Viswanathan had sought premature retirement following the Reserve Bank of India's refusal to clear him of his alleged involvement in the securities scam during his tenure at SBI Capital Markets. In the normal course, Viswanathan would have retired in November 1997. When contacted, Viswanathan admitted that he had quit. I was released on August 31, Viswanathan told Business Standard. Sources in SBI said the DMD was warned and censured by the SBI board. It is a sort of a penalty. For Viswanathan, however, it has turned out to be a technical punishment since he has already been released and the so-called penalty imposed on him in no way can affect his future prospects in the organisation. His superannuation benefits will not be blocked, sources said.
By releasing the DMD with a warning, the SBI board has overruled the recommendation of the Central Vigilence Commission which wanted the bank to give him marching orders instead of accepting his resignation. The CVC can advise SBI on these matters. However, it is up to the bank to abide by the CVC's recommendations, SBI sources said. SBI Caps lost Rs 16.25 crore in securities transactions with Harshad Mehta in 1991-92 during Viswanathan's tenure as the chief of the SBI subsidiary. Both the SBI and Central Bureau of Investigation had earlier exonerated Viswanathan. However, the RBI-instituted inquiry, conducted by SS Tinaikar, IAS and former commissioner of Birhanmumbai Municipal Corporation, had indicted him and the then executive director of SBI Caps R P Srivastava. Consequently, the bank was forced to initiate action against both the MD and ED of the subsidiary last year.
SBI could not accept Viswanathan's resignation without the CVC clearance. According to SBI sources, Viswanathan may join the Gurgaon-based Management Development Institute, promoted by Industrial Finance Corporation of India, as director. Viswanathan, who had a stint with IFCI as its executive director, however, denied this. I plan to settle down in Madras and may take up some academic assignments, he said. In 1991-92 when Viswanathan was at the helm of affairs at the SBI Caps, its Madras office, headed by C Gopal Raj, lost Rs 16.25 crore in securities transactions with Mehta. The office invested funds, mopped up largely from the SBI clientele in the form of intercorporate deposits, in ready-forward transactions without obtaining bankers' receipts.
The quarterly audit report in June-September 1991 mentioned the irregularity at the Madras office but the practice of entertaining repos without obtaining BRs continued and by end-March 1992 the transactions turned sticky. The corporate office in Mumbai did business with Mehta but against BRs and not his contract notes, sources said.
SBI Caps had written off the loss in 1991-92 and 1992-93. The SBI in-house probe, headed by a chief general manager, exonerated Viswanathan. Another inquiry, conducted by CBI, recommended disciplinary action against Gopal Raj and an assistant general manager and criminal prosecution against two others. However, the RBI probe indicted both Viswanathan and Srivastava. At the central bank's instance, SBI initiated disciplinary action against the two executives and found them not guilty. However, it could not exonerate them without the CVC's approval.
