Financial Daily from THE HINDU group of publications
Wednesday, Oct 13, 2004
Financial Daily from THE HINDU group of publications Wednesday, Oct 13, 2004 |
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Money & Banking
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Economic Offences United Bank not to review Benz Auto account Santanu Sanyal
Kolkata , Oct. 12 UNITED Bank of India has no plans to review the Kerala-based Benz Automobiles Ltd account. "The decision to advance Rs 42 crore of loan to Benz Automobiles is based on sound commercial consideration and, therefore, the question of review does not arise at all," according to a senior official of the bank. "We've strictly followed all the guidelines while advancing the loan to the firm," the spokesman said. He made it clear that the bank had not received anything either from the RBI or the Finance Ministry in this regard. The Central Bureau of Investigation on Monday raided the house and office of the CMD of UBI, Mr Parkash Singh, and registered a case against him for his alleged acceptance of bribe from Benz Automobiles. Mr Singh is now in a local nursing home. "We've not done anything wrong within the bank in the matter of advancing the loan to Benz Automobiles. Whatever happens outside the bank is not our concern," the spokesman said. "The bank functions normally as before," he said, pointing out that the board meeting of the bank was held as usual on Monday and, in the absence of the CMD, the Executive Director, Mr K.N. Prithviraj, presided over. On Tuesday, the managing committee of the board of directors also held its meeting and conducted business as usual. At its meeting on September 27 last, the board of directors of UBI sanctioned a loan of Rs 42 crore to Benz Automobiles, a leading dealer of light commercial vehicles manufactured by Tata Motors and automobile spare parts in Kerala. It has more than a dozen branches all over the State. Of the loan sanctioned, cash credit amounted to Rs 31 crore, Rs 10 crore as long-term loan and Rs 1 crore by way of non-fund based bank guarantee. The bank also took care of the firm's Rs 7.67 crore of outstandings with Federal Bank. Benz Automobiles, on the other hand, offered securities and collaterals worth Rs 53 crore. The account was earlier handled by Federal Bank. As the business of Benz Automobiles grew, it wanted higher exposure. But Federal Bank being a small private bank had difficulties in offering higher exposure. UBI, a larger bank in pursuit of expanding operations, did not have any problem in sanctioning the loan amount required by the firm. The bank also offered a lower rate of interest - 11 per cent compared to 12.5 per cent charged by Federal Bank. In 2002-03, Benz Automobiles posted a profit after tax (PAT) of Rs 25 lakh on a turnover of Rs 216 crore. In 2003-04, it posted a PAT of Rs 47 lakh on a turnover of Rs 177 crore. The turnover for the current year is projected at Rs 244 crore and PAT at Rs 2.84 lakh.
More Stories on : Economic Offences | Automobiles
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