Indian Banking Sector’s Criminal Underbelly

From Vakratund Varma, New Delhi, TSV Hari, Chennai

[1802 words, 20 minutes’ reading]

New Delhi [SFNS]: Despite an unprecedented overflow of funds after the demonetisation exercise, India’s public sector banks continue to be mired in criminal controversies and pretend being cash strapped. The needy do not get funds and the robbers seem to be having plenty of it.

“The manifestation of India’s economic malaise is visible through the recent brazen statements of fugitive scofflaws like Vijay Mallya on the one hand and lying criminal lawyers like P Chidambaram who even committed high treason. Its worst aspect is that high street top nationalised banks like Indian Bank, Corporation Bank, Andhra Bank – to name just 3 are the salient and stinking part of the rottenness. The criminal hydra head of Indian financial system’s rottenness is clearly visible. TM Bhasin, currently Vigilance Commissioner controlling the banking sector is being guided by evil forces beyond the borders. It includes international terrorist Dawood Ibrahim. The likes of Finance Minister Arun Jaitley are the Godfathers of this abomination of banking,” opined a Chennai-based retired senior banker.

“Though accused of serious wrongdoing, criminals like Mallya continue to cock a snook at Indian authorities. Worse, the brazen flaunting of nonexistent victim card is accorded wide publicity by the media,” the source pointed out.

“The fig-leaf arrest of former CMD of IDBI – Yogesh Aggarwal is a clear pointer that stables are being locked after the horses have bolted,” a serving senior banker located in India’s national capital region opined on condition of anonymity.

Aggarwal was arrested in January this year by the Central Bureau of Investigation. It was in connection with its probe into Vijay Mallya loan default case, according to news reports.

Three more former executives of IDBI Bank and 4 executives of Kingfisher Airlines have also been arrested by the investigating agency A team of CBI officials visited the offices of the Vijay Mallya led UB Group.

Mallya is facing the process of recovery of Rs 6,203 crores – he had borrowed from banks to keep his Kingfisher Airline afloat – successfully burrowing into the innards of the Indian financial system. Since his flight to London, courts have declared him a proclaimed offender.

Mallya is accused of cleverly manipulating social media outlets’ loopholes.

Two tweets by Mallya exemplify this:

Am shocked at CBI allegations. All false and misconceived to say the least What do a bunch of elite Police [sic] know about business and Economics?

Media happily being used as the pitch. I am the football. Two fiercely competitive teams NDA versus UPA playing. Unfortunately no Referees [sic].

National Democratic Alliance [NDA] media managers have charged Dr Manmohan Singh and P Chidambaram former Prime Minister and Finance Minister respectively with glibly defending Mallya. Reportedly perfidious and conspiratorial correspondence pointing to a nexus between Mallya and the duo is being cited as alleged evidence of wrongdoing.

Singh and Chidambaram have stoutly denied these.

“All prime ministers receive representations from various captains of industry that are passed on to appropriate authority. This is what I have done and done with full satisfaction. The deed was not against the law of the land,” Manmohan Singh had been quoted as saying in a media report.

Chidambaram dismissed the whole thing as a ‘routine affair.’

Congress spokesperson Randeep Surjewala rubbed salt into the BJP wounds.

“The Congress wants to know who permitted Mallya to escape and who waived loans [given] to him. It was the BJP that had brought Mallya into the Rajya Sabha [India’s upper house],” Surjewala observed.

The head honchos of top nationalised banking institutions like Indian Bank^[1], Corporation Bank, Indian Overseas Bank, Vijaya Bank, Canara Bank^[2] and Andhra Bank ^[3] – are being seriously probed by the Central Bureau of Investigation. If meaningful action is ever taken, the seamy underbelly to a governmental sector that ought to be functioning beyond reproach would stand exposed in pristine grotesqueness.

The probes are not making much headway because of one man – TM Bhasin, currently Central Vigilance Commission’s decision maker number 3. Before the current job, Bhasin had headed the public sector Indian Bank. The tenure had seen activity termed as being of utmost criminal nature. ^[4].

[1]

PR operators based in Chennai commandeered by its reported ringleader and former employee of Indian Bank and Corporation Bank – Prime Point Srinivasan. He is said to be aided and abetted by TS Raghavan, another former head of Indian Bank and Kanchi Shankaracharya Jayendra Saraswati.

While the latter was acquitted from the notorious Shankararaman murder case – not so honourably the former is  an accused in multiple criminal cases, was arrested and is currently on bail.

Cases include alleged cheating thousands of investors who had believed in the tall tales mouthed by the promoters of Vishwapriya Finance, a company that had employed Raghavan as a director.

Vishwapriya founders also face other criminal cases by other public sector banks which includes Bank of Baroda.

Branches of Corporation Bank located close to CBI headquarters are said to be involved in money-laundering locally and abroad, according to informed sources. A gang of middlemen auditors and film industry “Chettiars” are the ringleaders – who use accounts with credibility to change the colours of shady money. “Petitions have been sent to the CBI’s regional offices with clinching evidence, but, they are sitting on it, doing nothing,” a top banking source said. 

[2]

Operative portions from a report in The Hindu:

A branch of Canara Bank in south Mumbai reportedly played a vital role in laundering Rs. 340 crores through jewellery exports, reads a charge-sheet filed by Central Bureau of Investigation [CBI]. Sources in the Directorate of Revenue Intelligence [DRI] alleged worse.

“We suspect that a circuit of jewellers and diamond merchants have connived with bank officials to carry out this forgery, with officials allowing submission of forged bills of entry into IceGate, the e-payment gateway,” said sources in the DRI.

The charges have been partly denied by A.K. Das, general manager, Canara Bank, Mumbai.

“We have no reported cases in Mumbai of this nature. The bank is doing its due diligence in checking mechanisms for such incidents,” he told the highly respected daily newspaper – The Hindu.

Suveer Khanna, a partner at KPMG was careful with his words. “Public sector banks are speeding their monitoring mechanisms. While banking regulations are in place to prevent such frauds, the onus is also on the banks to take responsibility for building stronger monitoring mechanisms.”

The DRI is said to have finished its probe and is in the process of submitting a report to the Central Bureau of Investigation and Enforcement Directorate.

[3]

The Central Bureau of Investigation (CBI) has begun a probe into the suspected corporate fraud involving bank loans of over Rs 3,000 crore after three banks – Andhra Bank, Canara Bank and UCO Bank cried foul. The banks have declared the loan accounts of three group companies promoted by Praveen Kumar Tayal as fraud following an alleged diversion of funds to the group’s privately-held ventures, especially in real estate.

The three companies of the group that are under the CBI scanner are Krishna Knitwear Technology Ltd, Jayabharat Textile and Real Estate Ltd, and Eskay Knit (India).

A senior official from the Reserve Bank of India (RBI) confirmed to DNA that the regulator is in receipt of the complaint of fraud from Andhra bank, which is leading the consortium of 14 banks who have exposure to Krishna Knitwear Technology Ltd.

Andhra Bank has now handed over the Krishna Knitwear Technology case to the CBI to investigate the diversion of funds. The company, which specialises in knitted fabrics and spinning of cotton had borrowed Rs 616 crore of working capital and term loans of Rs 200 crore.

Praveen Kumar Tayal did not return calls nor respond to text messages enquiring about the fate of his companies or the alleged diversion of funds.

Surprisingly about two years back, banks had pushed for a corporate debt restructuring (CDR) for all the three companies, in the hope of reviving the companies and getting them to start servicing the debt. But in September last year, all the three companies exited the CDR cell as many banks opposed to the special dispensation given to the case where the promoter, according to bankers, did not seem committed to reviving his company.

A senior Andhra Bank official told DNA, “We suspect Rs 800 crore of bank loans in Krishna Knitwear, where we are the lead bankers, were allegedly diverted to unlisted companies.” Other banks suspect that the group’s arm Reward Real Estate was a recipient of promoter’s largesse.

Another bank official who is also party to the consortium said the companies have diverted large sums from the listed entity to a closely-held real estate arm of the group or to other ventures. “We tried our best to undertake a forensic audit but the company was not co-operating. So we had to hand over the case to the CBI.”

A senior Bank of India official also confirmed that CBI is investigating the accounts of the bank and said the CBI had asked the bank to submit certain documents pertaining to the loans given to the group.

The Tayals are in real estate, textiles and fibres and were the erstwhile owners of Bank of Rajasthan (BoR), until ICICI Bank took it over.

In 2010, the Tayal group was in news following which the RBI forced the merger of BoR with ICICI Bank. Market regulator, Securities and exchange board of India had found that Tayals fraudulently raised their stake in BoR through a series of off-market transactions.

Apart from the three companies now embroiled in the controversy, Praveen Kumar also runs other companies – Ksl and Industries Ltd, Krishna Lifestyle Technologies, Asahi Industries and Single Point Security Solutions.

[4]

Bhasin is occupying his post with the brazenness of a hardened criminal.

Bhasin took charge as the VC on June 11 2015.

The earlier CVC had recommended that Regular Departmental Action should be initiated against Bhasin.

The Supreme Court is seized of the matter against Bhasin since July 2015.

Excerpts from averments in public interest litigation [PIL] matter being heard in the Apex Court against Bhasin:

Bhasin was indicted in a detailed inquiry by the Central Vigilance Commission in 2013 for forging and tampering with appraisal report of Malay Mukherjee – a former General Manager of Indian Bank. Mukherjee currently heads IFCI.  

Former Union Minister and currently a senior member of the ruling party Dr Subramanian Swamy had written a strongly worded letter to the Prime Minister on 11.06.2015 stating that charge against Respondent No. 3 (Bhasin) is “very serious” and the recommendation of the selection committee to appoint Respondent No. 3 as VC must be withdrawn. He said “finding of moral turpitude by CVC of Bhasin makes him unfit to keep the position of Vigilance Commissioner.”

The Central Vigilance Commission recommended action against current CMD of Indian Bank – TM Bhasin as early as August 2013 asking the Union Finance Ministry to comply.

Bhasin had allegedly collaborated with the nation’s enemy Dawood Ibrahim to ruin Bank of Baroda and thus destroy the Indian financial system.

Bhasin’s target was reputed banker SS Mundra, currently a deputy governor in the Reserve Bank of India [RBI]. Bhasin wanted the post and reportedly managed to keep Mundra waiting for several months. Mundra’s elevation to RBI became possible after Dr Kamalesh Chandra Chakrabarty – another ex-Indian Bank head quit his RBI post 3 months ahead of schedule. Chakrabarty has an impeccable record as a banker. He had spent most of his years in Bank of Baroda. Chakrabarty’s opinion about Bhasin can be summed up in just two words “sheer contempt”. The contempt stemmed from one act- the so-called inauguration of Indian Bank HQ – adjacent to the ruling AIADMK’s HQ in Chennai. Bhasin had himself participated in its earlier “inaugurations” twice! Worse, he managed to invite Pranab Mukherjee [then yet to be elevated to the nation’s highest office] to do the honours. It was a ruse to allegedly splurge a sum in excess of Rs.3 crores – sans any justification – for a function that lasted less than an hour! The worst side of it is that Bhasin reportedly went around claiming to have bank-rolled Mukherjee’s elevation to the office of President! And there were, wags in Chennai add, enough fools to believe this kind of tripe!

The evidence against Bhasin has been piling since 2011!