The Economic Offences Wing of the Pune police on Wednesday arrested Bank of Maharashtra MD and CEO Ravindra Marathe, executive director Rajendra Gupta and two other bank officials, including Marathe’s predecessor, for allegedly disbursing crores of rupees in loans to DSK Developers Limited (DSKDL) without following proper procedure and in violation of RBI guidelines.
These arrests are part of the ongoing probes into the Rs 2,043 crore economic fraud said to have been committed by Pune developer D S Kulkarni, alias DSK, and his group of companies here, police said.
The bank’s former managing director and CEO, Sushil Muhnot, zonal manager Nityanand Deshpande, DSK’s chartered accountant and statutory auditor, Sunil Ghatpande, and DSKDL chief engineer and vice-president Rajiv Newaskar were the others arrested in the case. Muhnot and Deshpande were arrested from Jaipur and Ahmedabad respectively.
Bank of Maharashtra is the only nationalised bank which has its head office in Pune. Investigating officer and assistant commissioner of police (EOW) Nilesh More said , “The bank officers colluded with DSKDL, the group’s flagship company, to sanction and disburse the amount under the garb of a loan, which was siphoned off.”
The Rs 2,043 crore fraud relates to siphoning of money raised by the DSK group through investors as well as loans from banks and financial institutions, non-convertible debentures and money collected from home buyers in housing projects.
In an official statement, the bank said its total outstanding exposure to DSKDL was Rs 94.52 crore. The statement further read, “Recovery process like SARFAESI action has already been initiated by the bank and some of the properties are due for auction. Bank has also declared DSKDL and its promoters as wilful defaulters.”
Special public prosecutor Pravin Chavan said, “The EOW is also investigating the role of officials from five other nationalised banks which were part of a six-member consortium that had sanctioned a Rs 600 crore loan to DSKDL’s ‘Dream City’ mega housing project in 2016. A total of Rs 337 crore of this sanctioned loan was actually disbursed to the borrower by the cosortium. The Bank of Maharashtra’s commitment was for Rs 100 crore and its officials actually disbursed Rs 50 crore of this amount in one go on March 15, 2016 in violation of the Reserve Bank of India’s (RBI) guidelines.”
On Wednesday, Marathe , Gupta, Ghatpande and Newaskar were produced before special judge ( MPID) Act R N Sardesai, who ordered their remand in police custody till June 27. “Considering the nature and gravity of the offence and the huge amount involved in this crime, opportunity needs to be given to the investigating officer for custodial interrogation of the present four accused,” Sardesai said in his order. All the accused have been booked for criminal breach of trust, cheating and other offences.
Shekhar Sonalkar, an expert forensic auditor hired by the Pune police, said , “Muhnot, Gupta and Deshpande (the last named is a zonal manager who processed the loan proposal) disbursed Rs 50 crore of the bank’s Rs 100 crore commitment in one go without waiting for a sanction letter formalising the tie-up and financial closure between the banks in the consortium. This was against the RBI norms. The loan was disbursed against an understanding that in the absence of a financial closure, DSK himself will put in the money.
However, the bank did not do any due diligence as to from where he would bring this money. The loan was used for purposes other than what it was availed for and even for repaying unsecured loans.” Both More and Sonalkar said, “Marathe was part of the bank’s credit approval committee that cleared a fresh Rs 10 crore short term loan to DSKDL, ignoring the fact that the bank’s own loan (Rs 50 crore) had fallen into the special mention account (SMA)-II category with 74 days overdue. The firm was not even able to pay interest on the loan and credit rating organisation CARE had put the firm in the “-C” category, which means extending loans to such entity is high risk.”
Sonalkar said, “The bank officials ignored such low credit rating and extended the Rs 10 crore loan against a vague primary security such as ‘stocks and goods not specifically hypothecated to any other bank’ which was never specified .”