According to Mr. O.P. Bhatt, Chairman, State Bank of India (SBI), 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.
On 24th November, CBI 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.
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).
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