CHENNAI, Aug 20: The Central Bureau of Investigation (CBI) has been directed to arrest K Subramanian, chairman and managing director of Indian Overseas Bank (IOB), for his alleged role in sanctioning loans in violation of the banking rules during his stint as general manager (Credit) of the Indian Bank.

Passing the directions here on Wednesday, the principal special judge (CBI cases) SSP Darwesh also asked the CBI to arrest S Veeraraghavan, then deputy general manager, international division of the Indian Bank in Chennai, and MBN Rao deputy general manager, Indian Bank in Singapore.

The directions were passed while rejecting a bail relaxation plea of Gopal Pasupathy, a Singapore national and former director of Greenseas Shipping Co Pte Ltd.

The case relates to advance of a term loan of $3.6 million to Greenseas by Indian Bank. The CBI registered the case on December 30, 1993 against the four persons charging that a criminal conspiracy was hatched for sanctioning the loan on March 28, 1990. Pasupathy was arrested on April 28, 1995 and later released on bail with certain conditions.

The bail conditions were imposed by the court 18 months ago.On Wednesday, Darwesh also directed the CBI, New Delhi to expedite the investigations in the case, registered in March 90 against the four persons. The judge also instructed the CBI to complete the investigation within three months and file the final report without fail.

The CBI counsel submitted that Pasupathy could tamper with the evidence if the plea for relaxation is accepted. It was also submitted that investigations had reached a crucial stage. Some more time should be granted to the agency to complete the investigations and to arrest the remaining accused who were only Indian nationals.

When contacted by The Financial Express, Subramanian said as far his appointment as IOB's CMD was concerned it could have come only after extensive investigations had cleared his name of any wrongdoing.

It may be recalled that the Indian Bank had declared a massive loss last year which wiped out the entire net worth of the 90 year old bank.

The former chairman and managing director of Indian Bank M Gopalakrishnan has also been charged with unduly granting favours while making advances and loans and with having flouted all banking norms.Other alleged recipients of his `largesse' include prominent politicians and 23 companies, with the CBI having filed new cases against 11 companies. The Singapore based MVR group, the single largest beneficiary of the Rs 1300 crore scam, also stands accused of having links with the LTTE.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.