The country's largest lender State Bank of India (SBI) today said the housing finance racket, involving CEO of LIC Housing Finance and several senior bankers, will not hit disbursements to the real estate sector and there was no need for alarm.
"We are always cautious when we lend and you know there are always bad loans... Why should it impact (lending to real estate sector)," SBI Chairman O P Bhatt told reporters here.
"I won't say that (the current system) is perfect. But there is no need for any alarm. I don't think there is any any systemic risk that we are talking about. These are individual cases," he added.
CBI yesterday arrested LIC Housing Finance CEO Ramachandran Nair and seven other senior bankers for colluding with Mumbai-based firm Money Matters Ltd to sanction large scale corporate loans, overriding mandatory conditions for such approvals along with other irregularities.
Asked whether there is any case for regulatory review, Bhatt said that it was for the Reserve Bank to take a call.
"If there will be any regulatory review, it will be for the RBI and other regulators to look upon. But I think these things keep on happening periodically," he said.
Ruling out any internal inquiry to find out any housing loan irregularity in SBI, Bhatt said, "We still do not know what has happened... I would not say that there is a huge amount of such elements in the Indian banking industry.
"I would like to say with pride that Indian public sector banks are far above such things. There might be one or two exceptions...It is not a systemic issue. This is not something that has happened in a wide scale," he added.
Bhatt said all banks have policies and plans for risk assessment which are fairly prudent, and added, "there are several mechanisms (to deal with such issues)...Lakhs of loans are given out including to the housing sector. We have multiple oversights, checks which are proactive and which are also reactive. We have a very strong set of institution."
Later, talking to reporters, Yes Bank managing director and CEO Rana Kapoor said "it (housing finance racket) is just an aberration. It is exception to the rule so it is not going to have a serious impact."
Besides Nair, the bankers who were arrested by the CBI included Naresh K Chopra, Secretary (Investment), LIC, R N Tayal, General Manager of Bank of India (Delhi), Maninder Singh Johar, Director (Chartered Accountant) of Central Bank of India, Venkoba Gujjal and Dy General Manager of Punjab National Bank (Delhi).
