118.50-cr help to Nanded co-op bank wasted: CAG
The Comptroller and Auditor General (CAG) rapped the state government over largesse to a cooperative bank in Nanded, hometown of former chief minister Ashok Chavan.mumbai Updated: Apr 23, 2011 01:08 IST
The Comptroller and Auditor General (CAG) rapped the state government over largesse to a cooperative bank in Nanded, hometown of former chief minister Ashok Chavan.
In 2007, the government had given the ailing Nanded District Central Cooperative Bank Limited (NDCCB), which deals in farmers’ loans, Rs118.50 crore as loan. However, it was converted to a grant two years later. This means, the Rs110-crore loan and Rs8.5 crore interest accrued was waived off.
The CAG report for the year 2009-10, which was tabled in the state legislature on Thursday, said the government’s financial assistance to the bank was wasted. It observed that the conversion took place despite the state finance department turning it down.
Interestingly, the decision to convert the loan into a grant was taken by a state cabinet committee during Chavan’s tenure as the chief minister in 2009. This was done in retrospective effect from 2008 when the loan was cleared.
According to the CAG report, an inspection by the National Bank of Agriculture and Rural Development (NABARD) in March 2000 revealed the negative net worth of the bank. This Reserve Bank of India (RBI) put an embargo on it for refunding or accepting any deposits.
In December 2005, when Vilasrao Deshmukh was chief minister, the cabinet for the first time decided to grant the Nanded bank Rs200 crore loan and Rs20 crore share capital for restoring normalcy in its operations and enabling it to give crop loans.
The Maharashtra State Cooperative Bank Limited, however, refused to disburse the loan.
Finally, the cabinet managed to sanction a loan of Rs100 crore at 6% per annum along with Rs10 crore share capital in March 2008, which was later converted into a grant.
“The inspection report of NABARD revealed that the net worth of the bank remained negative during 2009-2010. Thus, the government assistance of Rs118.50 crore was useful to the NDCCB only to discharge its liabilities, but the real objectives for sanctioning of the grant, of improvement of net worth and increasing crop loan were not achieved,” the report said.