4 former bank officials get 3-yr jail in 1992 securities scam

A special CBI court here convicted four former bank officials in one of the multi-crore securities scam cases and sentenced them to three years imprisonment, 25 years after the scam involving 'Big Bull' Harshad Mehta came to the fore.
The securities scam rocked the BSE and other stock exchanges in 1992. Mehta, the kingpin of the scam, passed away in 2001.
Yesterday, Special Judge H S Mahajan convicted M S Srinivasan (former funds manager of State Bank of Saurashtra), Vinayak Deosthali (Former Assistant Manager of UCO bank), R Sitaraman (official from SBI's security wing) and P A Karkhanis (former senior manager, UCO Bank).

The four officials were charged with corruption, criminal breach of trust and falsification of books of accounts and eventually benefiting the deceased stock broker.
The court also imposed a fine of Rs 5,000 on each of them. However, after conviction, the court granted bail to enable them approach higher courts.
According to prosecution, in 1991 all banks were required to keep percentage of their deposits with RBI on a fortnightly basis called as Cash Reserve Ratio. Also, each of the banks were required to invest its deposits in securities called as Statutory Liquidity Ratio.

To maintain CRR and SLR the banks could borrow or lend from each other in the call market without the involvement of brokers or third party.

The CBI said that State Bank of Saurashtra, DN Road branch and UCO bank, Hamam Street branch, were authorised for such transactions.
The officials of these two banks under the guise of Call money Lending Transactions (CMLT) debited and credited personal accounts of Mehta in UCO Bank.
The probe agency also alleged that Srinivasan and others in conspiracy with Mehta parted with a sum of aggregating Rs 198 crores of State Bank of Saurashtra (to Mehta) by falsely recording various callmoney lending transactions, showing counterparty as UCO Bank.
The court acquitted one P S Gokhale, while the case against Mehta and M V Shidhaye, also named as accused, was abated as they died during the trial.

Sindhu Bhatt of State Bank of Saurashtra turned approver in this case.
Multiple cases were filed in 1992 following a probe into irregularities in securities transactions and fund management by banks and other financial institutions.