Finance ministry receives reports from lenders on housing loan scandal

The finance ministry today said the lenders, whose officials were arrested by CBI in connection with the housing loan racket, have submitted reports to the government assuring that investor interest would be protected.

It said LIC Housing Finance Ltd (LICHFL), whose CEO Ramachandran Nair has been arrested in this case, has assured its investors, customers and business associates that all necessary steps would be taken to ensure that interests of various stakeholders are protected.

LICHFL also said that all procedures and due diligences consistent with Board approved guidelines have been adhered to in approving the loans by the competent authority, according to reports received by the financial services department under the ministry.

"It has also indicated that all loans have been secured by underlying assets to the full satisfaction of the appropriate authority," it added.

Bank of India, whose general manager (Delhi) RN Tayal, general manager was also arrested, said the CBI at Chennai had enquired about particulars of the official, who was earlier working in Chennai Large Corporate Branch and sought information on three accounts -- OPG Power, BGR Energy and Ashapura Minechem, Mumbai.

"Of these three accounts, Bank of India has reported that only one is at present NPA on account of derivative losses. Tayal was interrogated by CBI in Delhi on 23.11.2010 on the above three accounts," as per the information received by the finance ministry from BoI.

Chartered accountant MS Johar, director on the board of Central Bank of India, was also arrested by CBI. The bank said Johar is not its official.

A report received from the bank said, "No official of the bank has been arrested. CMD, Central Bank has confirmed that as per information available there is no impact of the above development on asset quality."

VK Gujjal, an official of a Punjab National Bank subsidiary, was also arrested.

Information received from the bank by the finance ministry said, "Gujjal is working as Chief Operating Officer of PNB Investment Services Limited, a merchant banking subsidiary set up by the bank and headquartered in Delhi. Prior to this he was working as DGM in-charge of Large Corporate Branch, Delhi from 30th May, 2009 to 22nd May, 2010."

PNB CMD KR Kamath said that there is no information linking the above incidence to any loan account of the bank, as per the reports.