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CBI pulls up banks for not registering complaint against Kingfisher, Vijay Mallya

According to data released by the CBI, the agency has investigated 171 cases of bank frauds involving Rs 20,646 crore in 2015.

Written by Khushboo Narayan | Mumbai | Published: March 3, 2016 2:51:41 am

The chief of the Central Bureau of Investigation (CBI), Anil Sinha, on Wednesday criticised Indian banks for not registering with the anti-corruption agency any complaint against Vijay Mallya-led Kingfisher Airlines and its earlier management despite the company’s default of Rs 7,000 crore.

Sinha said while the banks loaned money to Kingfisher from 2004 to 2012, the CBI registered a case suo motu against the company only in July 2015. “Despite our repeated requests, the banks did not file a complaint with CBI. We had to register the case on our own initiative,” said Sinha at a conference organised by the agency in association with the IBA to chalk out ways to combat financial crimes.

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The CBI conference was attended by some of the India’s top bankers such as Arundhati Bhattacharya, chairperson of State Bank of India (SBI), Shikha Sharma head of Axis Bank and  Chanda Kochhar managing director and chief executive of ICICI Bank.

According to Sinha, the accountability mechanisms in banks and financial institutions are “weak and diffused”. Sinha said that most of the bank defaults involve big companies and “the monitoring of end use of funds, especially in large value accounts needs a re-look to check diversion of funds for non-sanctioned purpose”.

Maharashtra chief minister,  Devendra Fadnavis also said India needs a proper framework to swiftly deal with bank frauds so that public money is not stuck in non-performing assets (NPAs). “In Kingfisher’s case, we could see that the company is getting poorer, banks are getting poorer and those who own the company are getting richer. And thereby creating a situation where the financial flexibility of the sector comes into a lot of stress,” he said.

It was only in November, 2015 that SBI declared Kingfisher Airlines and its promoter Vijay Mallya wilful defaulters. Earlier this year, Punjab National Bank too declared the company a wilful defaulter.

According to data released by the CBI, the agency has investigated 171 cases of bank frauds involving Rs 20,646 crore in 2015. Sinha said the number of bank frauds have risen significantly and involve “high value frauds in borrower accounts, especially those pertaining to periods from 2008 to 2010”.

Shikha Sharma of Axis Bank said the banks are not deliberately delaying filing of complaints with investigative agencies in cases of loan fraud. Sharma said that the Reserve Bank of India (RBI) has only recently introduced a faster mechanism for recognition of NPAs by banks.

“There is a change in our process and it is good for the long term. It wasn’t as if banks were not recognising (NPAs), they were recognising as per the rules…. As far as wilful defaulters are concerned, the client should have defaulted and we should be able to prove that there was wilful default. You have to go through a process and of course, you have to give a chance to hear the borrower because if you just unilaterally declare them as wilful defaulter, then they can take you to court,” said Sharma.

On February 8, The Indian Express reported that 29 PSBs have written off Rs 1,14,000 crore in the last three years, according to a response by the Reserve Bank of India to an RTI application. Loan write-offs in the first half of 2015-16 were Rs 25,000 crore.

With this, banks would have written off Rs 2,77,400 crore in the last ten years with more than half the write-offs happening in the last three years. Gross non-performing assets, or bad loans, are expected to jump 31.48 per cent in the fiscal ending March 2016 to Rs 4,26,400 crore from Rs 3,24,300 crore.


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