Ex-SBI chief's arrest shocks bankers

Post-Retirement Banking Blues

- As per the allegations, Pratip Chaudhuri sold Rs 200-cr property for just Rs25 cr as the owners defaulted on a loan, to a company named Alchemist ARC

- Chaudhuri's advocate filed another bail application

- It'll be heard on Nov 8

- After retirement in 2013, Chaudhuri became one of the directors in the company that had bought the hotel

- The court on Oct 23 issued arrest warrants against 8 people, including Chaudhuri

- The rest of the seven are yet to be arrested

Mumbai: The arrest of the former SBI chairman, Pratip Chaudhuri, has sent shock waves across the banking sector. The banking community feels that if such types of harassment continue against bankers, then bank credit business will suffer the most.

In a first, the former SBI chairman, Pratip Chaudhuri was arrested by Jaisalmer police from his residence in New Delhi on Sunday over an alleged fraud involving the sale of a hotel in Jaisalmer at a hugely undervalued price.

He was remanded in judicial custody on Monday for 14 days after the chief judicial magistrate rejected his bail plea. He was sent to Jaisalmer jail. His advocate has filed another bail application in the district and sessions court; it will be heard on November 8.

As per the allegations levelled against him, Chaudhuri sold the Rs 200-crore property for just Rs 25 crore, when the owners defaulted on a loan, to a company named Alchemist ARC, it is alleged. After retirement, he became one of the directors in the company that had bought the hotel. The CJM's court agreed that selling the luxury hotel without getting it auctioned amounted to cheating. On October 23, the court issued arrest warrants against eight people, including Chaudhuri. The rest of the seven are yet to be arrested.

Talking to Bizz Buzz, Shiva Kumar, former managing director of State Bank of Bikaner & Jaipur, which is now a part of SBI, said: "This is very unfortunate that a banker, who has nothing to do with the case, has been arrested that too seven years after his retirement."

According to Kumar, "the government will have to take necessary steps to ensure that bankers are not harassed without reason and banking credit business doesn't suffer in the country affecting the economy."

A local court in Jaisalmer had issued an arrest warrant against the eight under relevant sections of law. Apart from the ex-banker, the other seven people are Alok Dhir, RK Kapur, SV Venkatakrishnan, Sasi Methadil, Devendra Jain, Tarun and Vijay Kishore Saxena. In 2008, the owner of Fort Rajwada Hotel, Dileep Singh Rathore, had decided to construct another hotel on Jaisalmer's Khuhadi Road and took a term loan of Rs 24 crore from SBI Jodhpur. In 2010, he sought another loan of Rs 6 crore from SBI, but the bank denied him the loan. Later in the same year, Rathore died of a heart attack. Two months after his death, SBI converted the under-construction hotel into an NPA and seized the property. SBI had both hotels evaluated and exerted pressure on Rathore's son, Harendra Singh Rathore, to repay the loan, it is claimed.

It is not the first time that such a complaint had been lodged by the borrower/promoter of The hotel group. In the year 2017, he tried a similar attempt against IRP (Insolvency Resolution Professional) and had made party to a host of other people into it. It was Supreme Court which had heard the matter directly and quashed the case as it didn't find any merit in the complaint.

"Can you imagine that after four years the 'gentleman' has again made the similar effort that too when the Alchemist ARC has taken over the property through IBC routes in NCLT. It seems to be a personal vendetta when the complainant is trying to take advantage of the same," felt a legal expert requesting anonymity.

Has anybody personally checked if Chaudhury was personally involved in the sanction of the loan in question? Secondly, the case pertains to the year 2006-07. And the action has been taken by the Rajasthan Police four years after the case was filed in the apex court.

Thirdly, a SBI chairman doesn't even see these kinds of small size loans. Chaudhury retired from the SBI in September 2013. The court on October 23 issued arrest warrants against eight people,

including Alok Dhir and Pratip Chaudhari, following which the Jaisalmer police arrested the former SBI chairman.

Normally the banks go for due diligence before sanctioning any loan. They do the valuation process and when they find that it was unrealisable and the loan has turned NPA, then only they sell it off to someone else. Coming on ARC, if an ARC has taken up such an NPA then it doesn't mean that ARC has taken up the entire thing as there are several stakeholders involved in the process, feel the experts. Part of it will go to security receipt holders too.