MUMBAI: Booking of more than half-a-dozen former and current top-level bank executives for alleged corruption in the sanctioning of loans to C Sivasankaran has chilled the system at state-run banks. The development has brought indecision back to the system at a time when it was slowly emerging from the shock of the Central Bureau of Investigation arresting former IDBI Bank chairman Yogesh Agarwal a year ago.ET spoke to CEOs of five large commercial banks who said decision-making will be the casualty of this development. None of them spoke on record as they fear commenting on the subject could be perceived as speaking up against the government.Last week, the CBI booked several people, including top-level bank executives, on corruption charges over defaulted loans totalling Rs 600 crore from two offshore companies owned by former Aircel promoter Sivasankaran.“It came as a bolt out of the blue. Investigative agencies did not seek any information about the loans given to the borrower — something which is required to establish that there was an element of fraud,” said the CEO of a large commercial bank. “In the absence of documents or proof, how has the investigative agencies gone ahead with the decision to book top-level executives,” he asked.63967569

The case related to Rs 322-crore and Rs 523-crore loans given to Sivasankaran’s companies – British Virgin Islands-based Axcel Sunshine and Win Wind Oy of Finland. The companies defaulted on the loans, resulting in a Rs 600-crore loss, according to the investigative agency.The people against whom the CBI filed criminal cases include Kishor Kharat, the current CEO of Indian Bank who was earlier the CEO of IDBI Bank; and Melwyn Rego, the CEO of Syndicate Bank who was previously a deputy managing director (DMD) at IDBI Bank. The agency also booked IDBI Bank’s current DMD GM Yadwadkar; former DMDs BK Batra and MS Raghavan; former executive directors Vinay Kumar and B Rabindra Nath; and former independent directors PS Shenoy and S Ravi, among others.“No one is saying there should not be any accountability. They should surely go after dishonest officers. But publishing their names before establishing mala fide (intention) has a very demoralising effect because once your name comes in CBI, life is hell for the officer. After 10 years you may acquit him, then what is the point,” said the CEO of another large bank. “The investigative agencies should step in when they have at least some preliminary evidence of mala fide. Decisions were already impacted, it will get worse now if things continue like this,” he added. IDBI Bank said both accounts became non-performing in December 2015 and in 2016 the bank had initiated attempt to recover the dues.“Kishor Kharat joined the bank when the account had already turned NPA and he was putting in efforts to recover the loan so where is the question of naming him in the FIR? Secondly, the entire loan was secured to the extent of 110% with shares of Tata Tele with IDBI Bank,” said another bank chief.The arrest of former IDBI Bank chief Yogesh Agarwal and DMD BK Batra in January 2017, on allegation of corruption related to loans given to Kingfisher Airlines, had put lenders from PSU banks on a back foot. At that time, bank CEOs met the finance minister who promised amendment to the Prevention and Corruption Act wherein no banker would be arrested unless frauds and corruption were established.“It’s been a year now but the Act is not amended. In fact, now none of the bank CEOs are even willing to make a joint representation on how this matter is demoralising the employees,” said a senior bank executive.