Home / Industry / Banking /  Arun Jaitley speaks out against arrest of bankers

Mumbai: Union minister Arun Jaitley on Wednesday came down heavily on the recent arrest of the entire top management of the state-run Bank of Maharashtra by the state police saying nobody should “overlook the federal structure of the nation." The minister also called for amending the Prevention of Corruption Act, which he described as “anarchic as well as one of the most badly drafted pieces of legislations" that has been bringing governments to standstill.

In an unprecedented move, the Pune police had on 21 June arrested the entire brass of the state-run bank for a loan of Rs94.5 crore to the scam-tainted developer DSK Group allegedly in violation of the its lending rules. This action has shocked the banking fraternity, which called an emergency meeting and condemned the police action.

“In investigating a crime or what could possibly be an unfair decision, we cannot overlook the federal structure of the nation. Our federalism has jurisdiction vested in the Central government. It has jurisdiction vested in the state governments. Law and order and investigation are the state subjects," Jaitley told an industry event without directly mentioning the name of the incident.

“I have found a new tendency that an agency or institution or banks under the Central government, is being investigated by a state police," he said, adding if Central agencies have to investigate a state official, they need the consent of the state. Even the Central Bureau of Investigation (CBI) cannot investigate a crime in a state without consent of the state.

“To maintain the federal balance, you require an element of statesmanship which can keep that federal balance in view. Therefore, there can be situations including the one that I am obliquely indicating at where the threat to federalism comes from a state, not from the Centre," said Jaitley, who is recuperating after a kidney transplant, through a video link.

In this scenario, what is needed is a certain level of statesmanship by all governments and investigative agencies, Jaitley said. “I think that the immediate need for us is to put this entire relationship between investigation, who to investigate, when to investigate, what constitutes a crime, really to be put in its place if we want an effective decision making and economic decision process not to be delayed," he said.

Calling for amending the Prevention of Corruption Act, he said this law is “one of the most badly drafted pieces of legislations as it a charter for bringing governments to standstill." “Therefore, for all political parties for the days, years and generations to come, it is extremely important that we amend that law, with the suggested amendments of the standing committee, and bring that anarchic and obsolete piece of legislation in tune with the modern times of decision-making process."

On the headwinds from rising oil prices and impacts of the trade wars between the three largest economies, Jaitley said these are two important external challenges that we are facing today but need not react in panic. “The artificial scarcity of oil supply is affecting us as we are net buyers of oil. But we have very little domestic control on this external factor. The second challenge is the consequential impact of the trade war on us. It is a trade war which is been thrust on us," he said, adding these two challenges can be resolved globally.

“Therefore, no panic reaction has to come from us as a response to this. We have to concentrate further on making our domestic fundamentals stronger," Jaitley said.

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