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MUMBAI : State Bank of India on Monday clarified that the bank had followed all due processes in the sale of asset, which led to the arrest of former SBI chairman Pratip Chaudhuri. This is the first instance where the chairman of the country’s largest bank has been arrested in an alleged loan scam.  

On November 1, Jaisalmer Police arrested Chaudhuri in an alleged loan scam, The Times of India reported. The case is related to properties owned by Godawan Group, which took a Rs24 crore loan from SBI in 2008 to construct a hotel. According to the report, allegations against Chaudhuri include properties worth 200 crore being sold for 25 crore after the bank seized them for defaulting on the loan.  

"Garh Rajwada was a hotel project in Jaisalmer, financed by the Bank in 2007. The project remained incomplete for over three years and the key promoter passed away in April 2010," SBI said in a statement.

It further said that the account slipped into a non performing asset (NPA) in June 2010 and various steps taken by the bank to complete the project did not yield results.

Subsequently as part of the bank's recovery efforts, the account dues were assigned to an asset reconstruction company (ARC) in 2014, and it was done through a laid down process of the bank's policy, the SBI statement said.

 “As recovery efforts failed, approvals for sale to ARC were taken in January 2014 and the assignment to ARC was completed in March 2014. It transpires now that the borrower had initially filed an FIR with the state police against the sale of asset to ARC," the bank said.  

The borrower has filed a Protest petition before the Jaisalmer magistrate and it has named all directors of the ARC, including Chaudhuri who joined the board after he retired from SBI in September 2013.  

“It appears from the copies of the proceedings now accessed by us that there have been some factual inaccuracies in the complainant’s version submitted to the Hon’ble court. SBI would like to reiterate that all due process were followed while making the said sale to ARC. The bank has already offered its cooperation to the law enforcement and judicial authorities and will provide further information, if any that may be called for from their side," the bank added.

Reacting to the news, former SBI Deputy Managing Director Sunil Srivastava said in a tweet: "Absolutely pathetic, is the system being gamed again by defaulters despite all efforts by Modi govt, time for overhaul of judicial processes to improve transparency and introduce accountability @PMOIndia."

He further questioned Chaudhuri's arrest stating "without notice and without summons, how can police from another state arrest someone in Delhi, where is the due process of law."

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