Arrest of Pratip Chaudhari is extremely unfortunate: SBI Chairman Khara

State Bank of India’s Chairman, Dinesh Kumar Khara said that the bank believes that due process was followed in the Gaudavan Group case

State Bank of India’s Chairman, Dinesh Kumar Khara, on November 3 termed the the recent arrest of former SBI Chairman Pratip Chaudhari as "extremely unfortunate".

Several people from the banking community, including previous chiefs of the bank, have made their reactions public, Khara said while addressing the media after the bank's quarterly results announcement.

"It appears that he was not given an opportunity to be heard before issuing the arrest warrant," Khara said.

Chaudhari was arrested by Jaisalmer Police on Sunday in a case associated with Gaudavan Group and Alchemist ARC. The group had taken a loan of Rs 24 crore to construct a new hotel. According to a TOI report, allegations against Chaudhuri included facilitating the sale of properties worth Rs 200 crore for Rs 25 crore to the ARC, after the bank seized them for defaulting on loan.

The SBI in a recent statement had said that there were factual inaccuracies in the complaint lodged against the former chairman.

Khara added that the bank has utmost faith in the country's judicial system and is confident that Chaudhari will be released unconditionally.

The banking community through IBA has taken up the matter with government authorities and it hopes that this matter will resolved soon, he said.

"As far as SBI is concerned, we adhere to best practices in corporate governance," Khara said.

Khara added that, as far as the bank is concerned, there has been no irregularity in the said case, and that all prescribed rules and processes were followed by the bank.

Issues of this magnitude are invariably dealt with at the local level, and top management of the bank including the chairman isn’t involved in the decision making.

"As we have got a structure in place, we are confident that all our people across the hierarchy can take decisions," Khara added.

The arrest of the former SBI chairman had drawn reactions from former SBI Chairman Rajnish Kumar and veteran banker Uday Kotak, among others.

Kumar in an exclusive chat to Moneycontrol had said “This seems to be a case of highly motivated, high-handed action. This seems to be an error of judgment. There is a due process and set of rules laid out by the RBI for the sale of assets to ARCs. Where is the corruption here?”

Uday Kotak, on November 2, said that we really need to have a criminal justice system that protects bonafide actions by bankers for recovery of their money.

Kotak was addressing the media on the recovery made by the IL&FS Group.