NEW DELHI: Increasing number of cases against bankers by investigative agencies and fear of continuous harassment have slowed down decision-making among public sector bankers, who are now wary of any big-ticket loan sanctions.
“While the banks are more vigilant now with the reporting of bank frauds, the increasing overreach by investigative agencies is a matter of grave concern. Not all NPAs are necessarily bank frauds. However, with the increased persecution of bankers, top officials in PSBs are wary of sanctioning big-ticket loans to private companies,” a senior official from Indian Banking Association told TNIE.
A representation from public sector bankers has recently approached the Department of Financial Services (DFS) to flag their concerns.The issue cropped up after the Serious Fraud Investigation Office (SFIO) filed its 70,000-page charge sheet in the Bhushan Power and Steel fraud. Of the 283 named as accused, 200 are bank officials.
“While banks are cooperating with investigation, sometimes the agencies are indiscriminate in picking bank officials. PSB officials are shying away from sanctioning big-ticket loans with increasing cases against them over failed loans. This will create fear among the bankers and delay the decision-making process in sanctioning loans,” the IBA member said, adding the DFS has assured to look into the issue.
In the last two years, after PNB scam, there has been a steep rise in prosecution of bankers as the number of bank frauds reported rose. Diamond traders Nirav Modi, Mehul Choksi, Jatin Mehta, Sandesara brothers and embattled liquor baron Vijay Mallya are among the 31 fugitive businessmen facing CBI investigation for different cases of bank frauds.
Allahabad Bank managing direcor and CEO Usha Ananthasubramanian was sacked recently after the government divested her of responsibilities in May, after her name cropped up in the CBI charge sheet in the Nirav Modi scam. Ravindra P Marathe, MD & CEO, Bank of Maharashtra, was divested of his portfolio after he was arrested for allegedly violating norms while extending loans to a real estate developer.