Eideard

MUMBAI: The Central Bureau of Investigation has arrested eight finance executives, including the chief of LIC Housing Finance, accusing them of taking bribes to give big corporate loans and sending shockwaves through stock and property markets at a time when the government is buffeted by a series of high-profile scandals.

LIC Housing Finance chief executive Ramachandran Nair , Life Insurance Corporation secretary for investments Naresh K Chopta, Bank of India general manager RN Tayal, and Central Bank of India director Maninder Singh Johar were among those arrested in the nationwide swoop by investigators.

The agency also arrested Rajesh Sharma, chief executive of Money Matters Group, a specialist loan arranger that was the go-between for lenders and corporates and is at the centre of the scandal…

“Officers of top management and middle management of various public sector banks and financial institutions were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions,” a CBI statement said. The arrests come at a time the government is on the defensive and is accused of condoning a culture of loot.

These are the biggest and most high-profile arrests since the Unit Trust of India corruption scandal a decade ago and the 1992 securities scam…

All the accused will be in CBI custody until Monday. They have been charged under the Prevention of Corruption Act and, if convicted, could be jailed for up to seven years and lose retirement privileges.

At this stage of the judicial proceedings you can’t predict the effect of these arrests being positive or negative.

Certainly, prosecution of corrupt bureaucrats is always welcome. You never catch up – do you? And peering from a distance, I think it unlikely that negative spin by analyst bears will be lasting. Not in an economy as hot as India.