Published On : Fri, Jun 22nd, 2018

Indian Banks’ Association Condemn Arrest of Top Bankers by Investigative Agencies

Indian Banks’ Association (IBA), the umbrella body of banks, has criticized the way investigative agencies have been handling top officials of public sector banks on account of rising bad loans. To discuss the issue the bank body has called a meeting on Friday in Mumbai on the arrest of top bank officials.

VG Kannan, IBA CEO, was quoted as saying, “To slap a criminal case against bankers for sanctioning loans is silly. We have already taken up the matter with the department of financial services in Delhi and the Maharashtra government here. Both claim ignorance about why these arrests happened and have promised all cooperation. We plan to meet on Friday and decide what to do next.”

There has been a spate of high profile arrest recently in the wake of loans given to companies without following due diligence process. For example, Yogesh Agarwal was arrested last year in January in connection with a Vijay Mallya loan default case. Punjab National Bank former CEO Usha Ananthasubramanian, United Bank of India former chairman Archana Bhargava and Canara Bank former chairman RK Dubey have also been booked by investigative agencies under fraud cases.

Bank officials reportedly have complained that government is treating public sector banks very harshly and putting them in the bad light even in cases where due diligence process was followed.

The recent top official to be arrested is Ravindra Marathe, managing director and chief executive officer of Bank of Maharashtra, by the Economic Offences Wing (EoW) of Pune police for allegedly clearing loans to real estate developer DSK by misusing his powers.

In its clarification, the bank said in a statement, “The bank has declared DSK Developers and its promoters as wilful defaulters… Recovery process like SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) action has already been initiated by the bank and some of the properties are due for auction.”

The bank said that loans were sanctioned to DSKDL as per the bank’s lending norms. It also said that outstanding loan to DSK Developers is just about Rs 94.52 crore, which it claims is secured by collateral securities given. Bankers have condemned the arrest for such such small amount considering they sanction a hundred crores of loan daily.

As per the charge-sheet, the scam of Rs 2,043.18 crore has been committed.

The EOW said in a statement, “Bank officers colluded with DSKDL by misusing their power and authority with dishonest and fraudulent intention,”