Make sure investor money is safe, FM tells banks

Finance Minister Pranab Mukherjee on Friday asked banks and financial institutions, which have exposure to companies involved in the multi-crore rupee housing finance racket, to ensure that investor money is safe.

"You know I have already instructed banking and financial institutions to look into all these issues and they should ensure that institutions' money is saved," Finance Minister Pranab Mukherjee told reporters in New Delhi.

On Thursday, Mukherjee held a review meeting with the officers of the department of financial services to take stock of the situation arising out the CBI arresting eight top officials of banks and financials institutions for allegedly accepting bribe for sanctioning loans.

Mukherjee had directed the lenders to look into their exposures to various companies mentioned in the CBI application filed in court.

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Among the companies named by CBI are financial services firm Money Matters, D B Realty, Pashmina Ltd, Mantri Realty, Sigrun Ltd, Entertainment World and Indore City Treasures.

He had also directed banks and financial institutions to strengthen the NPA monitoring and management in their institutions to ensure that advance action is taken to identify incipient sickness and take appropriate action thereon.

The CBI on Wednesday busted the housing-finance racket and arrested LIC Housing Finance CEO Ramachandran Nair, LIC Secretary (Investment) Naresh K Chopra and six top officials from banks and financial institutions, on charges of taking bribes to grant corporate loans.

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The Enforcement Directorate will launch a probe into the housing loan scam unearthed by the Central Bureau of Investigation to check possible money laundering.

Official sources said the CBI has registered cases against top officials from banks and financial firms under various sections of the Prevention of Corruption Act, which fall under scheduled offence of the Enforcement Directorate.

Sources, however, ruled out any immediate investigation into the case that saw arrest of top officials on charges of taking bribes for granting loans to corporates.

"The ED will move in as corruption falls under the schedule offence under the prevention of money laundering act (PMLA). However, the Directorate will not immediately step into the probe," a source said.

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The CBI had on November 24 arrested LIC Housing Finance CEO Ramachandran Nair, LIC secretary (investment) Naresh K Chopra, CMD of Mumbai-based firm Money Matters Rajesh Sharma and five other bank officials on allegations of involvement in housing finance racket.

The finance ministry had said that the housing scam is a bribery case involving some individuals and not a large-scale scam. It had also said that the Income Tax Department too will join the probe into the scam.

CBI has already sought explanation from private companies who benefited from the alleged cross-country housing loan racket.

D B Realty, Adani and a few other companies have already sent their representatives with relevant documents. The beneficiary companies include M/S Lavasa, Pashmina Ltd, Mantri Realty, Sigrun Ltd, Entertainment World, Indore City Treasures, Ashapura Minechem, BGR Energy, OPG Group, Adani, J P Hydro, J S W Power, Ralligear, Pantaloon, Adalite and MTECH.

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Even as more details emerge out of the multi-crore housing-finance scam, the Securities and Exchange Board of India on Friday said it would continue to take steps to protect the interest of investors'.

"Regulator's job is investor protection. So, we (will) continue to take steps to protect investors," Sebi whole-time member Prashant Saran told reporters on the sidelines of Assocham summit.

He further said, "Sebi already looks into the market dynamics... whenever we find something, we investigate. That is what we do."

His comments accompany the volatility in stockmarkets in the aftermath of the housing-finance scandal; popular BSE index Sensex has nosedived 710 points in the past three trading sessions. Further, continuing its downward journey, it plunged by another 193 points on Friday.

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The housing-finance scam came to light this week, when on November 24 the CBI busted a major housing loan racket and arrested among others, CEO of LIC Housing Finance Ramachandran Nair, on charges of corruption and criminal conspiracy.

The officials were arrested on allegations that while sanctioning large scale loans to corporates, they were working in collusion with loan arranger firm Money Matters and overlooked regulatory guidelines for granting such approvals, for their individual monetary gains.

Apart from R R Nair, Naresh K Chopra, secretary (investment), LIC; R N Tayal, general manager of Bank of India (Delhi); Maninder Singh Johar, director of Central Bank of India, and Venkoba Gujjal, DGM of Punjab National Bank (Delhi) were also named.

Rajesh Sharma, chairman and managing director of Mumbai-based firm Money Matters Ltd and two of its employees -- Suresh Gattani and Sanjay Sharma-- were also arrested.