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| Photo Credit: Reuters

FILE PHOTO: People move past a branch office of State Bank of India (SBI) in Mumbai, India, April 18, 2023. REUTERS/Niharika Kulkarni/File Photo/File Photo
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State Bank of India core net interest income rose nearly 15% to ₹46,992 crore on the back of a 18.63% increase in gross advances, while the domestic net interest margin contracted to 3%. File
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Bengaluru:

The Karnataka government has paused its order suspending all transactions with the Central government-run State Bank of India (SBI) and Punjab National Bank (PNB) just three days after it was issued, stating that the banks have sought some time to resolve the issues. The order has been paused for 15 days.

On Wednesday, the Karnataka government had directed all state departments to close their accounts with these banks and recover their deposits immediately.

“Accounts held in the State Bank of India and Punjab National Bank by state government departments, public enterprises, corporations, local bodies, universities, and other institutions must be terminated forthwith. Additionally, no further deposits or investments are to be made in these banks,” the order had said.

The state’s finance department had referred to an alleged fraud involving funds of the Karnataka Industrial Area Development Board. It has been alleged that money had been siphoned off with the involvement of bank officials from accounts in the Punjab National Bank. The government said the case has been pending in courts and several crores have still not been refunded. 

Similarly, the Karnataka State Pollution Control Board had deposited money with SBI bank, which was allegedly adjusted along with a loan for a private company using forged documents in 2013. This case is also pending in court. 

Issuing a statement on Friday, the government said its earlier directive had been paused because of requests made by both banks. 

“This (Wednesday’s) action was taken in response to the alleged fraud in the bank branches, which resulted in the non-repayment of fixed deposits made by the Karnataka State Pollution Control Board (KSPCB) and the Karnataka Industrial Area Development Board (KIADB). Despite prolonged correspondence and meetings, these issues remained unresolved since 2012-13,” the statement said. 

“On August 16, 2024, both banks submitted written representations to the government, requesting a 15-day period to resolve the matter. The same day, senior bank officials met with higher officials of the Finance Department and reiterated their request. After considering the banks’ requests, the Honourable Chief Minister has directed officials of the Finance Department to keep the circular in abeyance for 15 days. This will allow the banks sufficient time to address the issues and redress the concerns of the government,” it said. 

Money Transfer ‘Scam’

The order comes against the backdrop of a political slugfest between the Congress-ruled Karnataka government and the opposition BJP over the alleged money transfer scam involving the state-run Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd. The alleged scam had been revealed after the corporation’s accounts superintendent, Chandrashekhar P, died by suicide on May 26 and left a note behind.

The note claimed that Rs 187 crore belonging to the corporation was transferred without authorisation and Rs 88.62 crore out of the total amount was then moved to other accounts, including those belonging to IT companies as well as a cooperative bank based in Hyderabad. 

SBI posted a net profit of ₹16,884 crore in the April-June quarter of 2023-24. File
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State Bank of India (SBI) on August 3 reported an almost flat standalone net profit at ₹17,035 crore for the first quarter of the current financial year.

The country’s biggest lender had posted a net profit of ₹16,884 crore in the April-June quarter of 2023-24.

“The bank’s total income increased to ₹1,22,688 crore in the first quarter against ₹1,08,039 crore a year ago,” SBI said in a regulatory filing.

During the quarter, the bank earned an interest income of ₹1,11,526 crore compared to ₹95,975 crore in the year-ago period.

The bank’s gross non-performing assets (NPA) of the total advances declined to 2.21% in the first quarter from 2.76% at June-end last year.

Similarly, its net NPAs also eased to 0.57% in June 2024 from 0.71 % a year ago. On a consolidated basis, SBI’s net profit rose marginally to ₹19,325 crore against ₹18,537 crore in the same quarter of the previous fiscal.

At the same time, its total income increased to ₹1,52,125 crore compared to ₹1,32,333 crore in the corresponding period of the preceding financial year.

Besides approving the results, the board also cleared proposals for raising funds in Rupee or dollar by issuing Basel III compliant additional Tier 1 bonds and Tier 2 bonds of up to ₹25,000 crore to domestic and/or overseas investors during FY25.

“The fundraising would be subject to the approval of the Central government, wherever required,” the lender said.

State Bank of India (SBI) said it had raised ₹10,000 crore at a coupon rate of 7.36% through its fifth infrastructure bond issuance.

“The issue attracted overwhelming response from investors with bids in excess of ₹19,884 crore and was oversubscribed by around four times against the base issue size of ₹5,000 crore,” the bank said in a statement.

“The total number of bids received was 143 indicating wider participation with heterogeneity of bids. The investors were across provident funds, pension funds, insurance companies, mutual funds and corporates,” it added. 

The proceeds of bonds will be utilised in enhancing long-term resources for funding infrastructure and affordable housing segment.

“Based on the response, the bank has decided to accept ₹10,000 crore at a coupon rate of 7.36% payable annually. This represents a spread of 21 bps over the corresponding FBIL G-Sec par curve,” SBI said. 

With the current issuance, the total outstanding Long-Term Bonds issued by the Bank is at ₹49,718 crore.

SBI Chairman Dinesh Khara said that this issuance would help in developing a long-term bond curve and encourage other banks to issue bonds of longer tenor.

Twelve of the 20 new companies which bought electoral bonds were from Hyderabad.
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Despite companies in existence for less than three years not being allowed to make political contributions — even through the electoral bonds route — data shows that at least 20 such newly incorporated firms purchased poll bonds worth about ₹103 crore (Table 1).

At the time when they purchased their first electoral bonds, five of these firms were in existence for less than a year, seven of them were a year old and the eight others had only completed two years. Notably, many of these firms were started in 2019 when the Indian economy went through recession or during the middle of the pandemic and bought electoral bonds worth crores of rupees just months after incorporation.

Also read: Electoral bonds data | Full list of donors and recipient political parties

The ban on companies making political contributions within three years from incorporation has been in existence for nearly four decades. In 1985, the Parliament amended Section 293A, lifting the ban on political contributions by firms subject to a few conditions. One of the conditions was that the firms should not be owned by the government and should not be less than three years old. This clause was retained under Section 182 of the Companies Act, 2013. When Section 154 of the Finance Act, 2017, amended Section 182, just before the introduction of electoral bonds, this clause was again retained. However, the amendment deleted the first proviso by which the amount donated by a company was capped at 7.5% of its average net profit during its previous three financial years. The prohibition on companies making donations to political parties in their first three years continued. According to Section 182 of the Companies Act 2013, if a firm makes a donation in contravention to the provisions, “the company shall be punishable with fine which may extend to five times the amount so contributed and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed”.

Table 1 | The table shows the names of the 20 firms which purchased the electoral bonds (EBs), within three years of their incorporation. The date of incorporation of these companies, the date on which they purchased their first poll bond, the difference between the two dates along with the total worth of bonds purchased by these firms is mentioned in the table. 

Table appears incomplete? Click to remove AMP mode

Also read: Electoral bonds data | 55 firms’ purchase exceeded 7.5% cap in 2022-24, lion’s share went to BJP

12 of these 20 companies were headquartered in Hyderabad (Table 2). Together these 12 companies donated ₹37.5 crores, and close to 75% of which was encashed by the BRS, with the rest divided among the TDP, the Congress and the BJP. Two companies in Hyderabad — Tsharks Infra Developers Private Limited and Tsharks Overseas Education Consultancy Private Limited — both incorporated in 2023 — purchased ₹7.5 crore worth of bonds within months of getting incorporated and donated it to the BRS. Among the rest, HH Iron and Steel Private Limited, headquartered in Coimbatore, gave ₹15 crores to the BJP and five crores to the BJD. Their first electoral bond purchase was done just days short of turning three years old. Askus Logistics Private Limited, incorporated in November 2021, bought its first electoral bond within 1.5 years of its incorporation and donated ₹22 crores. This was encashed by the DMK, AITC and the RJD. Besseggen Infotech LLP, incorporated in May 2018, bought bonds worth ₹11.5 crores, with their first purchase done two years and ten months into their existence.

Table 2 | The table shows the city-wise split of the 20 companies.

Table 3 | The table shows the party-wise split of the encashments of the EBs purchased by the 20 companies.

Electoral bonds data | New firms bought crores of electoral bonds within months of formation

The three-year rule was retained to prevent shell companies from making political contributions. When the first proviso, which prescribed the 7.5% cap, was removed in 2017, the Election Commission of India had warned that this may lead to the use of “black money through shell companies”. The RBI had also flagged the possibility of firms misusing bearer bonds for money laundering.

The list of 20 firms is not exhaustive as it does not include the firms which were newly incorporated after mergers and amalgamations. The list also does not include firms that are not in the MCA

With inputs from Rebecca Rose Varghese

Watch our Data video:Electoral bonds banned: Which party benefitted the most while it existed?

New Delhi:

After being rapped by the Supreme Court, the State Bank of India has submitted all the details on electoral bonds to the Election Commission. The data includes the all-important unique numbers for the bonds, which will help match the donors with the political parties that were the recipients. 

The SBI submitted an affidavit of compliance to the Supreme Court on Thursday. One of the points of the affidavit reads, “It is respectfully submitted that SBI has now disclosed all details and that no details [other than complete account numbers & KYC details] have been withheld from disclosure.” 

The details given by the bank are expected to be uploaded by the Election Commission on its website shortly. 

The SBI had earlier given two lists to the Election Commission, which were released by the poll panel on its website on March 14. The first had the names of the donors, the denominations of the bonds, and the dates on which they were purchased. The other had names of the political parties as well as the denominations of the bonds and the dates on which they were encashed.

Without the unique numbers, however, there was no way of linking the lists and finding out which donor had given money to which party. 

New Delhi:

A journalist who had questioned the authenticity of the data shared by the State Bank of India (SBI) on electoral bonds has admitted that she was mistaken. Poonam Agarwal had, in a series of tweets, claimed that she bought electoral bonds only in 2018, but the data released showed she had purchased a bond in 2020. But yesterday, the journalist said she may have forgotten about the bonds she bought in 2020 as it was the year of the Covid pandemic.

“I have come across a video that I recorded at The Quint in which I am showing an Electoral Bond dated 20/10/2020. I don’t remember purchasing a bond in 2020 but only in 2018. A unique number will clear many doubts. Till then let’s not question SBI data,” Poonam Agarwal said in a post on X (formerly Twitter).

“One can blame it on my poor memory. 2020 was COVID outbreak year, many things were happening. Maybe that’s why I don’t remember it. My apologies for my poor memory,” she added.

One can blame it on my poor memory. 2020 was COVID outbreak year, many things were happening. Maybe that’s why I don’t remember it. My apologies for my poor memory.

— Poonam Agarwal (@poonamjourno) March 18, 2024

The electoral bonds scheme, introduced by the BJP government in 2018, allowed individuals and businesses to donate anonymously to political parties. The Supreme Court struck down in January and directed SBI to share all details on the donations made in the last 5 years.

When the SBI shared the first set of data, there were concerns raised as it did not contain electoral bond numbers which would have helped link donations to political parties.

Regarding this data, independent journalist Poonam Aggarwal then claimed that the purchase of bonds in her name had been shown from the wrong date. Poonam said that the data is incorrect because she had purchased two bonds worth Rs 1,000 each in April 2018, whereas the data available on the Election Commission website shows the same purchase in her name in October 2020.

I bought 2 #ElectoralBonds of Rs 1,000 each in April 2018. But the data shows my name as a purchaser of dated 20 Oct 2020. Is this an error, inaccuracy or my namesake purchased the bond. It will be a big coincidence.
A unique hidden no. in d data would’ve cleared doubts. pic.twitter.com/tgwke2MEIj

— Poonam Agarwal (@poonamjourno) March 17, 2024

But after her video showing the 2020 bonds went viral, she issued a clarification saying that the SBI data shouldn’t be questioned.

According to the data released by the Election Commission of India, the BJP received the maximum funds through these bonds (Rs 6,986.5 crore) since the scheme was implemented in 2018. Trinamool Congress was a distant second (Rs 1,397 crore) and Congress ranked third (Rs 1,334 crore).