The Rajasthan Police on Sunday arrested Pratip Chaudhuri, former State Bank of India chairman, in Delhi in connection with an alleged loan scam. He’s been sent to judicial custody for 14 days for an alleged sale of a non-performing asset (NPA)—Hotel Gaudavan—to Alchemist ARC at a low value.
The arrest was made on the basis of a protest petition filed by former directors of Hotel Gaudavan before the Chief Judicial Magistrate (CJM) Jaisalmer.
State Bank of India and Alchemist Asset Reconstruction Company (ARC) have maintained that a fair and transparent process was followed by the bank for assigning the non-performing asset (NPA) or the bad loan on March 20, 2014.
The petition was accepted, and non-bailable warrants were issued against Chaudhuri and Alok Dhir, promoter of the ARC, without issuing any summons or notice, alleged Manish Nihalani, chief operating officer, Alchemist ARC.
Industry lobby Indian Banks' Association (IBA) is in the process of taking up the matter with the Union finance ministry and Rajasthan government for prompt resolution.
Sunil Mehta, chief executive, IBA, said the lending and sale of assets are financial decisions and that these are executed by adhering to strict due diligence norms. Such arrests are a grave matter and the association will raise the issue with the Department of Financial Services and Rajasthan government, he said.
The management committee of IBA will also seek redressal, Mehta added.
SBI, in a statement, said the ‘Garh Rajwada’ hotel project in Jaisalmer was financed by it in 2007. With the key promoter passing away in April 2010, the account slipped into NPA in June that year.
After recovery attempts failed, the dues were assigned to an asset reconstruction company (ARC) for recovery in March 2014 as per a laid down process. The borrower was also subjected to an insolvency process by the ARC and the assets were acquired by an NBFC in December 2017.
Chaudhuri retired from the bank in September 2013 and subsequently joined Alchemist ARC.
As recovery efforts failed, approvals for sale to ARC were taken in January 2014. The assignment to ARC was completed in March 2014.
It transpires now that the borrower had initially filed an FIR with the State Police against the sale of asset to ARC.
SBI said aggrieved against the negative closure report filed by police authorities, the borrower had filed a protest petition. SBI was not made a party to this case. All directors of that ARC including Chaudhuri, who joined it in October 2014, have been named in the alleged scam.
ARC has alleged that the defaulting borrowers are trying to “frustrate the recovery process” that has been initiated by the lenders and Alchemist ARC. Instead of repaying their dues, defaulting borrowers, Harender Singh Rathore and Lokendra Rathore, are harassing and maligning the image of Alchemist ARC’s directors, Nihalani alleged.
“The ARC is examining all legal remedies,” Nihalani said when asked if Alok Dhir would appear before the authorities.