BCCI case: BoI making Rs 380 crore provision

BoI insiders, however, say the bank will take the Rs 380 crore hit on its balance sheet as the auditors have insisted on making full provisioning for the huge compensation. BoI had posted a net profit of Rs 851 crore in the fiscal 2002-03. The provisioning for BCCI compensation will result in a sharp fall in profits.

In his February 2004 ruling, the judge said Bank of India8217;s London manager K L Samant knew that BCCI8217;s deposits with the bank were being used to defraud BCCI creditors and that the bank must bear responsibility for the manager8217;s actions.

BCCI collapsed in 1991, owing 16 billion in the world8217;s biggest banking fraud. It was later discovered the lender had disguised losses and was insolvent.

At the hearing, BoI denied knowledge of the development but Judge Nicholas Patten awarded damages of 43.2 million to the liquidator Deloitte, which, along with an interest of 39 million has resulted in the compensation taking the total to a little over 82 million. In the financial year 2004-05, the bank is targeting to increase its retail loans from the current 30 per cent to 60 per cent.