What is the issue?
- In recent times there are growing number of cases which involves CBI investigation.
- But the actions taken by CBI in cases involving banks has shown signs of an unjustified passion.
What are the significance of CBI?
- CBI is the premier investigative agency in the country with a dual responsibility to investigate grievous cases and provide leadership and direction in fighting corruption to the Police force across the country.
- The aim of the organization is to uphold the law of land through in-depth investigation and successful prosecution of offences.
- The wide ambit of CBI responsibilities ranges from political corruption to corporate fraud.
- The CBI’s investigations are considered to be open-ended and which would have a destabilising impact on the political economy.
What are the status of Bank cases involving CBI?
- IDBI Bank Case - FIR’s against 15 senior executives of IDBI Bank were issued in a case involving two separate loans, given in 2010 and 2014, to two separate companies of the original owners of Aircel.
- Reportedly, after the first company failed to repay a ~3.22 billion loan and filed for bankruptcy.
- IDBI Bank gave another loan of Rs 5.23 billion to another group company with the intention of recovering the first loan.
- IDBI Bank has said it has made full provisioning for the loans, which became non-performing.
- 80:20 scheme case - The CBI questioned a former Reserve Bank of India deputy governor on the reasons for “rushing through”.
- It is a circular on the central bank’s gold import policy, which was introduced in 2013 to curb gold imports.
What are the assertions made by CBI in the bank cases?
- Much of the decisions taken by CBI as seen at the behest of whichever regime is in power, its recent actions are no less restrictive in nature.
- In recent times, in the cases involving banks the CBI has shown signs of an unwarranted zeal.
- In the IDBI case there is an open question whether the bankers could have foreseen the way the telecom sector would capitulate.
- It is also difficult to ascertain whether it was an act of fraud or a bona fide decision that went wrong.
- In 80:20 Scheme case the CBI’s enquiries were linked to the collusive fraud between Punjab National Bank (PNB) and jewellers Nirav Modi.
- The questioning by the CBI sent alarm bells ringing through the banking system.
What will be the implications of CBI’s decisions?
- The over-vigilance of CBI is likely to have a debilitating impact on the decision-making process in Indian banks, especially in the state-owned ones.
- It is likely to affect bank credit to industry, which barely grew through most of 2016-17 under the weight of systemic non-performing assets, but had started to show small signs of revival.
- If public and private sector bank officers anticipate investigation by the CBI for conducting routine business, they are unlikely to take any decision.
- A politically induced climate of fear in Indian banking could cause economic stagnation as damaging as the “policy paralysis”.
Source: Business Standard
