Lenders like PNB mull winding up petition against ECGC in Zoom Developers case

MUMBAI: Sunk loans to Zoom Developers, a Mumbai-based engineering and construction company that bagged several overseas projects, could boil over into an unusual court battle between state-run institutions.

Even as banks try to salvage close to 2,600 crore, lead lender Punjab National Bank has obtained the consent of other banks in the consortium to move a winding up petition against Export Credit Guarantee Corporation of India (ECGC) - the 55-year-old financial institution that has insured a substantial part of banks' exposure to Zoom.

The public sector bank has taken legal opinion from law firm AZB on the matter.

The banking consortium may simultaneously file a performance obligation suit against ECGC, which has insured close to 1,900 crore of banks' credit.

Till now, ECGC has refused to pay the banks' claim on the ground that there have been irregularities and allegations of fraud that the Central Bureau of Investigation is examining.

"The banks will first send a legal notice. If no positive response is received, they will approach the court," a person familiar with the development told ET.

The banks, it is understood, had discussed the subject with the ministry of finance, which in turn had taken it up with the ministry of commerce and industry. The commerce ministry, which has administrative control over ECGC, recently referred the matter to the institution.

"We have no comments to offer on what you have stated. ECGC will initiate appropriate action as and when any situation arises," said ECGC Chairman N Shankar, responding to ET's email query.

In an earlier communication, the institution had spelt out to PNB the reasons why the claim could not be met. But banks - as many as 26 of them in the consortium - think they have enough ground to move court. The lenders are also upset that ECGC is reluctant to refund the premium paid to the institution for covering the exposure. If indeed ECGC has to pay the amount, the outgo would almost wipe out its net worth of around Rs 2,300 crore and force the government to infuse capital to keep it afloat.

Differences between state-owned entities rarely reach courts of law. But, such a possibility cannot be ruled out in a market where all institutions are under pressure to protect their books. All the more because the earlier mechanism of a high-powered committee of senior bureaucrats sorting out a dispute between two public sector organisations no longer exists.

Banks, which had sensed sometime in early 2009 that they could take a hit, have separately filed cases in the debt recovery tribunal to recover their money. The tribunal hearing is expected to begin in month or two.
Courtesy:
Sangita Mehta & Sugata Ghosh, ET Bureau Apr 29, 2013, 05.00AM IST
http://articles.economictimes.indiatimes.com/2013-04-29/news/38904790_1_zoom-developers-banks-consortium

Company Overview of Zoom Developers Pvt. Ltd.

Zoom Developers Pvt. Ltd. operates as a project development and management company. The company’s projects include process plants; and industrial and engineering projects, such as location study and market survey, technology evaluation, detailed project report, engineering services, fabrication engineered capital goods, inspection, packing and transportation services to the project-site, and erection and commissioning. It also engages in energy and environmental projects, including water purification/effluent treatment projects, flue gas de sulphurisation equipment, soil savers, and bio- diesel. In addition, the company offers infrastructure and real estate development services, such as roads and bridges, municipal solid waste management project, and granite projects. Further, it engages in programming memory cards and cryptographic cards; and domestic e-governance projects, as well as offers BPO, call center, financial accounting, financial BPOs, and back office services; agro-ERP solutions; and network infrastructure, network management, and applications in mobile and voice over Internet protocol. The company also provides project development and financial services. Zoom Developers Pvt. Ltd. was founded in 1991 and is based in Mumbai, India with additional offices in New Delhi, Indore, Kolkata, and Bangalore. The company has projects and operations in the United States, Canada, the United Arab Emirates, the United Kingdom, China, and Zimbabwe.

United Bank To Sell Zoom Assets
Dec 19 12
United Bank of India is planning to sell the assets it forfeited from Zoom Developers Pvt. Ltd. for recovery of loans exceeding IINR 30 billion, on behalf of 25 banks, a United Bank official told NewsWire18. The assets on sale include two properties in Mumbai, one in Raigad district, and five properties in Indore. The United Bank official said that the assets on sale have a reserve price of INR 738.8 million. United Bank also hopes to recover interest and other expenses from the sale of assets.

High Court Stays Order to Terminate Lease Deed Between Zoom Developers Pvt. Ltd. and Kerala Industrial Infrastructure Development Corp
Jul 19 12
The Kerala High Court has stayed an order to terminate the lease deed executed between Zoom Developers Pvt. Ltd. and the Kerala Industrial Infrastructure Development Corp. with regard to 40 acres of land in Thrikkakara north village. Justice T R Ramachandran Nair passed the order on a petition filed by Zoom Developers challenging the order. The petitioner submitted that Zoom was selected after evaluating tenders received from various entrepreneurs and was granted a lease for a period of 90 years. On October 27, 2006, a tripartite agreement was executed between the KINFRA, the petitioner and the State Bank of India, Overseas Branch, to enable the bank, to grant financial assistance against a security of first mortgage and charge on its lease hold rights. Later, the petitioner was informed that a decision was taken by the KINFRA to terminate the lease deed with effect from June 30, 2012, and the land shall be returned to KINFRA. The petitioner was also asked to remove all buildings and fixtures, within three months from the date of termination. Immediately on receipt of notice, the company submitted a detailed reply requesting to reconsider the matter, afresh. It was submitted that before issuing the termination notice, the petitioner was not given an opportunity to be heard. So the action of the KINFRA in terminating the lease deed, was without following the procedure prescribed as per tripartite agreement. A written request was submitted by the petitioner before the state government as well as the KINFRA seeking extension of time. However, no decision was taken, the petitioner submitted.
Courtesy:
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapid=29462033

Lenders like PNB mull winding up petition against ECGC in Zoom Developers case

MUMBAI: Sunk loans to Zoom Developers, a Mumbai-based engineering and construction company that bagged several overseas projects, could boil over into an unusual court battle between state-run institutions.

Even as banks try to salvage close to 2,600 crore, lead lender Punjab National Bank has obtained the consent of other banks in the consortium to move a winding up petition against Export Credit Guarantee Corporation of India (ECGC) - the 55-year-old financial institution that has insured a substantial part of banks' exposure to Zoom.

The public sector bank has taken legal opinion from law firm AZB on the matter.

The banking consortium may simultaneously file a performance obligation suit against ECGC, which has insured close to 1,900 crore of banks' credit.

Till now, ECGC has refused to pay the banks' claim on the ground that there have been irregularities and allegations of fraud that the Central Bureau of Investigation is examining.

"The banks will first send a legal notice. If no positive response is received, they will approach the court," a person familiar with the development told ET.

The banks, it is understood, had discussed the subject with the ministry of finance, which in turn had taken it up with the ministry of commerce and industry. The commerce ministry, which has administrative control over ECGC, recently referred the matter to the institution.

"We have no comments to offer on what you have stated. ECGC will initiate appropriate action as and when any situation arises," said ECGC Chairman N Shankar, responding to ET's email query.

In an earlier communication, the institution had spelt out to PNB the reasons why the claim could not be met. But banks - as many as 26 of them in the consortium - think they have enough ground to move court. The lenders are also upset that ECGC is reluctant to refund the premium paid to the institution for covering the exposure. If indeed ECGC has to pay the amount, the outgo would almost wipe out its net worth of around Rs 2,300 crore and force the government to infuse capital to keep it afloat.

Differences between state-owned entities rarely reach courts of law. But, such a possibility cannot be ruled out in a market where all institutions are under pressure to protect their books. All the more because the earlier mechanism of a high-powered committee of senior bureaucrats sorting out a dispute between two public sector organisations no longer exists.

Banks, which had sensed sometime in early 2009 that they could take a hit, have separately filed cases in the debt recovery tribunal to recover their money. The tribunal hearing is expected to begin in month or two.
Courtesy:
Sangita Mehta & Sugata Ghosh, ET Bureau Apr 29, 2013, 05.00AM IST
http://articles.economictimes.indiatimes.com/2013-04-29/news/38904790_1_zoom-developers-banks-consortium

Banks fail to recover Rs 2,700 crore from Zoom Developers

Attempts by banks to recover Rs 2,700 crore lent to Zoom Developers have failed with the state-owned Export Credit Guarantee Corporation (ECGC) rejecting the claim on the project development company, which has defaulted on bank loans and closed down operations.

A consortium of nearly 25 banks led by Punjab National Bank had lent the amount to the Mumbai-based company, which had bagged many projects overseas, particularly in Europe and the UAE. A major portion of the banks' exposure was in the form of bank guarantees for projects to be undertaken abroad.

The banks demanded the insurance cover from ECGC but rejected. "We rejected the insurance claim as it failed to meet the conditions. We had given cover only to part of the banks' exposure," a top official of ECGC said.

ECGC, which functions under the commerce ministry, seeks to improve the competitiveness of Indian exporters by giving them credit insurance at the lowest level premium.

"The overseas projects of Zoom never took off. The company then blamed the global financial crisis for its failure in executing projects. What one can't understand is that 25 banks lined up to provide Rs 2,700 crore to this little-known company," said a banking source.
George Mathew : Mumbai, Fri Oct 26 2012, 10:12 hrs
Courtesy:
http://www.indianexpress.com/news/banks-fail-to-recover-rs-2700-crore-from-zoom-developers/1022056/#sthash.DDLeJes3.dpuf

Banks to club loan cases against Zoom Developers

Move to accelerate legal action in NPA cases and save on cost
Lenders to the near-defunct Zoom Developers plan to club suits filed against the company to speed up legal action and save on costs. Over 25 lenders with loan exposure of over Rs 2,500 crore have filed separate suits in Debt Recovery Tribunals in Mumbai.

A senior public sector bank executive said it would be a time-consuming and costly exercise to pursue the matter separately when the issues and arguments were common.

Punjab National Bank is the lead banker for a lender’s consortium. Each lender will have to approach the tribunal, with request to consolidate cases filed over repayment of dues. Lenders expect to complete work (on clubbing) by the end of this financial year, he said. Entire activity is subject to verdict for the appellate body

The Central Bureau of Investigations has begun examining allegations of banking fraud in loans worth Rs 2,500 crore disbursed to Zoom Developers, a Mumbai-based project developer.

Many of Zoom’s projects, including process plants, industrial and engineering projects and energy, environment and infrastructure projects, were overseas, particularly in Europe and the United Arab Emirates. Banks had issued guarantees for Zoom which have been invoked.

A senior bank official said the group which had some projects in Europe was hit hard after global financial crisis in 2008. Its cash flows came under severe pressure as the system experienced liquidity squeeze.

It is doubtful asset (loan remaining non-performing assets for more than a year) in books of all lenders. They began to make provisions after classifying this account as non-perming assets in 2010-11.

The bank had taken insurance cover from Export Credit Guarantee Corp of India Ltd (ECGC) for Zoom exposure. Banks are also in negotiations with ECGC for their claims.
Courtesy:
Abhijit Lele  |  Mumbai  September 17, 2012 Last Updated at 00:41 IST
http://www.business-standard.com/article/companies/banks-to-club-loan-cases-against-zoom-developers-112091700040_1.html

ECGC rejects banks’ claims on Zoom Developers debt

Export Credit Guarantee Corporation of India (ECGC) on Tuesday stated that the insurance claims filed by banks that had provided guarantees to the beleaguered Zoom Developers did not meet the terms and conditions of the insurance contract, which led to ECGC rejecting the claim. Besides, there were certain lapses on the part of the banks in operating the Zoom account, the insurance company added.

A consortium of 26 banks led by state owned Punjab National Bank had given Rs 2,600 crore non-fund based facilities to Mumbai-based Zoom Developers, an engineering and construction firm which had bagged many projects overseas, particularly in Europe and the UAE.

ECGC had given an insurance cover to 26 banks for advance payment guarantees issued by these banks with a claim liability of Rs 1,251.01 crore. Zoom Developers had defaulted on the payments to the overseas beneficiaries who invoked the bank guarantees. The policy cover was issued in 2009 and was extended for another year.

N Shankar, chairman and managing director, ECGC in an earnings conference told reporters, “We have examined the claims of banks in the Zoom Developers case twice. The claims and representations of the banks were found inadmissible and stands rejected.”

Another senior official of ECGC added, “In operating the Zoom Account, we found non-compliance with the terms of the insurance policy besides there were certain lapses on the part of the bank in operating the Zoom account.”

According to media reports, lead lender Punjab National Bank has obtained the consent of other banks in the consortium to move a winding up petition against ECGC for rejecting their claims.

The senior official of ECGC added, “Winding up takes place where a company has taken a loan and defaulted. We have not taken a loan from anyone.”

Shanker said that the company has asked the government for a capital enhancement of Rs 5,000 crore. ECGC has a paid up capital of Rs 1000 crore after getting a capital infusion of Rs 100 crore in September 2012.

ECGC reported a marginal increase of 7.8 per cent in net profit to Rs 242.79 crore during 2012-13 compared to a net profit of Rs 225.21 crore in the previous year.

The total income (premium and investments) rose by 10.5 per cent to Rs 1,308.5 crore.
Courtesy:
By Falaknaaz Syed    May 15 2013 , Mumbai
http://www.mydigitalfc.com/companies/ecgc-rejects-banks%E2%80%99-claims-zoom-developers-debt-003

Zoom debt recast fails, recovery to start

The proposal to restructure the debt of Zoom Developers, the engineering procurement and construction company, has fallen through. Banks aren’t convinced of the company’s business model and feel only recasting the debt may not suffice.

SBI Caps was given a mandate to study its viability and to suggest a debt restructuring package. Lender banks have also declined to infuse fresh funds.

Zoom was admitted for corporate debt restructuring (CDR) last year but this process has been stopped. As a result, a consortium of 27 banks, with combined exposure of Rs 2,600 crore, will start trying to recover their loans. Punjab National Bank was the lead banker, with an exposure of Rs 450 crore, of which nearly Rs 300 crore was classfied by it as non-performing assets in the first quarter of 2010-11.

“We are not sure about the viability of the business model. So, restructuring the debt and giving more time to the company to repay may not yield the desired result,” said an official from one of the banks.

Most of its loans have been classified as non-performing and the required provisioning made.

Some banks said they were not confident about how much they could recover. Which would mean most of the amount has to be written off. For writing off a loan, banks need to make 100 per cent provisioning. Banks, however, can still recover from the written off accounts.

Zoom Developers is Mumbai-based, with projects mostly in countries abroad. It undertakes business and project development work, involving process plants, industrial and engineering projects, and energy, environment and infrastructure ones.

Once a company is admitted, as Zoom was last year, into the CDR mechanism, a proposal is worked on how to recast the debt, by giving more time to repay and also altering the interest rate. For approving a CDR proposal, 75 per cent of the lenders, both in amount and number, should agree.

The management of Zoom had asked for an additional Rs 2,000 crore from the banks. “Most of the banks declined, as they were uncertain of the company’s re-payment capacity,” said an executive from a public sector bank.
Courtesy:
Manojit Saha  |  Mumbai  April 6, 2011 Last Updated at 00:49 IST
http://www.business-standard.com/article/companies/zoom-debt-recast-fails-recovery-to-start-111040600111_1.html

CBI asks PNB to file FIR in Zoom case

Almost four months after initiating a probe into alleged fraud in loans to Zoom Developers, the Central Bureau of Investigation (CBI) has asked Punjab National Bank (PNB) to file a first information report (FIR) in the case.

In October 2010, CBI begun preliminary examination of charges of fraud in loans worth Rs 2,500 crore disbursed to the Mumbai-based project developer.

A senior PNB executive confirmed the development, but declined to elaborate, saying the bank would not speak about borrower-specific matters.

CBI had questioned banks on Zoom, which is already being treated as a non-performing account. Questions are also raised about the use of funds.

The Reserve Bank of India was also likely to get into the act since this was a case referred for debt restructuring, said a senior executive with another public sector bank.

PNB is the lead banker to Zoom Developers, with an exposure of Rs 450 crore, of which nearly Rs 300 crore has been considered non-performing assets by the bank in the first quarter of financial year 2011.
Courtesy:
BS Reporter  |  Mumbai  February 1, 2011 Last Updated at 01:11 IST
http://www.business-standard.com/article/finance/cbi-asks-pnb-to-file-fir-in-zoom-case-111020100076_1.html

Zoom to invest Rs 1,000cr to build SEZ at Indore

Mumbai-based Zoom Developers, engaged in diversified businesses including real estate, plans to invest Rs 1,000 crore in the next three years to construct a 100 hectare IT-ITeS special economic zone (SEZ) at Indore, Madhya Pradesh. The company got a nod for the SEZ from the board of approval (BoA) last week.

"We are planning to invest Rs 1,000 crore to develop a 250-acre multi-services SEZ including IT and ITeS at Indore," Rumneek Bawa, president and CEO, Zoom Developers told PTI.

The planned investment, which excludes the cost of land, would largely be met through debt, he said, adding that the SEZ was expected to be notified in the next two months.

Bawa said the company already has the ownership as well as possession of the land where SEZ would be developed.

A further investment of Rs 1,500 crore is expected from units who propose to establish operations in the SEZ, he added.

The company estimates an export turnover of one billion dollars over a period of five years after the development and full occupation of the zone, Bawa said.

Zoom would develop about two million square feet of ready-built infrastructure in the SEZ.

The company has 200 acres of additional land near the SEZ where it would develop an integrated township. The state government has approved the township project.
Courtesy:
Press Trust of India  |  New Delhi  June 25, 2007 Last Updated at 16:11 IST
http://www.business-standard.com/article/companies/zoom-to-invest-rs-1-000cr-to-build-sez-at-indore-107062500035_1.html

पांच बैंकों को ९६६ करोड़ का 'जूम' का झटका

इंदौर: सीबीआई की अनुशंसा पर प्रवर्तन निदेशालय ने जिस जूम डेवलपर्स प्रालि के खिलाफ इन्फोर्समेंट केस इन्फॉर्मेशन रिपोर्ट (ईसीआईआर)  दर्ज की है उसने २००७-०८ की वैश्विक मंदी की आड़ में भारत की पांच बैंकों को ९६६ करोड़ रुपए का चूना लगाया है।

जांचकर्ता अधिकारियों की मानें तो जूम के संचालक विजय चौधरी ने विदेश में अलग-अलग परियोजनाओं के नाम पर बैंक गांरंटी ली। बाद में गारंटी इनकैश कराई और खुद को दिवालिया साबित कर कर्ज अदायगी के नाम पर हाथ खड़े कर दिए, जबकि बाद में इसी रकम को अलग-अलग फर्मों के नाम से निवेश कर दिया।

सीबीआई ने जो दस्तावेज ईडी को सौंपे हैं, उनके मुताबिक जूम ने २००४ से २००९ के बीच यूरोप और यूएई में अलग-अलग विकास परियोजनाओं के नाम पर बैंक गारंटी के लिए अप्लाय किया। बताया गया कि विदेश में काम मिला है। ७० प्रतिशत राशि का भुगतान होगा पर उससे पहले काम शुरू करने के लिए ३० प्रतिशत राशि की बैंक गारंटी चाहिए। कुल २५ बैंकों के कंसोर्टियम ने राशि मंजूर कर दी। इसी बीच २००८-०९ में मंदी छाई रही जिसकी आड़ लेकर कंपनी ने स्वयं को दिवालिया घोषित कर दिया।

जांचकर्ताओं की मानें तो सच्चाई यह है कि परियोजनाओं के नाम पर बैंक गारंटी ली गई लेकिन बिना काम किए विदेशी वित्तीय संस्थानों की मदद से बैंक गारंटी इनकैश कर ली। बाद में यही राशि उन्हीं देशों में निवेश कर दी गई। इसका खुलासा बैंकों की संयुक्त शिकायत पर २०११ में दिल्ली में जूम डेवलपर्स के खिलाफ मुकदमा कायम करने के बाद सीबीआई द्वारा की गई छानबीन में हुआ। सीबीआई जल्द ही चालान पेश करेगी।

इन बैंकों को लगाई चपत
* यूनाइटेड इंडिया बैंक
* पंजाब एंड सिंध बैंक
* कर्नाटक बैंक
* इलाहाबाद बैंक
* सेंट्रल बैंक आफ इंडिया
* देना बैंक
* यूनियन बैंक आफ इंडिया
* आंध्रा बैंक
* सिंडिकेट बैंक
* बैंक आफ बड़ौदा
* इंडियन ओवरसीज बैंक
* कॉरपोरेशन बैंक
* इंडियन बैंक
* विजया बैंक
* पटियाला बैंक
* स्टेट बैंक आफ बीकानेर एंड जयपुर
* ओरियंटल बैंक आफ कॉमर्स
* यूको बैंक
* स्टेट बैंक आफ हैदराबाद
* कैनरा बैंक
* पंजाब नैशनल बैंक
* स्टेट बैंक आफ त्रावणकोर
* तमिलनाडु मर्केंटाइल बैंक लिमिटेड
* फेडरल बैंक
* स्टेट बैंक आफ इंडिया।

सीबीआई को इन बैंकों ने की शिकायत
पंजाब नैशनल बैंक                ४०९ करोड़
यूनियन बैंक आॅफ इंडिया           २३० करोड़
यूनाइटेड इंडिया बैंक               १६७ करोड़
सिंडिकेट बैंक                     ८३ करोड़
कैनरा बैंक                       ७७ करोड़

२०११ में जारी की नॉन प्रोडक्टिव असेट्स
पीएनबी                         ३०० करोड़
इंडियन बैंक                      १२० करोड़
सेंट्रल बैंक                        १०० करोड़
यूनियन बैंक                      ५० करोड़
देना बैंक                         ५६ करोड़
बैंक आॅफ बड़ौदा                   ३६ करोड़
फेडरल बैंक                         १७ करोड़
(पंजाब नैशनल बैंक ने ४५० करोड़ में से ३०० करोड़ रुपए एनपीए घोषित किया था, जो कि वित्तीय वर्ष २०१०-११ के कुल एनपीए राशि का ८ प्रतिशत था। बैंकें मान चुकी थीं कि अब पैसा मिलना ही नहीं है।)
साभार:
विनोद शर्मा
Posted On:Saturday 7/09/2013
http://dabangdunia.co/news.php?newsid=5cdfae39d5b91e33b1d7422ebdcd6437#.UjyWfVONCSo

HSBC Whistleblower Speaks, Uncovered Terrorist Financing

We are posting a news from Daily Paul Liberty Forum Submitted by kevink on Wed, 09/18/2013 - 19:56

URL
http://youtu.be/QRYEFEJRw44

Stop Public Loot : NBFC norms due to global action: RBI

Mumbai: The Reserve Bank of India (RBI) has indicated that its new norms on nonbanking finance companies (NBFCs) have been developed under pressure from association of regulators worldwide and part of a concerted global move to reign in ‘shadow’ banking activities. The regulator, however, clarified that small NBFCs that fail to receive a registration can continue to be in business and avail bank finance.

“This is part of an international agenda and all responsible countries have to abide,” said Anand Sinha, deputy governor, RBI, said on Monday while addressing NBFC representatives in a meeting organized by the Finance Industry Development Council at the Indian Merchants Chamber here. Stating that RBI has to align with what is happening internationally, Sinha said that after the global financial crisis of 2008 the focus has been on institutions that engage in ‘shadow’ banking — financial entities that conduct banking like functions but do not have a banking licence. “Banks are being subject to very restrictive regulations. If regulations for banks are tightened, risks will flow to lightly regulated entities,” said Sinha.

Representatives of the finance industry, however, said that the move by RBI to increase capital requirement and tighten bad loan norms for finance companies would force several companies out of business.

“If it is the intention of the RBI to remove regulatory arbitrage, then it should remove the arbitrage on both sides of the balance sheet,” said T T Srinivasaraghavan, MD, Sundaram Finance. According to Srinivasaraghavan, finance companies have to hold higher capital than banks even if the assets held by them are of identical quality. Also, banks get tax breaks on bad loans which finance companies do not, he said.
Courtesy:
TIMES NEWS NETWORK
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/01/08&PageLabel=20&EntityId=Ar02002&ViewMode=HTML