CBI files charges in loans scam

The Central Bureau of Investigation (CBI) has filed charge-sheets in the cash-for-loan scam against top officials of state-owned banks and financial institutions for having taken bribes amounting to Rs1 crore to sanction loans.

The CBI charged Ramchandran Nair, former CEO of LIC Housing Finance of having taken a bribe of Rs16 lakh. Two other bankers, R N Tayal, former general manager, Bank of India, and Venkoba Gujjal, former deputy general manager of Punjab National Bank, were also charged of having taken bribes of Rs.45 lakh and Rs.25 lakh respectively.

Charge-sheets were also filed against employees of Money Matters Financial Services (MMFS) including Rajesh Sharma, chairman and managing director, along with Sanjay Sharma and Suresh Gattani, for having bribed the public sector bank employees. Others who have been charged in the case include Maninder Singh Johar, director, Central Bank of India, and Naresh Chopra, secretary, investments, Life Insurance Corporation.

According to the charge-sheet, the bank executives sanctioned large loans to private companies, including developers, ignoring mandatory conditions for granting approvals, in collusion with the employees of MMFS. 

The CBI arrested the eight accused in November 2010, but all were released on bail. According to the investigative agency, the executives of Money Matters were acting as mediators and facilitators for corporate loans and other facilities from financial institutions.

Money Matters had hired as ‘independent directors’ retired top bankers and officials of LIC and LIC Housing Finance. According to the CBI, Money Matters facilitated loans from banks and financial institutions to several private companies including Suzlon, Adani, JSW Power, Pantaloon, Lavasa, DB Realty, mantra Realty and JP group.

All the banks and LIC Housing Finance denied any wrong-doing and said the loans were approved in compliance with the relevant regulatory norms.

But the CBI probe revealed that there were financial irregularities in most of the loans given through Money Matters.
In some cases, loans were disbursed even though the borrowers had surplus cash, in other cases, interest rates were lowered. In a few cases, the banks and other institutions extended loans even without asking for the requisite security.