Discounting reports by BoI that there was a delay on the part of the apex bank in clearing the instruments, RBI sources on Monday held the bank responsible and said that there was no question of its advising BoI to honour cheques worth Rs 65 crore, alleged to have been deposited by leading broker Ketan Parekh in Madhavpura Mercantile Cooperative Bank (MMCB) drawn on the state-owned bank. The RBI at no stage advised BoI to withhold presentation of pay-orders issued by the Ahmedabad-based cooperative bank favouring the broker.

The Rs 137-crore BoI pay-order scam has led to the arrest of Ketan Parekh, his cousin Kartik and the Mumbai branch manager of MMCB, Jagdish Pandya, for alleged fraud. Two BoI officials of BSE branch have also been suspended, pending an inquiry.

RBI sources said it had apprised BoI that the MMCB did not have sufficient funds to meet their clearing liabilities on March 12 night itself.

Detailing the sequence of events in the wake of payment crisis and a loss of Rs 137 crore in pay-orders from MMCB, RBI sources said that BoI officials were called around 8 PM on March 12 and apprised of the situation. BoI officials were informed that clearing of the March 9 cheque had been completed and a further debit of Rs 65.39 crore had accrued to the MMCB. Of this, Rs 65 crore was accounted for by instruments returned to MMCB by BoI, sources said.

They said MMCB had a positive opening balance of Rs 4 rare in their account on March 12. While posting the settlement vouchers of March 9 (the next two days being holidays), inter-bank clearing and government securities transactions in the account of MMCB, it was observed that the bank would end up with an adverse position of over Rs 50 crore in their account if all transactions for the day were to be put through. The matter was internally discussed within the apex bank and MMCB officials were contacted forthwith. MMCB assured that funds were being arranged and that they would be able to meet their clearing liability by the end of the day. But by late evening, it was clear that the bank would not be in a position to do so, the sources added.

At about 9.30 pm, MMCB officials visited the clearing house and indicated that they would like to return the pay-orders worth Rs 62 crore to BoI which were presented to them by BOI on March 9.

The sources said the BoI officials were contacted once again and advised that the MMCB wanted to return these instruments but BoI took the stand that since the pay orders were issued by MMCB and the ``return clearing time'' was over, it would not accept the returns. In the circumstances, BoI was told that the clearing house had no alternative, but to invoke rule 11 of the Uniform Regulations and Rules for Clearing Houses.