Bankers in India will seek insurance cover to pay for legal costs as lenders grapple with investigations by various authorities, Mr VG Kannan, CEO of the Indian Banks' Association (IBA) has revealed.
At a meeting last week among top bankers, the IBA arrived at some actionable points which could help protect bank officials against undue investigations against them, reports Bloomberg Quint.
The meeting took place after the Economic Offences Wing of the Pune police arrested the chairman and MD Director of the Bank of Maharashtra Ravindra Marathe and Executive Director Rajendra Gupta in a fraud investigation against DSK Developers. The police have alleged quid pro quo on the part of bankers for approving loans to the company. Sushil Munhot, former chairman and of Bank of Maharashtra has also been arrested in the case.
Mr Kannan told reporters that the IBA and the rest of the banking community are confident that the loans extended by Bank of Maharashtra were given after due process and were fully secured.
The bankers feel that the loan in question had been disbursed in line with regulatory guidelines and there had been no lapse in approving of the loan as it had been done through a consortium of lenders. Banks are worried as genuine decisions are being questioned by investigators.
“IBA will lead a delegation to make representation to highest authority and get some kind of protection for genuine decisions made by the bankers,” Mr Kannan said.
The tension among bankers is exacerbated by the $2.1-billion fraud case at the state-owned Punjab National Bank that was uncovered in January and has resulted in the arrest of a number of bank officials.