Government for strict banking safeguards after Syndicate Bank scam, says Jaitley

Union Finance Minister Arun Jaitley on Sunday said that the government is open to putting in place more stringent safeguards to prevent scams like the Syndicate Bank cash-for-loans case.

"I think banks already know what they are to do. If some stringent steps are required, certainly it will be done," Jaitley said when asked if some fresh guidelines are required to check a repetition of such cases.

"But what was allegedly happening (in Syndicate Bank) was certainly in contravention of the legal framework; it was a crime. We don't need a fresh policy to decide that," he said in the national capital after addressing the Central Board of the Reserve Bank of India (RBI).

Last week, the Central Bureau of Investigation (CBI) had arrested Syndicate Bank chairman and managing director S.K. Jain for allegedly accepting bribe of Rs 50 lakh to enhance the credit limit of some companies. Seven other accused were arrested as well.

Terming this as a matter of criminal investigation, Jaitley said that it is for agencies like the CBI to find out the entire evidence. "As far as the Department of Financial Services is concerned, it has put the process of law in motion," he said.

RBI has also initiated inspection of the book of accounts of Syndicate Bank. The alleged bribe, paid by Bhushan Steel to Jain for not declaring Rs 134 crore bad loan as non-performing assets, could well turn out to be just the tip of the iceberg as the CBI has now unearthed a cash trail of Rs 3.5 crore leading to Jain.