I got this from twitter link . The raid is related to repco bank . It probably would be better to wait for clarification from management .
When a property is put on auction sale by some lending institution they have to follow certain governing laws and in this case it was SARFAESI and I didn’t find them following the same in letters and spirit and found many irregularities.
Generally a date is fixed for the inspection of the property on auction by the prospective bidders and in this case despite many calls the RHFL folks were not keen on the same. When I called them on the day of auction to know if the property in question is sold or not, they told me that auction is postponed by two days. Now, this can’t be done as in case of a failed auction, as was the case here, they would need to re-auction the property again by following the due procedure like paper publications, inspection etc.
I got a call from them regarding the inspection two days after this failed auction and I got to inspect the property which was against the rules, the guys from RHFL including a branch manager seemed very young and inexperienced who didn’t seem to have a damn clue about SARFAESI, the property in question was not really worth and they had to recover 4x the reserved price of the property. They also seemed to have sold one property in direct transaction without conducting proper public auction against rules and they seemed quite non transparent in their dealings.
All in all, I didn’t get the right feelings regarding culture and various checks and balances that a lending institutions should have and therefore, I’m not surprised by recent developments as it’s only when the tide goes that we know who’s been swimming naked.
This is my experience and could well be one off so members are advised to take it with a pinch of salt.
Very interesting to see so many negative views coming up now on this board. This phenomenon (not related to valuepickr but in general) is not uncommon.
I would like to reiterate what’s already said but because of flood of posts it is pushed under the rubble
1- My understanding is R. Vardarajan is no more directly associated with Repco Bank. He was associated with the bank earlier starting 2010 but the Repco Babk website does not have his name anymore in directors or key management.
2- The issue being talked about here is more likely related to Repco Bank when he was at the helm of the Bank.
3- At this point of time there is absolutely no reason for us to believe that there is any scam or financial irregularity related to RHFL. None of the posts mention it. I was shocked to read the tweet from the gentleman who posted last night ‘huge scam’. Not sure how did he conclude that.
4-We have plenty of examples behind us about IT department raids and CBI raids. Let us take time to read what ended up happening finally in most of these cases.
5- Let us wait for more clarity to emerge. I do think an announcement from RHFL would come out soon.
I am invested in RHFL and my views may be biased.
Good point. One must understand the fact that Repco housing finance is a structural story. The organization does not depend on one individual. Case in point is the LIC housing incident in 2010. A few individuals at the top level where incriminated.this does not equate to a scam. No structural defects where found. There was no impact on the balance sheet.
Have a look at how it performed after that…
one from Business Standard which has the (unofficial) company explanation -
CBI conducts search in Repco Home Finance premises
BS Reporter | Chennai Oct 09, 2016 01:40 PM IST
CBI-conducts search in the residences and offices of various senior officials of Repco Home Finance Ltd, including its managing director, on allegedly favouring some customers with waiver of certain charges.
According to sources, the raids were conducted related to a case filed against the senior officials alleging that they have favoured a Coimbatore-based customer by waiving off some charges.
Sources from the company said that the issue is related to a Rs 6 crore loan taken by Coimbatore-based Divya Agency, which has closed the loan in advance, said sources. While earlier there was pre-payment charges applicable, the company did not levy the charge.
National Housing Bank had issued a rule in 2014, that a company should not collect pre-payment charges on advanced loan closure. The processing fees are also waived off if the loan is availed through special schemes and this has also been part of the case.
Company sources, on condition of anonymity, said that the processes are according to the regulations and the particular loan has been fully closed without any outstanding.
PSUs perform as directed from the men from top.
In Pre Modi era we had dacoits masquerading as ministers and bureaucrats took full advantage of it.
There is no whiff of scam in central govt atleast ever since Modi came. Those who still dare to indulge in bribes are caught and commit suicides.See the case of that hugely corrupt Bansal at MCA. Bank of Maharashtra CMD was forced to retire 4 days before retirement.Syndicate Bank CMD was caught red handed.
On the other hand see the performance of PSUs like OMCs,IOC,HPCL ,BPCL,REC.NHPC,PGCIL,SJVN ,
MOIL etc inspite of being in a cyclical sector.Their performance has improved dramatically. .Now we have top notch honest performing CMDs and ministers at top. Even corrupt secy level IAS officers and bank CMDs are raided and arrested which is unprecedented in history of India.See the case of GS Sandhu ex DFS secy who is in jail since long after retirement and that hugely corrupt Archana Bharagava ex ED canara Bank and CMD United bank,
Things should only improve from here at PSUs specially central govt controlled one.Cleaning up is on. Lets look at other side as well for PSUs.
If BS is right and complete, whole issue revolves around non-collection of pre-payment charges from a customer on fore-closed loan of 6cr.
As per the following NB circular sep-2014:
The waiver of foreclosure charges is for all individual borrowers. Its not applicable to non-individual borrowers like firms, companies.
So the question is whether the customer involved here is an individual borrower or not.
All in all, seems a trivial issue here on known information until now. What is not clear or may be missing information why CBI got involved here.
those of you who are shareholders should write to the company / Investor relations to issue a formal clarification ASAP so that people dont get affected on monday
If business-standard report is correct then matter is trivial related to compliance to procedure. If so, why CBI got involved? Based on involvement of CBI, I feel that the report from Business-standard is not giving us full story. As for person tweeting “huge scam”, he seems to have jumped the gun without verifying the facts. It shows how intensely biased an investor can get, if story does not pan out as per his liking.
Pretty sure the company will automatically come out with a clarification over the next 1-2 days as we’ve seen many such alerts recently for other companies along the lines of - “NSE/BSE seeking clarification/explanation of company featuring in so and so TV news / newspaper”
If the company hasn’t done anything wrong - why do we shareholders need an immediate explanation? Which shareholders are getting affected here - speculators selling on unconfirmed reports and news or those not having the ability to see MTM losses?
But I do agree with you on taking that guy on and getting him booked for price manipulation if news is just a false alarm and stock tanks!!
Its a Recpo bank related case of a 2013 waive off. But officials are part of current RHFL. Looks like two pre closure loans charges worth 24.31 Lakhs + 22.64 Lakhs are waived off by officials.
Thanks, I have said before this could be the case regarding Repco Bank. The size of loans are so small that it is difficult to make a scam in RHFL. Now there is a difficult part. It seems that the current management made a concession to the borrower for the full payment perhaps due to fear of turning this account into an NPA and could be part of the settlement. If you use discretion, you will be called corrupt and if you allow the loan to remain NPA and follow full procedure like an ideal govt. employee, you will be called inefficient/bureaucratic.
I think even if this was a deliberate move on the part of erstwhile management, it should have no bearing on RHFL apart from sentimental reactions. Those who know how CBI works will tell you that this case is about getting their pound of flesh due to alleged illegality. Listed companies absolutely fear loss of reputation and that is what being threatened here.
companies performance always overshadows individuals. example in case if canfin home where after the recent CEO change, investor thought growth will come down. but no change and growth continues and stock has moved up another 40% from 1300 to 1700.
Similarly this whole issue doesnt talk anything wrongly abour repco home- loan pratices or NPA. its about one individual who if found guiltly can be replaced by board of company.
dont see any reason for change in view on company unless its fundamental change.
few fundamentals of company:
- cost of funding expected to go down
- govt housing for all now working with subsidies being received by company. check govt data to see and realise demand in low cost housing could really shoot up
These social media does more damage (easy to spread fear but no accountability &responsibility) for retail investors. Anyone can inflate small news into big scam kind of image and retail investors get panicked. SEBI has to come up with more stringent code to include “rumors” “creating unnecessary panic” as well. There are some vested interest by doing such activity.
Sebi plans new system to crawl social media, websites
The Exchange has sought clarification from Repco Home Finance Ltd on October 4, 2016, with reference to news flashed on www.dnaindia.com dated October 9, 2016 stating “CBI files case against Repco Housing chief, conducts raid”
The reply is awaited.
asked clarification on on 4th Oct? Interesting.
Looks like a typo. Cannot ask for a clarification for news that appeared on October 9 on October 4…LOL
Bought today at 760 levels
Disc: No Interest. Just tracking developments.
So company is claiming that they have no such information except for press report. Interesting. Speaks a lot about internal communication and control structure
Ridiculous clarification from Repco. It shows that they want to cover up than coming up clean. Management quality is very important. If that is not guaranteed, it is a big risk.
Why would CBI get involved if it is just a one time petty waiver?
Disclosure: No holdings.