Tuesday, May 10, 2016

A sneak into Case of KYC Irregulation, Uncompliance and Rising NPAs : Surya Vinayak Industries.

Perfume wala Gas cylinder   !!

 A perfume making company Surya Vinayak Industries which is part of Floriana Group just evaporated with loans to the tune of INR 2,500 Cr from consortium led banks. The matter is under investigation with CBI and ED. The Matter raises concern on banks functioning today and who is accountable for such a Big Blunder and subsequent losses.

KYC : Popularly known as Know Your Customer is the ABCD for any banker that helps to profile a customer and here the matter of investigation is "company had diverted the funds"  on  large scale to wholly-owned overseas subsidiaries and "indulged in fraudulent activities" not with one bank but the consortium of 23 banks. 

The RBI has revealed - “The company did not export commodities in the case of export finance availed by it from consortium member banks. It diverted working capital funds to Falcon Jersey Pvt. Ltd., an entity controlled by it and various other accounts including current accounts of Sanjay Jain and Rajiv Jain (promoters of Surya Vinayak ),”.


Few trembling questions that follows are:
  • Who is responsible as well as accountable for the NPA?
  • How would the staff accountability be determined in such being a case?
  • Are KYC regulations really observed in letter and spirit at the grass-root level.?
  • 90 days of non-repayment of interest or principle : Are the criteria enough to put checks in such cases?
  • As per bank records stocks valued INR 800 Cr, which was worth only for INR 4 Cr.

    How Stock valuation was done?
  • Why were billing copies not checked since the export was being made to only one buyer ?
  • The loan amount which banks gave was public money how would it be repaid ?
  • The opportunity cost of INR 2500 is economic growth and welfare of Indian economy! Who is answerable ?
  • And the final joke- Company has its registered office on record which is a : A Plot in Delhi !!!! : 

    Surya Vinayak Industries Ltd 
    Address: Zone H-4/5 Plot No 55, Suvidha Kunj, Pitampura, Pitampura, New Delhi, Delhi 110005
    Phone:011 2703 3750

Such a stark case puts the question whether RBI's regulations and Compliance have been just put aside for mere Business !!



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