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The Indian Banks’ Association (IBA) is in a fix over whether it can offer any help to former State Bank of India (SBI) chairman Pratip Chaudhuri in the recent case of alleged mispricing of a stressed asset, said a person aware of the development.

The reason for the dilemma is that the complaint was filed against Chaudhuri as the director of Alchemist Asset Reconstruction Company and not as a former banker.

“We are not clear as to what role IBA can play. He was arrested for an ARC case and not directly related to the bank. Within banks,we have a policy to protect our directors and employees when such cases come up. Since this was cleverly filed as a case of ARC, we cannot directly intervene," said the person cited above, speaking on condition of anonymity.

IBA has 244 members—public sector banks, private banks, foreign banks, co-operative banks, regional rural banks and all-India financial institutions.

Chaudhuri was arrested on 1 November by the Rajasthan police after a Jaisalmer court issued a warrant on a petition by a borrower. He was released on bail on 9 November.

“Everybody is talking about it, but it is more of an emotional reaction. The matter is being informally discussed among IBA members. While all banks feel that something should be done, they are not sure what," the person said.

The case relates to a 24 crore loan granted by SBI to Hotel Gaudavan Pvt. Ltd in tranches beginning January 2008. The loan was restructured in January 2009, and repayments were rescheduled. The loan was sold to Alchemist ARC in March 2014. It was then referred to the National Company Law Tribunal (NCLT) for resolution and was taken over by JFC Finance (India) Ltd in December 2017.

On 3 November, IBA sought an appointment with Rajasthan chief minister Ashok Gehlot and wrote to the chief secretary, expressing concern, the Economic Times reported.

High-ranking former SBI officials have denounced the arrest on social media. Former deputy managing directors have posted on Twitter and LinkedIn to vouch for Chaudhuri’s integrity and recounted their experience working with him. Chaudhuri was the chairman between 2011 and 2013.

An email sent to IBA remained unanswered till press time.

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