Mukherjee calls for review of graft-hit financial system

NEW DELHI - A day after India’s premier investigative agency arrested eight officials of banks and financial institutions for allegedly taking bribes to give loans, Finance Minister Pranab Mukherjee Thursday directed a thorough review of the financial system and remedial action.

The directions were issued to all public sector banks, financial institutions, as also insurance companies to particularly look into their exposures to various firms mentioned by the Central Bureau of Investigation (CBI).

He directed that they should carry out an independent evaluation on the asset quality, documentation and compliance of other prudential requirements in the firms mentioned in the CBI application to court, a finance ministry statement said.

He also directed that they should ensure all procedures and due diligences, consistent with board-approved guidelines, have been adhered to while approving these loans by the competent authority.

The missive followed a review at his North Block here with officers of the Department of Financial Services of the situation arising out of the arrests Wednesday that involves a few banks and LIC Housing Finance.

At least eight senior officers of some state-run banks and financial institutions were arrested by the probe agency Wednesday for allegedly accepting bribes to extend loans to corporate houses, in what the probe agency said was a housing finance scam.

The agency said officials arrested included the chief executive of LIC Housing Finance, a general manager of the Central Bank of India and senior officials of Punjab National Bank and Bank of India.

Search and seizure operations were conducted in Mumbai, Delhi, Chennai, Jaipur, Kolkata and Jalandhar based on secret information received by the bureau. The scam has been going on for some time, a spokesperson for the agency said.

The agency also dispatched letters seeking explanation from at least 15 firms against which it claimed to have unearthed incriminating evidence.