The state excise department and some nationalised banks have thrown caution to the winds and bent bank guarantee rules to favour liquor retail licencees, it is revealed.
Retailers who provided bank guarantees to get licences have become a crucial link in the Anti-Corruption Bureau’s ongoing probe into the liquor syndicate scam.
Sources say the excise department showed a kid’s glove treatment even in cases where retailers submitted bank guarantees for inadequate amounts.
The banks were too eager to provide guarantees without safeguarding their own interests, the sources add.
In several cases bank officials were suspended after retailers defaulted on licence fees to the excise department, forcing the latter to invoke the bank guarantee.
The banks took a drubbing due to the lack of a safeguard mechanism, officials said. Under the mutual guarantee sche-me introduced by banks for retail trade, a set of four or five dealers stand guarantee to each other.
The retailers, primarily benamis, disappeared at the end of licence period with huge arrears to the excise department, which in turn invoked bank guarantee to recover the arrears.
Under rules, retailers are required to pay the first installment and provide bank guarantee for the remaining amount, to be paid in five more installments.
But in several cases the department did not act even after retailers paid the first installment and provided bank guarantee for only one or two further installments.
Under the mutual guarantee sche-me introduced by banks for retail trade, a set of four or five dealers stand guarantee to each other. On the AP Wine Dealers Associa-tion’s request, PSU banks such as the UCO Bank, the Allahabad Bank and the Indian Bank brought bank guarantee for retailers under this scheme.
“In normal cases, a bank guarantee is provided after securing 100 per cent amount for which the bank stands guarantee,” a senior official “The department also violated conditions laid out in licence agreements regarding bank guarantees,” a senior official admitted.