Monday Musings: What’s at the bottom of Bank of Maharashtra arrests?
Ravindra Marathe, the managing director and CEO of such a bank is a very senior functionary, directly accountable to the ministry of finance. His arrest by the economic offences wing (EOW) of the Pune police early this week has come under sharp scrutiny in banking circles.pune Updated: Jun 25, 2018 16:40 IST
Bank of Maharashtra is a mid-sized public sector bank with deposits amounting to ₹1.35 lakh crore and lendings of ₹90,000 crore. It is the lead bank for Maharashtra, meaning that all the major government programmes and initiatives for credit expansion in the state are driven through this bank.
Ravindra Marathe, the managing director and CEO of such a bank is a very senior functionary, directly accountable to the ministry of finance. His arrest by the economic offences wing (EOW) of the Pune police early this week has come under sharp scrutiny in banking circles.
Marathe’s arrest in particular has come under intense criticism and BoM has maintained that the pending outstandings against a ₹104 crore loan extended to DS Kulkarni Developers Ltd (DSKDL) is to the tune of ₹94 crore. This loan is fully secured and according to one senior official, “there has been deviation to the tune of ₹10 crore.”
The recovery process was underway. There was no charge by the police that Marathe was refusing to cooperate with police investigations. Was it then necessary to take the drastic action of arresting a senior official like him? There have been bigger allegations of fraud running into far bigger amounts, but one does not hear of the chairperson or MD getting arrested, as happened in the case of BoM.
What then is at the heart of Marathe’s arrest? Is he the victim of an internal rivalry, or some political conspiracy? Or is he truly guilty of serious, fraudulent practices with regards to multiple loans extended to DSKDL which led to his arrest?
The fact is that DSKDL, led by its rags-to-riches-to-rags chairman DS Kulkarni, has had a very strong relationship with BoM over the last four decades. Bank officials recall that the very first business loans of ₹2,000 and ₹10,000 that DSK took nearly four decades ago, when he launched his ‘Tele smell’ business of sticking perfumed strips to telephone instruments, were from BoM. Since then, this bond has only strengthened. The DSK group companies stand accused of investor and other frauds to the tune of ₹2,000 crore. To what extent is the BoM involved in this scam?
It is a fact that a deep-rooted, corruption-ridden banker-borrower nexus- with or without the blessings of top politicians- has been the bane of the Indian banking system. Large borrowings running into hundreds and thousands of crore rupees and re-payment default have become systemic. The BoM has itself faced action and arrests by the CBI in a couple of cases of this nature and its non-performing assets stand at a staggering ₹9 lakh crore. This is part of the rot in the banking system that needs to be cleaned up.
While that is the history, the fact is that more details need to emerge in the case relating to Marathe’s arrest and prosecution. This will help settle the question whether the arrest was done with due diligence or is a case “police over-reach.”
First Published: Jun 25, 2018 16:38 IST