CBI keen to be lead investigator of big-ticket corporate loan default cases

NEW DELHI: CBI wants to be made the default lead agency probing all big-ticket corporate loan default cases, rather than having such cases referred to it. CBI officials have sought broader powers after recently being asked by the finance ministry to probe the top 10 cases of default in which fraud is suspected at state-run banks. The agency faces hurdles when it comes to gathering info and conducting raids in the big bank fraud cases it’s currently probing. That’s why it wants the Centre to specify the offences or categories of such infringements that need to be investigated under Section 3 of the Delhi Special Police Establishment Act.

The central government can implement this change through a gazette notification. Apart from being notified as the main investigator for such cases, CBI wants chief vigilance officers (CVOs) at state-run banks to be appointed as nodal officers. Currently, the bank CVO has to refer any purported fraud to the Central Vigilance Commission (CVC), which in turn asks CBI to start an investigation.

The agency can take the case or decline it on the ground that the fraud is of a low amount and can be probed by the economic offences wing of the state police. The amendment to the Delhi Special Police Establishment (DSPE) Act will allow CBI to directly pick up high-value cases. This will not only speed up the investigation but also lead to better coordination between banks and the agency, according to CBI officials.

Among the matters now being examined by CBI is a loan obtained by the grounded Kingfisher Airlines from IDBI Bank in 2009 although it had already missed repayments on borrowings worth Rs 7,500 crore to a consortium of 17 banks led by State Bank of India. CBI registered a preliminary enquiry against IDBI Bank and Kingfisher Airlines in August last year. IDBI Bank and Kingfisher couldn’t be immediately reached for comment.

NEED TO EXCHANGE INFORMATION

Financial Services Secretary Hasmukh Adhia has also instructed CBI and other agencies involved in bank fraud cases to exchange information.

“CBI, which also maintains post-fraud information data in connection with the cases being investigated by the agency, has also been asked to share (data),” said a senior official who attended the meeting at the finance ministry last month.

It was observed at the meeting that the reporting of fraud cases by public sector banks was faulty. CBI officials said banks should consult them before making complaints that become the basis of first information reports to help plug any gaps.

The Reserve Bank of India has also been asked to share the summary of its annual financial inspection reports with other agencies in cases where red flags have been raised by banks.

It was also suggested that a system for reporting bank fraud to the Central Economic Intelligence Bureau needed to be developed so that it can help CBI in coordinating and pursuing large-value bank fraud cases.

Poor lending practices and a system prone to political interference have combined to raise the gross bad debt burden on staterun banks — at the end of 2014, gross bad loans at public sector banks surged to Rs 2.60 lakh crore from Rs 80,818 crore in 2013. Prime Minister Narendra Modi told state-owned bank managers earlier this year that they should run their units along strict business lines and reassured them that no political influence would be brought to bear on their decisions.