Ex – IDBI bank chief among eight others held for loan scam

Posted on January 24, 2017

In a shocking incident, the Central Bureau of Investigation (CBI) on Monday (23/01/2017) arrested the ex – IDBI Bank Chairman, Yogesh Agarwal and four of his colleagues, apart from the ex – Kingfisher Airlines CFO, A. Raghunathan and three other ex – employees of the airline, in connection with the ₹900 – crores loan default case. Last but not the least; the CBI had also arrested the IDBI Bank’s Deputy MD, B.K. Batra late in the evening, the same day. Read more on Arrests

The arrests come days after the Debt Recovery Tribunal allowed a consortium of lending banks to initiate the process for recovering Rs. 6,203 crores at 11.5 % interest rate from Kingfisher Airlines promoter, Vijay Mallya and his companies.

“Mr. Agarwal was arrested in Delhi and is being taken to Mumbai for further legal proceedings”, said a CBI official.

The colleagues of Yogesh Agarwal who were arrested include: B.K. Batra, O.V. Bundellu, S.K.V. Srinivasan and R.S. Sridhar. The bank’s credit panel had sanctioned the loan. The ex – employees of Kingfisher Airlines who were arrested include: Shailesh Barkar, who served as the Vice –President of Finance for the airlines and the former Deputy General Managers, Amit Nidkarni and A.C. Shah.

Taking suo motu notice of the alleged fraud, the CBI had registered the case against Mr. Mallya, Kingfisher Airlines and the IDBI Bank officials in July 2015. The CBI had conducted raids and even questioned Vijay Mallya twice, regarding the loan for Kingfisher Airlines. Vijay Mallya had been declared as a ‘willful defaulter’ by the Mumbai court and shortly afterwards flew out of India to London, during March 2016. This had raised speculation that someone had tipped him off about the banks’ impending house – arrest move.

The CBI has arrested Yogesh Agarwal and his other bank colleagues as they sanctioned loans to Kingfisher Airlines despite its poor credit rating. The FIR alleges that the bank had approved an application for a corporate loan of ₹950 crores on October 1^st, 2009.

“On the same day, a memorandum was put up to the credit committee and the loan was sanctioned, though the company had negative financials and a negative net-worth”, alleges the FIR.

On November 27^th, 2009, IDBI had released the corporate loan of Rs.750 crores for Kingfisher Airlines. Based on the case filed by the CBI, the Enforcement Directorate has launched a probe under the Prevention of Money Laundering Act and attached assets worth Rs. 1,411 crores. In May, 2016, the CBI had registered another case against Vijay Mallya, Kingfisher Airlines and United Breweries Holding Ltd. for causing a loss of Rs. 6,027 crores to the State Bank of India – led consortium of banks. Subsequently, the Enforcement Directorate attached more properties worth Rs. 6,600 crores and also confiscated assets worth Rs. 1,620 crores under the Criminal Procedure Code after Vijay Mallya was declared as a ‘willful defaulter’ by the Mumbai Court.

Loans should be given to corporates by banks only after strict verification on the genuiness and the net – worth of corporates. Any violation in the verification procedure would only increase the risk of bad – loans for banks. Hence, they should be cautious right from the start. The CBI and the ED should keep up their good – job of ‘cracking the whip’ on willful loan defaulters and should help banks recover the lent amount faster. Read more on Startup News