Syndicate Bank scam: more loans under lens
As investigators dig out fresh information in the alleged bribery scandal involving former chairman and managing director of Syndicate Bank, SK Jain, focus is also shifting to all large-size corporate loans, which were cleared by the bank after he took charge in July last year.business Updated: Aug 07, 2014 00:21 IST
As investigators dig out fresh information in the alleged bribery scandal involving former chairman and managing director of Syndicate Bank, SK Jain, focus is also shifting to all large-size corporate loans, which were cleared by the bank after he took charge in July last year.
A number of loans that were placed with the mid-size state lender are under investigation with several of these allegedly reporting irregular repayment schedules within months of being sanctioned.
Jain's influence and role in approving loans to borrowers who do not deserve it in exchange of a quid pro quo are being investigated.
Besides, Jain's role in approving loans at a price, which was lower than what it should have been, is also being examined.
In addition, evidence is being examined about the role of "deal makers", who could have received "commissions" from defaulting borrowers.
The former Syndicate Bank CMD's role in helping restructure some weak loan accounts and give breathing time to borrowers, who have defaulted in exchange of "reciprocal gains" is being examined, sources told Hindustan Times.
Jain, 54, was one of the youngest chiefs of a government bank. He was appointed for a period of five years.
Net non-performing assets (NPAs) - shorthand for bad loans - of Syndicate Bank stood at Rs 2,721 crore at the end of March, up 142% over Rs 1,125 crore in the year-ago period. The jump in the bank's bad loans is nearly triple the combined average - 45% rise in NPAs of all 26 public sector banks.
The finance ministry has sought a detailed report on the matter from the Central Bureau of Investigation.
"A concrete decision would be taken only after we receive the full report on the case, we are awaiting the report," a senior finance ministry official who did not wish to be identified said.
The banking department will also hold discussions with RBI on the issue. "We are working on improving the overall system and trying to bring in more transparency... But it is unfair to generalise things," GS Sandhu, financial services secretary, told HT.
A senior official at a large public sector bank said that while cases of bribery have come up on several occasions, this was rare where a CMD has been allegedly involved in such as case.
RBI governor Raghuram Rajan said the boards at public sector banks needed to be strengthened while the incentive structure for chief executives need to be improved to enhance corporate governance. "We have to draw in people from the private sector who want to give back themselves, and in that way you will get talent into these public sector enterprises."