All public sector banks may need to take CBI’s clearance before allowing one-time settlement of bad loans by customers under a new direction likely to be issued by the Reserve Bank of India(RBI) soon.

The circular, the proposal for which was mooted by CBI (Central Bureau of Investigation) will ask all the banks to seek the clearance in all such cases where criminal proceedings were underway, sources said.

They said there were instances where CBI had beenprosecuting a company or an individual and it was found that those involved in the bad loans had already made a one-time settlement with the bank where by the bank had given them in writing that all criminal proceedings against them had been withdrawn.

In one of the cases, CBI had prosecuted a businessman for forgery while procuring loans from a public sector bank. Later the agency found in the Supreme Court that the bank had made a one time settlement at an amount of Rs 400 crore against Rs 525 crore and also given in writing that all criminal proceedings against him were withdrawn.

The incidence prompted CBI to approach the bank through the Central Vigilance Commission (CVC) and a meeting was convened with chairman and managing directors of the six public sector banks recently.

It was decided during the meeting that the central bank will be approached for issuing such a circular to all the banks making it mandatory for them to seek CBI clearance wherever a criminal case was pending. During the meeting it was highlighted by CBI that its corruption cases were falling in courts after banks reached out-of-court deals with individuals and corporates through one time settlement.

The meeting was attended by managing directors of Punjab National Bank, State Bank of India, Bank of India, Bank ofBaroda, Union Bank and Canara Bank.

The bank officials were asked to streamline one timesettlement mechanism besides re-framing its list of members comprising lawyers and property evaluators.

Besides the circular, RBI will ask bankers to launch a drive in their banks to educate their staff on the need to strictly adhere to the due diligence norms already specified by the banking regulator in this regard.

More Under Finance

Posted Under

Category : Finance (3520)
Type : News (12760)
Tags : CBI (392) Housing Loan (37)

Comments are closed.