Bank of Maharashtra arrests: IBA set to move govt

After an emergency meeting of the IBA, the apex body of commercial banks, Kannan said, “The entire banking community is with the BoM management and the IBA has decided to approach the highest authority.” “We feel that the arrest of BoM officials is unwarranted and unfortunate, and has left the entire banking industry concerned and anguished. Bank officials are now worried that genuine banking decisions are being questioned by law enforcement agencies,” Kannan said. Senior bankers will meet and present the issues to government officials, seeking a direction to prevent recurrences of such unavoidable incidences.

What has surprised bankers is that BoM was not the lead bank which lent funds to the DSK group and the banks had declared the borrower as wilful defaulter. Several other banks had given loans to the DSK group along with BoM. “The government should intervene in the matter and ensure such unwarranted measures are not taken. Such arrests will demoralise the entire banking sector,” said a top bank official.

Bank unions led by the All-India Bank Employees Association had backed the arrested BoM officials. Unions said it was surprising that the arrested bank executives were not connected with the cheating by the DSK Group. “Hence, arresting them at this stage in connection with this is unwarranted. If there is any involvement of these officials in the DSK scam, they should be taken to task but as per our information, they are not involved in the same,” the unions said in the letter to Financial Services Secretary Rajiv Kumar.

At the annual general meeting of BoM on Thursday, some shareholders had raised the issue of the loan disbursed to the DSK Group — which is accused of cheating thousands of its investors of over Rs 2,000 crore — and the management had clarified its position.

“Replying to concerns raised by a few shareholders with regards to the amount advanced to D S Kulkarni Developers Limited, A C Rout, ED of the bank, explained that the bank’s present outstanding exposure to the group is Rs 94.52 crore, which is fully secured. The bank has already declared DSK Developers Limited and its promoters as wilful defaulters. Recovery processes like SARFAESI action have already been initiated by the Bank and some of the properties of the firm have been put under auction,” BoM said.

In January 2017, former IDBI Chairman Yogesh Agarwal and four other executives were arrested in a case linked to the Vijay Mallya loan default. Former Canara Bank Chairman RK Dubey, former United Bank of India Chairman Archana Bhargava, former Punjab National Bank CEO Usha Ananthasubramanian and former IDBI MD Kishor Kharat (now with Indian Bank), Syndicate Bank MD Melwyn Rego (formerly with IDBI Bank) and former IDBI Bank CMD MS Raghavan are also facing charges.