Chargesheet against former Canara Bank CMDs adds to panic among bank officials

Related | Bank of Maharashtra divests CEO & MD Marathe, executive director Gupta of their powers

On the chargesheet against two Canara Bank CMDs, the former chairman of a bank said: “With less than 8 per cent of the consortium exposure, Canara bank officials are the easy scapegoat. For the CBI to have jurisdiction in this case, they needed to chargesheet some PSU bank officials. They were the easiest targets… does not matter PSU bankers were only a minor member in the consortium. Crisil rating was AA, internal ratings were good. The conduct of the account was blemishless, troubles in the account started much after they retired. Still they were chargesheeted… only for the sin of having been a public sector banker.” Three CEOs served Punjab National Bank when the Rs 13,000 crore fraud happened over the years. However, action has been taken against only one CEO, Usha Ananthasubramanian, the banker said.

“Bank chairmen should protest. Actions like arresting BoM CEO will destroy the sector. What are they trying to show? Government nominees are silent when corporate governance norms were violated in ICICI Bank. Why they are not taking action in the case of ICICI Bank? PSU bank chiefs are easy targets. They should come out and protest” said a senior official of a leading PSU bank. In fact, Raman had served as Wholetime Director of market regulator Sebi.

There are fears that arrests of bankers will hit decision-making and credit offtake in the sector. “The arrests have devastated many bankers. The issue is whether a public sector banker is a public servant and whether permission from the government is required and obtained? If the issues involved are policy violations or regulatory violations who will go into these issues — the regulators or the investigative agencies without government permission?” asked another senior bank official.

On June 20, the Economic Offences Wing of the Pune police had arrested BoM MD & CEO Ravindra Marathe, BoM Executive Director Rajendra Gupta, Zonal Manager Nityanand Deshpande, and former CEO and managing director Sushil Muhnot for their role in sanctioning the allegedly ‘illegal’ loan of about Rs 100 crore to DSK Developers Limited. BoM’s senior officials were arrested for alleged criminal conspiracy and for violating the provisions of the Maharashtra Protection of Interest of Depositors in Financial Establishment Act of 1999. But this law is not applicable to banks, a bank offcial said. “Bankers are not concerned if a company takes deposits from the public, and therefore their arrest is unwarranted,” he added.