Recent arrest of Bank of Maharashtra MD & CEO Ravindra Marathe, its executive director Rajendra Gupta, zonal manager Nityanand Deshpande and four other officials along with former chairman Sushil Muhnot in an alleged cheating case lodged against real estate developer DS Kulkarni and his wife has angered the Bankers and Indian Bankers Association has come in the support of arrested bankers stating it as “Harassment”.
Conspiracy angle behind the arrest cannot be deferred as 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”, interestingly, this law is not applicable to banks.
Further, 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, but in this case arrest were made by State Police.
IBA has also condemned the arrest of the top management of the Bank of Maharashtra for “taking bona fide decisions”. PTI reported that the Senior Bankers have termed the arrests as ‘arbitrary’ and called the probe launched by the authorities as ‘harassment’.
Bankers are also mulling over a plan to take insurance cover for their senior officials under investigation to help them meet the cost for defending themselves.
PTI reported citing IBA chief executive VG Kannan
IBA has 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.