This article was originally published in the
29th March 2018 edition of LiveMint.
Given that investor directors are usually non-executive in
nature, they should normally not be liable for actions which are
largely promoter-driven
In the past few weeks, the Central Bureau of Investigation (CBI)
has registered cases against multiple companies and their officials
for bank frauds, such as Gitanjali Gems and Simbhaoli Sugars.
Coupled with such revelations is the response of the government,
which has brought the investigative authorities out of their usual
stupor. The government has now asked public sector banks to
evaluate potential frauds in all bad loans above Rs50 crore. Thus,
over the next few weeks, we will see increased scrutiny by banks,
and, in turn, by authorities such as the CBI, Enforcement
Directorate (ED) and Serious Fraud Investigation Office (SFIO).
