2G scam gone behind, Indian PSU see biggest scandal ever

Scam of the year has hit the PSU sector of the country. It has sent shock waves amongst the common man and has also shaken the confidence of the stock market, if experts and analysts are to be believed. The CBI on Wednesday swooped down on the CEO of LIC Housing Finance Mr Ramachandran Nair and seven others including three top officials of public sector banks in connection with the alleged housing finance racket.

But the government does not agree that this is a scam. It simply terms this case as a mere housing case of bribery. "It's an individual case of bribery.

There is no large-scale scam. Banking system is sound," minister of state for finance Namo Narain Meena told reporters in the capital. He justified it further by saying that "NPAs (non-performing assets) are minimal in housing loans -- less than 1%. There is no impact on asset quality of banks."
The scam, for the time being, is being pegged to be around Rs 1,000 crore and with searches being conducted at various locations in Mumbai, Delhi, Chennai, Jaipur, Kolkata and Jalandhar, this could be just the tip of the iceberg..
Apart from Mr Nair, those arrested are Mr Naresh K Chopra, Secretary (Investment), LIC, Mr R N Tayal, General Manager of Bank of India (Delhi), Mr Maninder Singh Johar, Director (Chartered Accountant) of Central Bank of India, Mr Venkoba Gujjal and Deputy General Manager of Punjab National Bank (Delhi).
Mr Rajesh Sharma, Chairman and Managing Director of Mumbai-based firm Money Matters Ltd and two of its employees – Mr Suresh Gattani and Mr Sanjay Sharma -- were among those arrested, CBI said.

The officials allegedly colluded with the firm to sanction large scale corporate loans, overriding mandatory conditions for such approvals along with other irregularities.
But for sure, this case will go down as a black mark for the PSUs and financial system of India which withstood the ravages of the global economic crisis better than almost anywhere in the world , because Indian regulators have been conservative in permitting the more esoteric practices that caused trouble on Wall Street, and in part because India's banks have been domestically focused.

In the meantime, reactions of heads of public sector banks which have been named in this case, are awaited to know what their take is on this issue. Whether they admit that this is a scam, a procedural lapse with criminal intent or they tow the government line and pass this off as a simple bribery case .........