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No scam in Indian Bank, says Chidambaram

Finance Minister Palaniappan Chidambaram asserted that there was no scandal in the public sector Indian Bank. The bank only had some non-performing assets, he said, and there was a distinction between commercial misjudgment and a wilful criminal act.

"The Indian Bank is now in the process of a turnaround," Chidambaram told a crowded press conference in Madras.

He said the finance ministry had given permission to the Central Bureau of Investigation to probe cases involving the Indian Bank. Altogether, 23 cases had been registered by the CBI with the finance ministry's permission, he disclosed.

Chidambaram refused to discuss reports that several Tamil Maanila Congress MPs and other leaders, who had borrowed heavily from the Indian Bank, had not repaid the loans. He said the names of the defaulters could not be disclosed under the banking laws unless proceeded against in a court of law.

Several banks such as the Indian Overseas Bank, the UCO Bank and the Bank of India which had heavy non-performing assets earlier, he said, had turned around or were in the process of turning around. The finance minister wondered why the media took so much interest only in the Indian Bank.

Chidambaram said the Reserve Bank of India was also investigating the affairs of the Indian Bank. The Supreme Court was monitoring the progress of the investigation.

To borrow from the bank was not a crime, he added, saying because of the scare created, banks were now shying away from lending.

In the first quarter of fiscal 1997-98 ending June 30, while deposits of banks had increased by Rs 140 billion, advances had gone up only by Rs 60 million. This meant that banks were keeping their money in government securities and not lending for productive purposes.

UNI