Losing Ground

The banking sector hits a new low, as Bank of Maharashtra officials get embroiled in the DSK scam.

- Nachiket Kelkar​​​​​​​

TIMES HAVE NOT been good for the banking sector, owing to the mounting bad loans and the many cases of fraud. However, when the Pune Police swooped down on top executives of the public-sector Bank of Maharashtra on June 20, it sent shockwaves across the industry. Ravindra Marathe, managing director and chief executive of the bank; Rajendra Gupta, executive director; Nityanand Deshpande, zonal manager; and Sushil Muhnot, former chairman, were arrested by the economic offences wing, which has been investigating a cheating case against real estate developer D.S. Kulkarni.

“The arrested officials misused their position and authority from time to time, and acting illegally and without following rules sanctioned 0100 crore loan to D.S. Kulkarni Developers (DSKDL) under a consortium,” said the remand application. The police are also investigating the motive of the bank officials in disbursing ₹ 50 crore to DSKDL before the consortium of banks reached an agreement. “There is gross violation of Reserve Bank circulars, their own loan policies and their own circular,” special public prosecutor Pravin Chavan told THE WEEK. He said the bank had done no investigation, and there was no viability report even as around 1,200 cheques given to depositors by DSKDL had bounced, and some 250 employees had left the company.

Bank of Maharashtra, however, said its outstanding exposure to DSKDL was just ₹ 94.52 crore, and loans were given as per the bank’s lending rules. Marathe secured bail on June 27. The bank did not respond to a mail sent by this correspondent.