By Venkatachari Jagannathan

Chennai, June 1 (IANS) For the first time perhaps in India's banking history, the Central Vigilance Commission (CVC) is conducting a probe based on a whistleblower's complaint about certain alleged irregularities at the Mangalore-based public sector Corporation Bank.

A two-member team from the CVC camped at Corporation Bank's headquarters May 9-14 to probe the complaint and senior bank officials deposed before it, sources told IANS.

The inquiry was held under Sections 8 and 11 of the CVC Act. Section 11 confers inquiry team the power of a civil court in respect of summoning and enforcing attendance of a person, production of documents and receiving evidence on affidavits, among others.

Vigilance Commissioner R. Sri Kumar at the CVC office in New Delhi told IANS on phone: "We will talk about investigation once it is complete, that is, when the investigation attains a certain stage and when it can be talked about."

It is learnt the two-member team will submit its report sometime this week.

The complaint, it is reliably learnt, is against the bank's chairman and managing director Ramnath Pradeep. When contacted for comments, Pradeep told IANS: "The matter is with the CVC and hence I am not in a position to make any comments now."

The issue of CVC inspection was discussed at the bank's last board meeting May 23, 2011.

Hiren Mehta, a director of the bank, told IANS: "The CVC inquiry was brought to the notice of the bank's board at the last meeting. The matter was discussed."

According to bank sources, the CVC looked into the sanction of loans to some parties, the transfer of general managers dealing with the credit sanctioning and information technology, and proposal to appoint a foreign consultancy firm for IT, among other issues.

Speaking on the condition of anonymity, an official told IANS: "The major complaint is the sanction of loan to an Indore-based steel company classified as a loan defaulter by another nationalised bank. That bank had to forgo sizeable sum of its dues in one-time settlement of the loan account."

The Indore-based company was sanctioned Rs.50 crore by Corporation Bank.

Another senior official told IANS that credit was sanctioned as a big private sector engineering conglomerate had guaranteed repayment of the loan. The Indore company is a vendor for the group. But bank officials told IANS there was no such guarantee.

According to officials, first-time borrowers from the bank have been sanctioned loans of around Rs.1,000 crore, while the bank's long-time policy is to restrict the exposure to Rs.250 crore initially.

Officials also complain that rejected loan proposals were presented several times for sanction.

Speaking on the condition of anonymity, another director told IANS: "Some of the loan proposals were rejected and some have been returned with caution and some approved with changes in the terms."

According to him, the bank is on an aggressive growth path and loan proposals will be of various kinds and the sanctioning authorities have to be careful. Big loans are given a nod by the management committee comprising of some directors.

"It is only the advances that is growing at an accelerated pace and not the deposits. Last fiscal, the advances grew by 36 percent while the deposits grew by 25 percent," said an official.

One of the complaints is the transfer of general managers, including a chief general manager, after Pradeep assumed office last September.

The chief general manager is normally a position in the bank's head office and the official, U.B. Bhatt, was transferred to Mumbai. The bank has 22 general managers, including the chief general manager and the chief vigilance officer.

Responding to that, Pradeep said: "The transfers are made only with consultation with the official concerned so that they can be with their families. Bhatt's family was in Mumbai and he was posted in Mangalore. Similarly, another general manager was brought to Mangalore from Gujarat so that he could be with his family."

Mehta said transfers were routine in banks. "With the bank getting nearly 60 percent of its business from Mumbai, it needed a senior official to be stationed there. That was the reason told to us on the transfers of top level officials."

But some officials countered that there were hundreds of employees who were away from their families, and have not been transferred.