ED seizes house of ex MD IFFCO in Rs 685 crore money laundering case in ‘Fertiliser Import Scam’

It is the tip of the iceberg in India’s largest Fertiliser Import Scam. 

The Excise Department has attached another house of ex IFFCO MD Udai Shankar Awasthi in the plush South Delhi Hauz Khas Enclave on 3d June. With this the total attached assets seized including Rs 37 crore in the Swiss Bank goes upto Rs 86 crores.  The laundered amount currently under investigation is Rs 685 crores. As per the ED this was the  illegal payment made as commissions by foreign suppliers of fertilisers to the Dubai based sons of US Awasthi during the 2017-2014 period.

           

But this is the tip of the iceberg in India’s largest Fertiliser Import Scam that syphoned out thousands of crores as fertiliser subsidy each year funded by the  Indian taxpayer from 2007 to 2014. The key beneficiaries of the scam were not IFFCO’s MD US Awasthi or Indian Potash Ltd’s MD PS Gehlot, both under detention and being interrogated by the ED. These two 70 plus gentlemen were the key players who conducted the scam. The chief beneficiaries were the political masters during the UPA II  and the bureaucrats who helped IPL import bypassing state run importers MMTC and STC . The key beneficiaries were the then fertiliser minister the late Ram Vilas Paswan, the then secretary Fertiliser, the Finance Minister P.Chidambaram and the top bosses of the UPA . The probe into the scam that has  now began belatedly will hopefully expand its horizon in the coming months to snare the key beneficiaries. 

                                              

                                         

In October 2020, my book The Inside Story of Indian Banking was published by Rupa highlighting India’s biggest fertiliser import scam that lasted for a decade and amounted to anything between Rs 50,000 crore to Rs 100,000 crore. Use the Read Inside facility available in Amazon ( page 26 onwards) to know the full details of the scam and how it made India which was self sufficient in fertilisers in 2002 the world’s biggest importer in 2007. In July 2021 the ED filed cases against Awasthi, Gehlot and several others and investigations began unravelling the first layer of the multilayer scam. Let me assure you - This is just the beginning ……much more is in store that will be bared in the months to come.  Keep watching.

Central Bank Returns To Profit After Scare About 600 Branch Closures.

Amidst the bloodshed at Dalal Street of overpriced stocks, the public sector banks are slowly showing green shoots of recovery. The Reserve Bank of India Financial Stability Report released in the month of December 2021 confirmed the popular opinion that merged public sector banks are more riskier   than the un-merged banks. The PSBs may however prove the RBI wrong. They are slowly showing  improved results than last year, despite the long drawn effect of the pandemic. The RBI had reportedly analysed the daily stock returns of 32 bank stocks for each calendar year since 2011 to assess the systemic risk levels in the sector. However when we examine the annual performance of the bank stocks that were merged in April 2020 into five merged entities under lead banks SBI, PNB, BOB, BOI and UBI we find that quite a few of the banks have turned the corner. Other than SBI all other banks had recorded losses in the year 2019-2020 and were placed under the RBI watch list. 

Last month,Union Minister of State for Finance Mr. Pankaj Chaudhury, replying to a question at the Rajya Sabha confirmed that the Bank of Baroda posted a profit of Rs 828.96 crore in FY2020-21 against a loss of Rs 8,339.27 crore in FY2018-19 following the amalgamation of Vijaya Bank and Dena Bank with the lead bank. Similarly Punjab National Bank with whom United Bank of India and OBC has been merged has reported a net profit of Rs 2,021.62 crore in the FY2020-21 from a loss of Rs 8,310.93 crore in FY2019-20.

Even one of the un-merged banks in the PSU stable the Central Bank of India has posted profits  of Rs 310 crore in the last quarter of 2021-2022.  Revenue for the  the year rose to ₹ 25,770.13 crore, from ₹ 25,845.90 crore last year while the Bank posted a small profit of Rs 1045 crore against a loss of Rs 888 crore in 2020-21.  The NPA losses of the bank have been low largely because they have been accounted for the previous period and borrowing has still not picked up in the industry sector currently though the consumer businesses are showing some recovery due to strong  demand.

Last week Central Bank employees got a scare when Reuters quoting regulatory filings stated that the Bank in a drastic step to cut losses  and improve its finances will shut down 600 branches by 2023. This was equal to 13% of the Bank Branches. Earlier it was reported that the Bank is taking up rationalisation of work force followed by the sale of non-core assets such as real estate, by  a government source who did not want to be named. The more than 100-year old lender currently has a network of 4,594 branches and a wide footprint in four states of Central India besides presence in most major cities. The bank however clarified that it has not yet decided which branches it will shut and when it will close them and branch rationalisation and reorganisation exercises were routine.

 For a detailed study of  the public sector bank mergers of April 2020 scan the chapter 11 of my book The Inside Story of Indian Banking. The chapter titled ‘Bank Mergers : Will 2+2 Be 5 or 3’  - the Pages 184 to 197 can be read with the free page reading facility ‘look inside ‘ at Amazon. #Banking #Indian Banking #RBI #BranchClosures #CentralBank #SandipSen #Bank of Baroda #Economy