MUMBAI: Ravindra Marathe of Bank of Maharashtra (BoM) became the latest bank CEO to be arrested after the Pune Police booked him, his executive director and other bank officials for allegedly colluding with real estate developer DS Kulkarni to divert money and cheat shareholders.Sushil Muhnot, the bank’s former CMD, was also nabbed from Jaipur. All accused have been sent to police custody till June 27. The economic offences wing of Pune Police believes that the arrested officials colluded with promoters of the DSK Group for alleged fraudulent transactions.Pune EoW sources claimed that bank officials misused their positions to sanction loans worth Rs 60 crore in two tranches. They alleged DSK Group diverted the said loans for personal use including renovating promoter’s house.“Bank officers colluded with DSK Developers by misusing their power and authority with dishonest and fraudulent intention to sanction and disburse the loan which was siphoned off,” the Pune EoW said in a statement.All the accused have been booked under various sections of the Indian Penal Code and the Prevention of Corruption Act amounting to cheating, forgery, criminal conspiracy, criminal breach of trust, among others.Lawyers defending the accused BoM officials argued that the loans disbursed to DSK Group was sanctioned through a formal process which involved a clearance from the credit committee of the bank.Hence it was incorrect to allege that the officials misused their position or gained anything by disbursing loans to DSK Group, the lawyers argued.Bank of Maharashtra claims its total outstanding exposure to DSK Developers is about Rs 94.52 crore which is fully secured by primary and collateral securities.“Recovery process like SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act) action has already been initiated by the bank and some of the properties are due for auction,” the bank said in a statement. “The bank has also declared DSK Developers and its promoters as wilful defaulters.”Police and investigating agencies have been cracking down on current and former officials of various public sector banks in connection with loans that have gone bad. The Indian banking system is struggling under the weight of bad loans worth Rs 10 lakh crore forcing banks to cut lending and conserve capital.In August 2014, the then CMD of Syndicate Bank SK Jain was nabbed by the CBI in a Rs 50 lakh bribery case. The agency last month charged many including former IDBI Bank executives Kishor Kharat, now CEO of Indian Bank, and Melwyn Rego, the CEO of Syndicate Bank, in connection with IDBI Bank’s Rs 600 crore loan to entrepreneur C Sivasankaran’s firm. Other former and current IDBI employees including GM Yadwadkar, the current DMD of the bank, and BK Batra, its former DMD, were also booked.In April this year, CBI booked former CMD of UCO Bank Arun Kaul in connection with an alleged Rs 621-crore loan fraud in which he purportedly facilitated loans to Era Engineering which were not utilised by the company for the sanctioned purpose. In March, RK Dubey, former CMD of Canara Bank, was booked by the CBI for allegedly allowing deviations in sanctioning credit limits to a company during his tenure as executive director at Central Bank of India.Again in March, the investigative agency registered a disproportionate assets case against former CMD of United Bank of India Archana Bhargava for amassing assets worth over Rs 3.6 crore allegedly disproportionate to her known sources of income.The case against DS Kulkarni has been building for some time. Kulkarni and his wife Hemanti were arrested in February this year and accused of cheating over 4,000 investors of Rs 1,154 crore and diverting bank loans worth Rs 2,892 crore.Pune Police believe Kulkarni availed these loans on the pretext of constructing at least 16 real estate projects across Pune and Ahmednagar and filed a 37,000 page charge sheet in the case in May.Last month, the Maharashtra government issued a notification to attach 124 properties, 276 bank accounts and 46 vehicles of Kulkarni, his wife and other officials of the DSK Group under the provisions of the Maharashtra Protection of Interests of Depositors (Financial Establishments) Act 1999 for duping investors.