Mumbai: The Pune police last week arrested Bank of Maharashtra CEO Ravindra Marathe, along with other officials, in relation to an alleged 2,043 crore scam, drawing criticism from the banking industry. What is the case all about?

What is the case?

Jitendra Mulekar, a resident of Kothrud, a Pune suburb, filed a complaint against D.S. Kulkarni Developers Ltd at the Shivajinagar police station in Pune, alleging that the promoters, Deepak Kulkarni and his wife Hemanti Kulkarni, had duped him of 440,647. During the course of the investigation, the police found that 45,000 fixed deposit investors had been cheated by the duo. The police, in its petition, said the accused had hatched a conspiracy to embezzle 2,043.18 crore.

The charges against the bankers

Apart from Marathe, the Economic Offences Wing of the Pune police arrested BoM executive director Rajendra Gupta, zonal manager Nityanand Deshpande and former CMD Sushil Muhnot for their roles in sanctioning alleged illegal transactions of about 100 crore to DSK Developers for its Dream City project. The officials were arrested for alleged criminal conspiracy and violating the provisions of the Maharashtra Protection of Interest of Depositors in Financial Establishment Act of 1999.

The banking industry’s reaction

The Indian Banks’ Association condemned the arrests and said the bankers were not directly involved in sanctioning or repayment of deposits by firms.

What the industry body proposed

The IBA stated that the provision of law under which the arrests were made is not applicable to banks. The association also said it will submit a memorandum, proposing to set up a committee under a Reserve Bank of India official which will decide whether proceedings against the officials should be allowed or not. The memorandum will also propose an indemnity cover to provide legal assistance to these officials.

Ongoing probes involving bankers

Since January 2017, several cases have been filed against bank officials, from the arrest of IDBI Bank chairman Yogesh Aggarwal in connection with the Vijay Mallya case to a probe against former IDBI Bank executives Kishor Kharat and Melwyn Rego over a 600 crore loan to C. Sivasankaran’s firms. Last month, it named former Allahabad Bank CEO Usha Ananthasubramanian in the Nirav Modi case.

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