The Supreme Court has upheld the discharge of the former Chairman and Managing Director of the Central Bank of India from allegations tied to a Rs. 436-crore credit facility misuse. The case revolved around loan approvals that allegedly caused significant financial losses for the bank, but the Court found no grounds to frame charges against him.
A two-judge bench dismissed the Central Bureau of Investigation’s (CBI) appeal challenging the Gujarat High Court’s earlier decision to drop the case against Srinivas Sridhar, the ex-banking chief. The CBI had accused Sridhar of hastily approving loans for Electrotherm (India) Limited, which were later misappropriated. However, the Court concluded that his involvement was limited to procedural signing as part of his official role.
The case began with the CBI filing charges under various provisions, including cheating, forgery, and conspiracy, alongside violations of the Prevention of Corruption Act. The allegations focused on three credit facilities issued by the bank between 2010 and 2011: a short-term loan of Rs. 50 crore, a letter of credit worth Rs. 100 crore, and an Export Packing Credit (EPC) line totaling Rs. 330 crore.
The investigation claimed that Electrotherm misused the EPC funds—Rs. 247.50 crore intended for steel plant operations in Tanzania—by diverting money into unrelated accounts and real estate deals. The CBI also cited irregularities in standby letters of credit (SBLCs) issued in favor of companies in Hong Kong and Singapore for materials that were never supplied.
Sridhar initially sought dismissal from the case, but the CBI’s Special Court rejected his plea. However, the Gujarat High Court ruled in his favor, prompting the CBI to appeal to the Supreme Court, arguing that sufficient suspicion existed to justify framing charges.
The Supreme Court disagreed, emphasizing that Sridhar’s role was limited to signing documents prepared by the Credit Department and endorsed by senior officials. The credit proposal had been vetted by multiple public and private sector banks before reaching Sridhar’s desk for approval. Furthermore, there was no evidence suggesting he benefited from or had direct knowledge of any wrongdoing.
The Court concluded that the mere speed of the loan’s approval was insufficient to establish conspiracy or misconduct. It noted that internal bank procedures, including review by the Loan Advisory and Management Committees, were followed throughout the process.
Finding no substantive link between Sridhar and the alleged misuse of funds, the Supreme Court dismissed the CBI’s appeal, clearing him of any wrongdoing.
