Bankers worry over arrest of Bank of Maharashtra CEO, want Govt to intervene
The Indian Banks’ Association (IBA) on Friday came out in support of Bank of Maharashtra’s top officials, just two days after they were arrested.
The IBA met with top officials from public sector banks, private sector banks and foreign lenders and decided to seek the Finance Ministry’s intervention over the sudden arrests on Wednesday.
“All the bankers unanioumously expressed anguish and concerns for what has transpired there for bonafide decision taken in the discharge of official duties…The officials are worried that genuine banking decisions are being questioned,” said VG Kannan, Chief Executive Officer of IBA, after a meeting that lasted close to three hours.
He said the senior officials of the bank have been arrested for criminal conspiracy and “in violation of Maharashtra Protection of Interest of Depositors in Financial Establishment Acts, 1999”, adding that this is not applicable to banks.
Bankers have also sought the government’s help to form an independent committee with representatives from both the government and the Reserve Bank of India, and retired bankers.
This committee will be formed to “give clearance for initiating criminal proceeding on senior executives of banks to ensure smooth functioning of banking industry and enabling decision making,” Kannan said in an emergency conference with reporters after the meeting.
IBA will also ask the government to consider an insurance cover for bankers for the costs incurred on fighting such cases after their retirement.
Arrest after yoga class
The concerns come after Bank of Maharashtra CEO Ravindra Marathe was arrested on Wednesday by the Pune police’s economic offences wing, while he was returning from his yoga class.
Marathe’s colleagues, the bank’s executive director Rajendra Gupta, zonal manager Nityanand Deshpande and former chairman Sushil Muhnot were also arrested for allegedly extending loans to the scam-tainted DSK Group.
Condemning the arrest, Kannan said that the officials were now behind bars despite the bank disclosing that the loan exposure to DSK Group was as low as Rs 94 crore, and was fully secured and disbursed before Marathe took charge.
IBA-Government meet soon
Kannan also said that as per RBI guidelines, frauds involving amounts exceeding Rs 25 crore are to be only handled by the Central Bureau of Investigation (CBI), and not the state police.
The IBA has sought appointment with senior government officials sometime next week to present a detailed memo to take remedial action.
“The entire banking community is with the BoM management and the IBA has decided to approach the highest authority,” Kannan said.
The IBA’s solidarity comes a day after the Bank of Maharashtra’s shareholders, and bank unions led by the All-India Bank Employees Association, had backed Marathe.
In a letter to Financial Services Secretary Rajiv Kumar, the bank unions had said it was surprising that the arrested bank executives were not connected with the cheating by DSK Group.
