Ex-RBI deputy governor KC Chakrabarty stopped from travelling abroad: Report

Former RBI deputy governor KC Chakrabarty was stopped from travelling abroad as the Central Bureau of Investigation (CBI) had issued a Look Out Circular (LOC) against him.

Chakrabarty was scheduled to go to London from Mumbai airport on May 1, 2018, reported The Economic Times.

An LOC is used to monitor and prevent the entry or exit of persons who may be required by law enforcement authorities.

The CBI had issued the LOC in connection with a 2016 forgery case filed by the Indian Overseas Bank against a Delhi based travel company — Airworth Travels & Tours Pvt Limited, its promoters and ‘unnamed public servants’.

The bank has accused them of “…cheating, forgery of valuable securities, forgery for the purpose of cheating, using forged documents as genuine…” and public servants of “abuse of official position” thereby dishonestly causing a loss of Rs 41.38 crore.

The FIR registered by the CBI in the case does not name Chakrabarty. A source told the paper that he was a witness and not an accused in the case. Chakrabarty, in a letter written to the CBI director on May 15, has professed his innocence.

Chakrabarty, who served as deputy governor of the Reserve Bank between 2009 and 2014, was the chairman and managing director of Indian Bank from 2005 to 2007. He was also the chairman and managing director of Punjab National Bank from 2007 to 2009.

The former RBI deputy governor has requested to withdraw the LOC so that he can travel back to London, where he is now settled.

In 2007, Indian Overseas Bank had taken over the credit limit of Rs 1 crore from Punjab National Bank given to the travel company. This credit limit was increased to Rs 25 crore between 2007 to 2013. The loan has now been classified as a non-performing asset.

According to the report, it has been alleged that Chakrabarty, then the deputy governor of the Reserve Bank, had informally asked the then chairman and managing director of Indian Overseas Bank M Narendra to increase the credit limit to the travel company.

The alegations, however, has been disputed by a former chairman of a public sector bank. "How can a bank increase the credit limit on anybody’s recommendation without proper verification of the borrower," the chairman told the paper.

Indian Overseas Bank and PNB did not respond to e-mail queries.

In the letter, Chakrabarty had said that he only had a professional relationship with Airworth Tours and Travels and its director Gaurav Mehra as the company has been doing his personal bookings after he resigned office in 2014.

“I have made payments to Airworth Travel & Tours Pvt Ltd. Details of my personal booking are already submitted to the IO (Investigating Officer) along with all payment details. In my official capacity in both RBI and PNB, I have never dealt with him nor I have recommended for sanction of any credit facility or financial support in his business,” he said.

The CBI has examined Chakrabarty at length on April 17 and April 28 after which he was told that he could go. He was, however, stopped at the airport because of the LOC issued earlier.

The former deputy RBI governor has said that he would ‘attend the office of CBI’ and provide all necessary assistance for investigation in the future.