The Indian Banks’ Association (IBA) has asked all banks to take a clearance from the Central Bureau of Investigation (CBI) before allowing one-time settlement of bad loans, and not to drop criminal charges pertaining to the recovery of dues.
In order to bring in a uniform practice, the IBA has set up a working group that will circulate a model wherein banks will not be allowed to withdraw a criminal allegation even after the case is settled through a one-time settlement.
The working group is to submit its report within a month. The association has also decided to arrange a meeting every six months between bankers and the CBI.
The CBI had found that, in two previous cases of 1992-93, banks had made a one-time settlement and had withdrawn all criminal proceedings against the companies in the Supreme Court.
“Banks will have to seek the CBI’s clearance in all cases where criminal proceedings are underway, even if the loan is paid by the defaulter under the one-time settlement scheme,” said IBA Chief Executive K Ramakrishnan. He added that willful defaulters are a concern for both banks and the CBI.
In February, the CBI had approached banks through the Central Vigilance Commission (CVC) asking them not to discontinue criminal proceedings even as they settle the civil suit.
Cases regarding defaults which involve amounts of more than Rs 1 crore are given to the CBI, while those which involve less than Rs 1 crore is dealt with by the local police.
A source said that, in one of the cases, the United Bank of India had called off criminal proceedings against Duncan Agro after it availed of the one-time settlement offer.
The amount involved in this case was over Rs 450 crore. The source added that, in this case, the bank had withdrawn all criminal proceedings against the firm even as the CBI was prosecuting it for forgery.
