Wednesday, June 23

PSU banks withdraw aid to graft accused’s legal battle

NEW DELHI: In a setback for hundreds of bankers facing corruption-related charges, the government has advised state-run lenders to withdraw any legal or financial support to fight cases, especially when the bank itself is a complainant.

In a letter to IDBI Bank, whose former bosses and members of the top management are facing criminal cases related to Kingfisher Airlines and Aircel-Maxis, the finance ministry has said that in cases where support was provided, the amount should be recovered. Sources told TOI that the letter has also been sent to other banks.

At present, a committee within banks decides the cases in which financial support is provided. In its letter, the finance ministry’s department of financial services has said there is no question of providing support to bankers in cases that are filed by the lender itself. This means that all those named in the FIR in the Nirav Modi-Mehul Choksi orchestrated fraud at PNB will not be eligible for any support.

In the second category, where an investigative agency files a case, such as Aircel-Maxis, the Centre has left it to lenders to take decisions based on merits of the case. But, it is unlikely that bank managements would be willing to provide any assistance. In any case, the support can only come from the panel of lawyers available with banks, instead of accused bankers hiring lawyers on their own and the banks footing the bill.

In recent months, there has been a spurt in cases involving bank managers and top management where the government and investigative agencies found instances of wrongdoing in sanctioning of loans or classifying them as non-performing assets. In several instances, irregularities were noticed and cases have been filed.

Often, some of the public sector lenders have not just provided legal assistance to accused managers, but also purchased tickets and allowed them to access the bank’s guest house and other facilities.

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