CBI arrests senior bankers in Rs1,000-crore loan scam

At a press conference today the CBI's EOW chief P Kandaswamy said the agency has busted a housing loan racket and arrested the CEO of LIC Housing, the general manager of Bank of India, a director of Central Bank of India in New Delhi and deputy general manager of Punjab National Bank, the LIC's investments secretary and the chairman and managing director and two other officials of a Mumbai-based private financial services company in connection with a Rs1,000 crore-loan scam.

The arrested include Central Bank of India director Maninder Singh Johar, Punjab National Bank deputy general manager Venkoaba Gujjal, Bank of India general manager RN Tayal and Money Matters Financial chairman and MD, Rajesh Sharma.

A number of other bank officials have also been arrested on charges of bribery. According to the agency the officials had given out classified business information for favours. Also LIC's secretary (investments Mumbai) too has also been arrested on bribery charges.

Shortly before the stock markets closed of trading for the day, talks of LIC Housing Finance being involved in a multi-crore scam surfaced, sending realty and banking stocks plumetting.

The CBI, is meanwhile said to be questioning a slew of people involved in the scam, including officials from LIC Housing, Central Bank of India and a real estate developer, whose identity has not been disclosed.

According to the CBI, a private financial services company and real estate developers allegedly bribed officials of public sector lenders for facilitating loans and that confidential documents had exchanged hands. 

"These are clear cases of bribery and corruption by people working in the public sector. Land prices in urban areas have sky-rocketed and developers need large sum to buy them. So bribing officials for quick and huge loans is an easy option," said HDFC chairman Deepak Parekh.

The CBI has filed five cases in the matter in Mumbai. (See: Pranab asks PSU banks and FIs to assess exposure to scam-hit firms)