Senior FinMin official says police action in Bank of Maharashtra case technically incorrect

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26 Aug, 2025 12:21

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The arrest of Bank of Maharashtra's top officials last week is technically an aberration and the state police were wrong in nabbing them, said a senior finance ministry official.

"This is an aberration in a giant country like ours. In the normal course, the state police do not have any jurisdiction on central government employees... It should be set right, there is a proper mechanism in place...The state police were not right, it's not fair," the official said on conditions of anonymity.

On Wednesday last week, Pune police arrested the public sector bank's CEO and MD Ravindra Marathe, along with other officials in relation to an alleged Rs 2,000 crore scam involving city-based realtor DS Kulkarni.

The official said even when the central government needs to take action against a state government official, the permission of the state government is needed. "That is the strength of India's federal structure."

But when asked if the bankers are being hounded, the senior ministry official said, "I disagree with that."

Apart from Marathe, the Economic Offences Wing of the Pune police arrested BoM's Executive Director Rajendra Gupta, Zonal Manager Nityanand Deshpande, and former chairman and MD Sushil Muhnot for their roles in sanctioning the alleged illegal transactions of about Rs 100 crore to DSK group.

The prompted criticism from the Indian Banks' Association (IBA) and the entire banking industry and sought an independent committee to approve such arrests, if any, in future.

IDBI stake sale to LIC?

On the much talked about privatisation of IDBI Bank, there are reports that the government may allow government insurer LIC (Life Insurance Corporation) to buy a significant stake in the ailing IDBI Bank.

"Both (LIC and IDBI) are independent organisations...We never envisage one way or other. We have left all decisions to the bank boards. We are not going to micromanage," the finance official added.

Bad bank idea

Punjab National Bank Chairman Sunil Mehta-led committee has sought some more time to submit its plan on the proposal to form an asset management company (AMC) or asset reconstruction company (ARC).

While the Mehta Committee was supposed to submit a feasibility plan on the 'bad bank,' more time has been sought.

The finance minister will meet the committee sometime this week and follow up with the report made by the Committee so far.