capital lenders do not always have a charge on fixed assets and the ARCs have not been enthusiastic about selling off current assets.

What is more, the banks have found that when they issue notices to borrowers under SARFAESI Act, the response is much better. The amount of recoveries done under the Act has been significantly higher comparatively speaking than under BIFR, and faster.

The one major problem the banks experience in pursuing SARFAESI permitted action is that an aggrieved party, generally the borrower, can make an application to a DRT and get a stay order on sale which is not difficult to obtain. Nevertheless, the banks have felt use of SARFAESI has been more effective than other legal provisions.

Under the Sarfaesi Act, only assets that are mortgaged with banks can be recovered, while DRT allows taking possession of any asset held by a defaulting borrower, irrespective of whether these are pledged with banks or not. The DRT process, however, is a long one. While recovering through court cases, without taking help of Sarfaesi or DRT, if a borrower has to contest a claim by a banker, the borrower has to deposit 75% of the contested amount upfront with the court. However, courts frequently waive this requirement.

The bank officials feel that by strengthening the recovery department, they can show greater success than by handing over NPAs to ARCs. All said and done, the loyal bank officials definitely have greater commitment to the health of their bank than the ARCs.

The imperceptible trust deficit between the banks and the ARCs could be inferred from the fact that the SBI referred just six cases with claims of Rs40 crore to an ARC during 2010-11 though its bad loans were about Rs40,000 crore. (Source: The Economic Times, 13 March 2012). SBI is one of the sponsors of the first and the largest ARC viz. ARCIL.

Officials of various banks in the recovery departments state that the ARCs, with their high profile directors, have become a strong lobby to advocate larger flow of business to them from the banks. Coincidentally perhaps, in May 2012, the ministry of finance (Department of Financial Services) directed all public sector banks to designate one or more ARCs as their “authorised officer to take up recovery of loss assets on behalf of banks on commission basis”.

It would have been appropriate, say, for the RBI  to have studied/ audited the financials and methods of operations of the ARCs and the reasons for the existing trust deficit between banks and ARCs before the ministry issued this direction. Besides, the definition of authorised officer given in the SARFAESI Act does not include ARC, though it can be an agent.

The distinction between the two seems to have been made purposefully in the Act and therefore it seems a bit odd that the ministry directed the banks to designate the ARCs as authorised person instead of as agents. This confusion needs to be cleared.

The role of an agent is governed by Contract Act; banks being the principal become liable for acts of omission and commission of the agent as such. There is no reason for banks to undertake such an onerous responsibility. It is difficult to escape the feeling that ARCs are perpetuating their existence with some help from the finance ministry.

Even as the government was planning to introduce a bill in 2001-02 to assign the BIFR responsibilities to the National Company Law Tribunal, the RBI took a proactive measure of introducing in August 2001 “Corporate Debt Restructuring (CDR)” scheme. The objectives are, “to ensure timely and transparent mechanism for restructuring of corporate debts of viable entities through an orderly and coordinated restructuring programme outside the purview of BIFR, DRT and other legal proceedings”.

CDR is a well known mechanism to tackle incipient sickness/possible delinquency of a loan and restore viability of operations adversely affected by external and internal factors in the least disruptive manner by minimizing the losses to the creditors, the concerned corporate and other stakeholders. In India this is applicable to corporates with loan exposure of Rs10 crore or more to the banks.

CDR is not a part of any statute. However legal strength is provided by certain prescribed agreements between creditors and between borrowers and the lenders. The CDR scheme has laid down pretty elaborate system for appraisal, monitoring and reporting to various levels of authorities.

A CDR package envisages certain sacrifices and concessions to be given by lenders to the corporate concerned which could be also obligated to bring in additional equity and bind itself to the terms of the package and covenants. The package needs the approval of a majority (called ‘super majority’) of at least 75% (by value) of the lenders in which case the minority of lenders has to fall in line. In contrast, under the BIFR dispensation, the minority cannot be forced to follow the majority.

CDR is a ‘success’ if one were to judge it by the statistics of progress: As at March 2012, the CDR cell approved 292 cases and another 41 are in advanced stage of approval, involving an aggregate amount of Rs1.86 lakh crore of debt. The number of cases referred each year has been moving up and in 2011-12 it reached the highest figure of 87 cases with a debt of Rs68,000 crore.

Yet lenders are not celebrating this record and perhaps the RBI may be feeling the “Winner’s curse”. Reasons are not far to seek. In practice, it appears that some lenders in league with ARCs or the promoters have referred the cases to CDR cell to avoid immediate classification of the loans as non-standard in their books.

The promoters of large corporations being influential prefer the CDR route to salvation than facing SARFAESI action by the lenders. Considering the large amount of debt sought to be restructured with not inconsiderable sacrifices by lenders, one would have demanded a more careful approach in referring the cases under CDR scheme.

One quick action to remedy the current situation of handling NPAs will be to divest DRTs of all company cases and hand them over to the National Company Law Tribunal (the relative Act was passed in 2002 but some amendments are yet to be approved) to be set up in replacement of BIFR to deal with not only sick undertakings but also such of those cases which now are dealt with by CDR mechanism beyond a certain debt level of say, Rs100 crore.

CDR as a non–statutory and voluntary method can remain open for smaller corporates. Given freedom of action and without the fear of vigilance enquiries imbued with hindsight, public sector banks themselves must be able to handle substantially their NPAs by strengthening their recovery departments. That could minimize the role of the borrowers and their cohorts masquerading as experts in tackling NPA problem and deriving undue benefits from a well intentioned scheme at the cost of lenders, just as they wore down the BIFR and the DRTs.

July 16, 2012

Revaluation of Exam Answer Sheets CA

An examinee of CA exams can apply for verification of his/her answer books, either physically in his/her own handwriting, or on-line from within a month from the date of declaration of results.

The process of verification of marks covers the following:

  • Whether the answer book(s) compilation is complete
  • Whether any question or part thereof has remained unvalued
  • Whether there is any totaling error in any question or total marks on the cover page
  • Whether there is any discrepancy between the marks for each question and or/part thereof and marks for each question indicated on the cover page of the answer book
  • Whether the handwriting of the examinee in all the answer books is the same.
The application for verification of marks must be in the handwriting of the examinee. If the examinee had appeared in Hindi medium, his/her application should be in Hindi. Typewritten applications will not be entertained.

There is no standard format as such for such application. However, the application should clearly indicate the following details and should be duly signed by the examinee.
  • Student Name
  • Student Registration No
  • Exam-IPCE/PCE/Final/CPT
  • Month and year of the exam
  • Roll No
  • Paper(s)/subjects to be verified
  • Address for communication
Examinees are advised to note that there is no provision for re-evaluation of answer books.

Verification fee is as follows:
  • For Final, PCE, IPCE/ATE, IPCE/ATE-units: Rs 100/- per paper subject to a maximum of Rs 400/- for all the papers of a group/both groups.
  • For CPT: Rs 200/-
  • For Post qualification courses ISA, DIRM, ITL&WTO, MAC/TMC/CMC: Rs 500/-
The fees is payable by way of a demand draft drawn in favour of “The Secretary, The Institute of Chartered Accountants of India” payable at New Delhi. In case an examinee is applying online, he/she can pay the verification fee on-line, either by debit/credit card, Master/Visa. The verification fees is the same, whether the application is physical or on-line.

In the case of on-line applications, a scanned copy of the handwritten request for verification is also to be uploaded. However, there is no need to send the print-out of the on-line verification application by post.

An application by an examinee seeking inspection of his/her evaluated answer books and/or certified copies thereof is independent of and distinct from an application made by him/her for verification of marks under the existing Regulation 39(4) of the Chartered Accountants Regulations, 1988.

For details regarding the procedure for applying for certified copies/inspection of evaluated answer books, click here.

An application for inspection/certified copies is not treated as a verification application.

An examinee can apply for both verification as well as inspection/copies of his/her evaluated answer books by following the prescribed procedure. Such examinees are advised not to send both the applications together in the same envelope. They should be sent in separate envelopes, by speed post/registered post only, superscribing the name of the exam, i.e Final or PCE or IPCE as the case may be, on the envelope. Applications should not be sent by courier/ordinary post.

The verification process is meticulously drawn up exercise and it therefore takes time which may run to about 6-8 weeks from the date of receipt of the application.

Though it will be our endeavour to inform the outcome of verification in respect of May 2012 exams, as sought by the examinees latest by 15th October 2012, yet the same cannot be assured, due to time consuming processes involved. However, all such examinees who do not receive the response latest by 15th October 2012 are advised to send an email, at the E-Mail IDs mentioned below, as per the exam.

Examinees are advised to submit their examination form for the forthcoming examination, if they so wish, pending receipt of the outcome of verification of answer books of the May 2012 exams.

The application along with the demand draft should be sent at the following address so as to reach us within a period of one month from the date of the declaration of results.
The Additional Secretary (Exams)
The Institute of chartered Accountants of India
ICAI Bhawan
Indraprastha Marg
New Delhi 110 002
In case of change in marks pursuant to verification, the verification fee is refunded to the examinee automatically. There is no need to make a separate claim for refund. In case, he/she had also applied for the next exam, pending the outcome of the verification and the outcome of verification, leads to his passing the earlier exam, the examination fees paid by him/her for the next exam will also be refunded.

The outcome of the verification of all those who had applied (whether through on-line mode or physical mode) will be hosted on the website and a written communication will also be sent to the concerned examinees individually.

The examinees are advised to check the said website from time to time regarding the outcome.

They can also send an email at the following email IDs, as per the exam:
CPT examinees
PCE examinees
IPCE examinees
Final examinees

July 13, 2012

Protection under BIFR

Realising the seriousness of the problem of sick industrial undertakings financed by the banks, the central government passed an Act known as “Sick Industrial Companies (Special Provisions) Act, 1985 (SICA)”. Under this Act, the Board of Financial & Industrial Reconstruction (BIFR) and an appellate authority known as AAIFR (Appellate Authority for Industrial & Financial Reconstruction) were set up in New Delhi. Under this, every company is obligated to register itself as a sick company once its net worth is completely eroded.

Initially this was confined to public limited companies but later in 1991, public sector undertakings were also included. Detailed instructions are stipulated for the sick undertaking and the lending institutions about their responsibilities. First an Operating Agency (one of the lending institutions) is appointed to make a study and work out a draft scheme to decide on whether it is worthwhile reviving the undertaking and if so with what conditions, reliefs, etc. OR certify the undertaking can be wound up.

No legal action can be taken against the borrower by anyone once an undertaking is under the purview of BIFR under Section 22 of the Act which is considered an essential protection for a rehabilitation of revivable entities. The financing institutions need not necessarily agree to the scheme of rehabilitation.

Over the years, it has been found that the borrowers take full advantage of the protection under Section 22 and carry on their operations, even if truncated, with the help of some other friendly bank or on their own and drag the proceedings in BIFR by seeking adjournments of hearing, going in appeal to the AAIFR on some technicality or the other, submitting unacceptable one-time settlement proposals for a fraction of what is owed with repayment spread over several years.

July 12, 2012

What is LIBOR

London interbank offered rate, or Libor, which is the interest rate at which banks are ready to lend to other banks. This rate is used as an international benchmark to set interest rates worldwide for loans to businesses for their working capital needs, or to consumers to buy cars and homes or for settling their credit card debts. In the US, it is even used to compute student loan interest rates. In other words, it is the rate believed to be set by that mysterious oracle in which we have all come to believe: “the market”.

Now it turns out that this oracle, “the market”, which we have all been enjoined to trust and believe in, is in reality fixed by a trade association in London called the British Bankers’ Association. Every day, these banks, 14 in all, tell this association at what interest rate they “could have” borrowed money from each other. The average of these rates is then published as Libor, which is then used by the whole world to set the interest rates on their loans — worth $10 trillion in all.

What everyone, or at least the lay public, has missed is that Libor is not the actual rate at which these banks borrow from each other, but a guess at what they “could have”. This delicate difference allowed those 14 banks to submit almost any number it chose as its borrowing rate. Emails unearthed during the investigation show that Barclays stated rates that would profit the trades it was doing. Stripped of arcane language, it means that the interest rate that Libor sets is a piece of fiction written by these participating banks to suit their purpose.