Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

<a href="https://www.smartkarma.com/entities/547" target="_blank" data-smartkarma-citation="entities:547:1">ICICI Bank Ltd (ICICIBC IN)</a> ‘conflict of interest’ saga has caught the attention of every business media house, analyst and investors community. The news is more focused on Ms. Chanda Kochhar (CEO of ICICI Bank) husband’s advisory business which talks about potential conflict of interest while lending to few corporate entities.  In such scenario of uncertainties, the presence of such conflicts of interest in other private sector banks cannot be ruled out. The ICICI Bank saga was on the conflicting business of CEO’s spouse, however, no one has questioned on possibilities of such conflicting businesses owned by the directors on the board of many of these private sector banks.We tried to dig into the details of entities that are into businesses such as financial advisory or investment banking or debt syndication, which are being owned/ under directorship of persons, who are also occupying seats on the board of 19 private sector banks.

ICICI Bank Ltd (ICICIBC IN) ‘conflict of interest’ saga has caught the attention of every business media house, analyst and investors community. The news is more focused on Ms. Chanda Kochhar (CEO of ICICI Bank) husband’s advisory business which talks about potential conflict of interest while lending to few corporate entities.  In such scenario of uncertainties, the presence of such conflicts of interest in other private sector banks cannot be ruled out. The ICICI Bank saga was on the conflicting business of CEO’s spouse, however, no one has questioned on possibilities of such conflicting businesses owned by the directors on the board of many of these private sector banks.We tried to dig into the details of entities that are into businesses such as financial advisory or investment banking or debt syndication, which are being owned/ under directorship of persons, who are also occupying seats on the board of 19 private sector banks.

Banks' Board: Minefield of ‘Conflicts of Interests’?

After last few years of tough ride owing to burgeoning bad loan problem in public sector banks and specter of under-reporting of non-performing assets (NPAs), the Indian banking industry’s public credibility and investors’ confidence were jolted by Nirav Modi ‘scam’ that exposed the PSU Punjab National Bank (PNB) to over INR 11,500 Crore fraud. Though we may have a different view on the entire Nirav Modi episode, we tried to study at ground level, how the banking business is being done and what are the innovative ways followed by the corporates while borrowing from the banks and how banks are managing their balance sheets.What our research points out is that the Nirav-PNB saga might be followed by greater shocks in the near future as the Indian banks face the unleashing of the ugly side of three borrowing innovations each loaded with calamitous outcomes.Most of such innovative product offerings are nestled in the real estate sector which is under duress for a long time with normal bank lending channels almost blocked for the sector. To overcome such tough situations, various consultants in the markets sometimes along with understanding with financial institutions (FIs) have devised various innovative products to raise funds from the FIs at affordable rates and in a less cumbersome manner. Few of such product offerings specifically for Real Estate Firms are:<ol><li>Proxy Investor/ Profile Investor</li><li>Trade Finance route</li><li>Promoter Funding through PSL route</li></ol>

After last few years of tough ride owing to burgeoning bad loan problem in public sector banks and specter of under-reporting of non-performing assets (NPAs), the Indian banking industry’s public credibility and investors’ confidence were jolted by Nirav Modi ‘scam’ that exposed the PSU Punjab National Bank (PNB) to over INR 11,500 Crore fraud. Though we may have a different view on the entire Nirav Modi episode, we tried to study at ground level, how the banking business is being done and what are the innovative ways followed by the corporates while borrowing from the banks and how banks are managing their balance sheets.What our research points out is that the Nirav-PNB saga might be followed by greater shocks in the near future as the Indian banks face the unleashing of the ugly side of three borrowing innovations each loaded with calamitous outcomes.Most of such innovative product offerings are nestled in the real estate sector which is under duress for a long time with normal bank lending channels almost blocked for the sector. To overcome such tough situations, various consultants in the markets sometimes along with understanding with financial institutions (FIs) have devised various innovative products to raise funds from the FIs at affordable rates and in a less cumbersome manner. Few of such product offerings specifically for Real Estate Firms are:Proxy Investor/ Profile InvestorTrade Finance routePromoter Funding through PSL route

India

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Banks' Board: Minefield of ‘Conflicts of Interests’?

ICICI Bank Ltd (ICICIBC IN) ‘conflict of interest’ saga has caught the attention of every business media house, analyst and investors community....

Nitin Mangal

Three Gorges Could Damn Indian Banks

After last few years of tough ride owing to burgeoning bad loan problem in public sector banks and specter of under-reporting of non-performing...

Nitin Mangal

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Market Cap (USDm)

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