CBI chief will meet heads of PSUs to discuss financial frauds

  • Abhishek Sharan and Mahua Venkatesh, Hindustan Times, New Delhi
  • Updated: Feb 29, 2016 08:02 IST
CBI director Anil Sinha leaves after a meeting at Parliament in New Delhi. (PTI Photo)

In a first of its kind, CBI director Anil Sinha and his aides will join heads of public sector banks at a meeting this week to discuss measures to curb financial frauds that contribute to non-performing assets (NPAs) of banks.

The day-long brainstorming session in Mumbai on Wednesday is expected to focus on monitoring and sharing of information on suspicious transactions, illegal diversion of borrowed funds and new measures to tackle wilful defaulters, said three officials familiar with the development.

The CMDs of 35-plus state-run banks and financial companies and top officials from the Reserve Bank are scheduled to attend the meeting, organised by the Indian Banks Association (IBA). This is the first time the CBI will be joining such a meeting.

It comes at a time when rising NPAs have eroded profitability of banks and hit economic sentiments. The crisis has become so severe the Supreme Court has intervened. On February 16, a bench headed by Chief Justice TS Thakur asked the RBI to submit details on loans written off by PSU banks in the last five years along with particulars of alleged defaulters who owe Rs 500 crore or more, terming such practices a fraud on the public.

According to government figures, gross NPAs of 39 listed banks stood at Rs 4.43 lakh crore in December 2015, nearly 10 times the level prevailing in 2009.

“The CBI is likely to ask banks to adopt measures to examine suspicious transactions that are often ignored by lenders. This includes stringent monitoring of multiple transactions undertaken from a single account,” said an IBA official who didn’t wish to be named.

The agency is also expected to come up with prescriptions on strengthening compliance, especially on issues arising from the Rs 6,000 crore foreign exchange fraud at Bank of Baroda, the official added.

A public sector bank chairman, who also spoke on condition of anonymity, said “the issue of bad loans and wilful defaulters will be discussed at length, especially after the Supreme Court order… the CBI is expected to come up with suggestions”. The meeting will explore new legal provisions that may be needed to deal with wilful defaulters.

A CBI official told HT Sinha will recommend “improving processes of due diligence, credit appraisal and monitoring and measures to prevent money laundering or siphoning of loan funds abroad”.

The CBI, which probes loan defaults, has seen a spurt in NPA cases that have been referred to it. “Since 2014, the CBI has lodged around 315 cases related to NPAs, including those pertaining to defaults, diversion of funds abroad,” the agency official said.

“The CBI catches loan defaulters, including the big fish, but it has its limitations. Cases are mostly filed when banks refer them to us after having detected loan defaults in internal examination then their subsequent classification as NPAs,” the official said. “At times, we begin a probe on getting a complaint or intelligence from a source.”

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