MUMBAI/NEW DELHI: Bankers have come out in support of Pratip C Chaudhuri, the former SBI chairman, and have questioned the way he was arrested in a case involving Alchemist Asset Reconstruction Company and an aggrieved borrower.
“Prima facie, it appears that the norms have been ignored. This is not the way it is done, without giving an opportunity to a person to be heard… It does not appear to be a case of corruption,” former SBI chairman Rajnish Kumar told TOI. He said that the case involved a dispute between an ARC and the property owner and one person seems to have been singled out. “It is not about an individual. Today it is him, tomorrow it may be someone else,” Kumar added.
Arundhati Bhattacharya, who succeeded Chaudhuri and was the first woman to head the country’s largest bank, too backed her former boss. “I can attest to the fact that Mr Chaudhuri is absolutely and scrupulously honest and there is absolutely no wrongdoing on his part. This is an unfortunate day for bankers when a senior banker is taken to task like this without doing anything wrong,” she told TOI.
Ironically, the arrest came a day after the finance ministry’s norms on uniform staff accountability framework for non-performing assets (NPA) accounts of over Rs 50 crore, meant to protect bankers from bona fide business decisions that prove wrong later. Bankers have been wary of action by law enforcement agencies, prompting several of them to go slow in sanctioning loans, a concern that had prompted even Prime Minister Narendra Modi to step in and comfort them.
“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,” tweeted former SBI deputy MD Sunil Srivastava. Reacting to Kumar’s comments to a news platform, Mohandas Pai took to social media to seek government intervention. “Shocking, @FinMinIndia (finance ministry) and @RBI (Reserve Bank of India) should intervene to protect banks and its employees,” he tweeted.
Several bank executives said that Chaudhuri’s arrest will once again raise fears, not just in sanctioning loans but even in the recovery process, where lenders and borrowers often opt for settling the dues and waive the penal interest. SBI sources alleged that the borrower has sought to frustrate the bank’s attempts to recover the dues for a long time. Executives also pointed out that given the size of the transaction, it is unlikely that it would have been Chaudhuri’s decision. “Also, even in smaller loans, it is never one person who decides on the recovery action” an SBI executive said.
“If a defaulter can send a former bank chairman to jail on an allegation, how can bankers be expected to do this? The government has repeatedly assured us that authorities cannot pick up a banker without reason. The case has been filed just before the courts are closed for Diwali — this appears to be premeditated,” said a senior banker.
Another banker pointed out that a defaulter is given all the opportunity to repay. “In this case, several years have passed since the default and the final sale. You cannot compare current real estate value with an older value. Also, when assets are sold in a distressed condition, the valuations are always lower.”