The Reserve Bank of India does not play any role in sanctioning of large-value loans by banks, nor it has anything do with post-sanction monitoring process. In an affidavit submitted to before the Supreme Court, the RBI has also said that linking its officials with bank scams is ‘fallacious’.
RBI said, “Large value credit sanctions in banks are generally taken by a committee of the board/senior management of the bank. The sanctioning of such credit is committeebased and not an individual decision. RBI nominee director does not have veto power in the credit sanctioning process.”
The RBI was replying to a public interest litigation (PIL) filed jointly by former union minister and member of Bharatiya Janata Party (BJP) Subramanian Swamy and advocate Satya Sabharwal questioning the failure of Central Bureau of Investigation (CBI) to probe the role of RBI officials for their ‘acts of omission and commission’ in such scams.
A bench of justices B.R. Gavai and Vikram Nath heard the PIL on Wednesday and gave three weeks’ time to Swamy to respond to RBI’s affidavit.
The petition, highlighting a series of financial banking frauds, pointed out: “In the last couple of years, various banks reported scam after scam wherein the role of bank officials was clearly made out but surprisingly not even a single RBI official has been brought to justice despite RBI retaining the power to monitor, regulate, supervise, audit and direct the functioning of all banking companies in India.”
Major scams as listed out by the petitioners and being probed by CBI, ED, and the Serious Fraud Investigation Office (SFIO), included the Kingfisher scam ( ₹9400 crore), Nirav Modi-Punjab National Bank scam ( ₹11,400 crore), Bank of Maharashtra scam ( ₹2043 crore), PMC Bank scam ( ₹6500 crore), Rotomac scam ( ₹3695 crore) among others. In the IL&FS scam, the SFIO in June 2019 charge-sheeted the company officials for defaulting on loan obligations worth over ₹91,000 crore wiping off a huge chunk of public revenue.
Appering for RBI Solicitor general Tushar Mehta appearing told the Supreme Court, “The RBI stated that the scams referred to by the petitioner are being probed by CBI, ED. If there is complicity, they will investigate.”
However, “in the absence of any prima facie evidence being produced by the agencies or by the petitioner, trying to link the scams to the RBI officials is “fallacious and non-substantiated,” the SG added.
The RBI affidavit further said, “Bringing any individual to justice, RBI official or otherwise, there needs to be prima facie evidence for the investigating agencies to examine their role. It is for the investigating agencies to conduct an investigation as per the laid down procedures and applicable law. Most of the scams referred to in the present PIL are already under investigation by the CBI and Enforcement Directorate (ED). It is not for the petitioners to direct the course of investigations and decide the aspects which are to be pursued by the law enforcement agencies.”
It further stated, “Post sanction management and monitoring of loan, to ensure that the borrower satisfies all the terms and conditions of the sanction, including ensuring end use of funds for intended purposes, lies with the bank management.”