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Housing scam: bankers defend loans sanctioned

Nov 26, 2010 09:55 AM IST India India
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Mumbai: Bankers have defended the loans given to companies named in the CBI charge sheet in connection to the bribes for loan scam saying these were performing loans and were sanctioned after due process.

In its chargesheet, the CBI had named officials from the Bank of India, Punjab National Bank and even a board member of Central Bank of India for allegedly accepting bribes to sanction loans, causing worries that the loans were sanctioned to non-credit worthy borrowers.

However, the bankers contended that loans cannot be sanctioned by any single officer and their processes ensure that all loans are sanctioned after proper due diligence.

"These are three accounts - BGR Energy, OPG Power and Ashapura Minechem. I would like to say that BGR Energy is a well conducted satisfactory account. OPG Power, though sanctioned is yet to be disbursed and Ashapura Minechem is an account which is with us for over 40 years. This is a misconduct of an individual but let me clarify that there is a due process for sanctioning of all loans," said Alok Kumar Mishra, Chairman, Bank Of India.

"I don't think there is going to be an asset quality impact on account of this because whatever loans that have been sanctioned, the banks have sanctioned after following all due processes and in the ordinary process of business. I don't foresee any impact of this on the asset quality," said KR Kamath," said KR Kamath, CMD, Punjab National Bank.

The chief of the Indian Banks Association and chairman of India's largest public sector bank also agreed that it was not a systematic failure.

"It is not a systemic risk issue, this is not something where something has happened on a very wide scale. All banks have policy procedures in place for risk management or risk assessment and I believe that all banks are always fairly prudent in all these procedures of assessment and that will continue," said the SBI chairman.

however, the issue may mean that it may take more time for loans to be sanctioned from now on. Both the Finance Ministry and RBI have asked the banks mentioned in the CBI report to disclose just how much was granted as loans by the arrested officials.