Bank of Maharashtra MD and Officers were arrested for disbursing crores of rupees in loans to a builder.

In another crackdown, the Economic Offences Wing of the Pune police has arrested Bank of Maharashtra MD and CEO Ravindra Marathe, executive director Rajendra Gupta and two other bank officials for allegedly disbursing crores of rupees in loans to DSK Developers Limited (DSKDL) without following proper procedure and in violation of RBI guidelines.

The arrests on Wednesday in Pune follow the ongoing probes into the Rs 2,043 crore economic fraud by Pune developer D S Kulkarni, alias DSK, and his group of companies.
Among those arrested are the bank’s former managing director and CEO, Sushil Muhnot, zonal manager Nityanand Deshpande, DSK’s chartered accountant and statutory auditor, Sunil Ghatpande, and DSKDL chief engineer and vice-president Rajiv Newaskar.

Investigating officer and assistant commissioner of police (EOW) Nilesh More told the media: “The bank officers colluded with DSKDL, the group’s flagship company, to sanction and disburse the amount under the garb of a loan, which was siphoned off.”

The Rs 2,043 crore fraud relates to siphoning of money raised by the DSK group through investors as well as loans from banks and financial institutions, non-convertible debentures and money collected from home buyers in housing projects.

In an official statement, the bank said its total outstanding exposure to DSKDL was Rs 94.52 crore. The statement also said: “Recovery process has already been initiated by the bank and some of the properties are due for auction. Bank has also declared DSKDL and its promoters as wilful defaulters.”

Special public prosecutor Pravin Chavan said, “The EOW is also investigating the role of officials from five other nationalised banks which were part of a six-member consortium that had sanctioned a Rs 600 crore loan to DSKDL’s ‘Dream City’ mega housing project in 2016”.