The banking sector's bad loan problem as well as the recent instances of bank frauds has seen the investigative agencies unleash a spate of high profile arrests. Just two days ago, the Economic Offences Wing of the Pune Police arrested Bank of Maharashtra CEO and MD Ravindra Marathe along with five other bank officials for their alleged involvement in the Rs 3,000 crore DSK Group loan default case. The bank's Zonal Manager Nityanand Deshpande, Executive Director Rajendra K Gupta and former CMD Sushil Muhnot are among the arrested.
According to The Economic Times, the Indian Banks' Association (IBA) has not only condemned this crackdown on bankers but has also called an emergency meeting on Friday in Mumbai to discuss the alleged high-handedness of the investigative agencies. "To slap a criminal case against bankers for sanctioning loans is silly," VG Kannan, IBA CEO and former State Bank of India official, told the daily. "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," Kannan added.
The arrest of former Chairman-cum-Managing Director of IDBI Bank, Yogesh Agarwal, set this particular ball rolling. The CBI had arrested him along with three other bank officials for having shown "undue favours" to the now-defunct Kingfisher Airlines owned by Vijay Mallya and sanctioning loans worth over Rs 1,000 crore.
The report added that former Canara Bank chairman RK Dubey, former Punjab National Bank CEO Usha Ananthasubramanian and former IDBI executives Kishor Kharat, Melwyn Rego and MS Raghavan are all facing charges. In March, the CBI also booked former Chairman and Managing Director of United Bank of India Archana Bhargava for amassing assets worth over Rs 3.6 crore allegedly disproportionate to her known sources of income.
Marathe's arrest, in particular, has raised hackles because the Bank of Maharashtra had reportedly already kick-started the recovery process on the DSK Group loan. "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 in a statement, adding, "The bank has also declared DSK Developers and its promoters as wilful defaulters."
The EOW has accused the bank's officials of colluding with the DS Kulkarni Group by entering fraudulent transactions and sanctioning loans that were later siphoned off. DS Kulkarni, the Pune-based realtor and the owner of DSK Group, was arrested earlier this year in February along with his wife Hemanti. Charges levelled against him included swindling Rs 1,154 crore from over 4,000 investors Rs 470 crore from homebuyers, along with siphoning loan funds worth Rs 2,892 crore.
"It looks like a conspiracy to show public sector bankers in a bad light and in that way promote private sector banks. We have always seen even regulators treating private sector banks with kid gloves while wielding all the powers on us public sector banks. This has now gone so far that even investigative agencies are taking us for granted," a senior official at one of the public sector banks told the daily. Another pointed out that "at this rate no banker would be willing to give loans" adding that "there is a witch hunt on".
With PTI inputs