An arrest that has raised concerns

The arrest of former SBI chairman Pratip Chaudhuri by the Rajasthan police in a case related to the NPA (Non-Performing Assets) resolution process exposes the loopholes and problems in the system which can work against itself. The system was developed over a long period and has proved to be effective in many cases. But there are cases where it can malfunction, and Chaudhuri’s arrest raises concerns in that respect. He was arrested on the orders of a lower court in connection with the sale of an NPA to an asset reconstruction company (ARC). The sale happened after his retirement. The bank’s loan for a hotel project in Jaisalmer had turned an NPA in 2010 and it was given to the ARC in 2014, a year after Chaudhuri retired. It so happened that he became a director of the company later. The borrower contested the resolution process and managed to secure an order for Chaudhuri’s arrest. The arrest was made on the basis of a protest petition made by the defaulter.

The banking community has expressed shock and outrage over the arrest, alleging that it was harassment and persecution for no good reason. It has been pointed out that the entire procedure for NPA resolution was in accordance with the laid down rules and Chaudhuri did not influence it in any way. It is also noted that the amount involved was relatively small and so the decisions were taken at a lower level, not the chairman’s office. It is alleged that there has been a miscarriage of justice as the due process has not been followed. The order for arrest was issued by a lower court without hearing Chaudhuri’s side and the police arrested him in Delhi and took him away without informing the Delhi police. He was denied bail and is in jail now.

No evidence or information has yet come into the public realm that has pointed to any wrongdoing by Chaudhuri in the matter. That is why the banking community and many others have expressed concern over the action against him. Bonafide decisions by officials should be protected and they should not be hounded for them later. That will adversely affect their morale and discourage them from taking decisions. Banks have huge piles of NPAs. The government had promised that it would support them in their efforts to solve the bad loans problem. It had announced a new Staff Accountability Framework to protect them from unnecessary scrutiny. Accountability is very important, but when actions are taken in such cases, the reason for it should be made known and those who are acted against should have the opportunity to defend themselves.