Banks' settlement

Banks' settlement
with defaulting borrowers will now specifically exclude criminal cases lodged and proceedings with regard to criminality
would continue even after the settlement of the civil cases, Indian Banks' Association (IBA) said on Thursday. The IBA decision comes against backdrop of two recent cases where the courts absolved the defaulting borrowers of any criminal wrongdoing who had entered into One Time Settlement (OTS) agreements with banks and where banks withdrew all charges against them. The new IBA measure has been taken after some of the bankers had a meeting with top officials of Central Vigilance Commission and the CBI. Settlement agreements with borrowers will now have a clause stating that the criminal proceedings, if any, would continue even after the settlement, IBA's Chief Executive K Ramakrishnan told reporters here today. He, however, said the number of settlements which involve criminal charges are very few. Explaining the IBA decision, M R Umarji, Legal Advisor to the Association said in some cases banks also file criminal cases against borrowers, who besides defaulting, indulge in cheating or wrongly declare their collaterals.