IBA resists CBI plan to probe private banks

India’s premier investigative agency the Central Bureau of Investigation (CBI) is seen attempting to extend its turf to cover private banks and corporates which remain largely outside its investigative domain. The agency has sounded out the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA), which represents the interests of a multitude of banks, on whether private banks and corporates could be brought under the ambit of the investigative agency. CBI is now of the view that since private banks deal with public money, the onus is on the agency to check corrupt practices taking place in such institutions. IBA was of the view that CBI was not in tune with the nuances of banking. “Very often, a banker may take a commercial decision to grant a loan and the account holder may default due to various reasons such as a slowdown in the economy or the export-import policy and other reasons. This may not mean that the banker is in the wrong,” said a banker. There are other reasons for banks to resist the move. According to bankers, a probe undertaken by CBI drags on for long before the agency arrives at a logical conclusion. “Currently, as per the Banking Regulation Act and Prevention of Corruption Act, private entities are not covered under CBI. These two Acts will have to be amended to include private banks and corporates under CBI,” said former RBI executive director and now IBA chief legal advisor MR Umerji.