Chennai, June 01: For the first time perhaps in India’s banking history, the Central Vigilance Commission (CVC) is conducting a probe based on a whistleblower’s complaint about certain alleged irregularities at the Mangalore-based public sector Corporation Bank.
According to the sources, a two-member team from the CVC camped at Corporation Bank’s headquarters May 9-14 to probe the complaint and senior bank officials deposed before it.
The inquiry was held under Sections 8 and 11 of the CVC Act. Section 11 confers inquiry team the power of a civil court in respect of summoning and enforcing attendance of a person, production of documents and receiving evidence on affidavits, among others.
It is learnt the two-member team will submit its report sometime this week.
The complaint, it is reliably learnt, is against the bank’s chairman and managing director Ramnath Pradeep.
The issue of CVC inspection was discussed at the bank’s last board meeting May 23, 2011.
According to bank sources, the CVC looked into the sanction of loans to some parties, the transfer of general managers dealing with the credit sanctioning and information technology, and proposal to appoint a foreign consultancy firm for IT, among other issues.
Speaking on the condition of anonymity, an official said: “The major complaint is the sanction of loan to an Indore-based steel company classified as a loan defaulter by another nationalised bank. That bank had to forgo sizeable sum of its dues in one-time settlement of the loan account.”
The Indore-based company was sanctioned Rs.50 crore by Corporation Bank.
Another senior official said that credit was sanctioned as a big private sector engineering conglomerate had guaranteed repayment of the loan. The Indore company is a vendor for the group. But bank officials said there was no such guarantee.
According to officials, first-time borrowers from the bank have been sanctioned loans of around Rs.1,000 crore, while the bank’s long-time policy is to restrict the exposure to Rs.250 crore initially.
Officials also complain that rejected loan proposals were presented several times for sanction.
One of the complaints is the transfer of general managers, including a chief general manager, after Pradeep assumed office last September.
The chief general manager is normally a position in the bank’s head office and the official, U.B. Bhatt, was transferred to Mumbai. The bank has 22 general managers, including the chief general manager and the chief vigilance officer.
Responding to that, Pradeep said: “The transfers are made only with consultation with the official concerned so that they can be with their families. Bhatt’s family was in Mumbai and he was posted in Mangalore. Similarly, another general manager was brought to Mangalore from Gujarat so that he could be with his family.”
Mehta said transfers were routine in banks. “With the bank getting nearly 60 percent of its business from Mumbai, it needed a senior official to be stationed there. That was the reason told to us on the transfers of top level officials.”
But some officials countered that there were hundreds of employees who were away from their families, and have not been transferred.
–Agencies