While the notice briefly referred to the PCA, it mainly sought to explain its point related to the FIR filed against it and its director in a dispute between the bank and RFL. It said that it is also initiating appropriate action against RFL, its directors and others for criminal defamation, malicious prosecution and causing disrepute to the bank and directors.
At the outset, the bank stated that PCA
initiated by RBI
on September 27, is due to high net NPAs and insufficient CRAR, among other factors. Banks
periodically do undergo such corrective actions by the regulator, it explained.
In a filing on May 16, Religare said, "The new management discovered that one of the major reasons for RFS's terrible financial condition was the misappropriation by LVB of monies due to RFL on account of four fixed deposits placed by it with LVB amounting to approx. Rs 791 crore (including interest accrued on Rs 750 crore of principal amount). Such misappropriation had caused a massive unlawful loss to RFL and consequently to all its shareholders, including the public shareholders."
Responding to this, the lender said, "The bank unequivocally states that the outstanding amounts due to the bank from two loans sanctioned to Religare Group of Companies has been appropriated by the bank against fixed deposits from the same group, by following due process and in compliance with all the applicable norms.”
It added that it had no role to play in the commission of any alleged criminal action. Further, the directors of the bank arrayed as parties in the FIR, exercised no direct or indirect control in relation to the transaction that was effected on 2016-17 and 2017-18. LVB asserted that the directors were not involved in the day-to-day management of the bank, and claimed RFL's complaint was solely intended to harass LVB and its directors.
“Therefore, the directors of the bank have been arrayed as accused for no good reason - and the bank is taking appropriate steps to defend against any criminal action,” LVB said in the notice.
The lender stated that FIR has not only been registered against the bank's directors but also RFL's own personnel and erstwhile promoters, Malvinder Mohan Singh and Shivinder Mohan Singh.
It added that it is defending the proceedings against RFL before the courts and authorities which are pending adjudication. Mere registration of FIR against the bank and its directors does not mean anything at this stage, LVB asserted.
“Till date, no adverse orders have been passed against the Bank by any judicial forum and no prima facie case has been found in favour of RFL's fictitious narration of events,” said the Bank.