Delhi HC asks RBI to review plea seeking probe into Hindujas as promoters of IndusInd Bank

Representative image

The Delhi High Court on April 11 asked the Reserve Bank of India to consider as a representation of the plea seeking a probe into the “fit and proper” status of the Hinduja Group as promoters of IndusInd Bank.

A division bench of the Delhi High Court headed by Acting Chief Justice Vipin Sanghi asked the RBI to look into the allegations of irregularity against IndusInd Bank promoters made by the petitioner. The court disposed of the case by referring it to the RBI and without passing any directions on the petition.

The public interest litigation (PIL) plea was filed by an advocate who had sought a direction from the high court for a probe by a Special Investigation Team (SIT) into the status of the Hindujas as promoters of a private lender – IndusInd Bank.

The petitioner, a certain Mahek Maheshwari, had cited a number of instances alleging fraudulent antecedents of the Hinduja family. Pointing at its alleged role in Bofors kickback, family troubles, as well as cases of the Hindujas being indicted of financial fraud abroad, the petitioner questioned the status of the promoters.

It was also argued in the petition that the decision of the RBI to accept the proposal of an internal working group to allow raising shareholding of promoters in private banks from 15 percent to 26 percent must not be allowed. In doing so, the petitioner questioned the role of the RBI as the regulator of the banking sector and argued that if corporate houses are permitted to hold sizeable shareholdings in banks, then this could lead to potential frauds by siphoning off of funds.

As such, a stay on the implementation of the IWG’s proposal on the issue of corporate shareholding in banks was also sought.

The case now stands referred to the RBI for its consideration.