Days after the board of directors of Maharashtra State Cooperative Bank was superseded by the Reserve Bank of India (RBI), yet another bank — Sangli District Central Cooperative Bank (SDCCB) — has come under a cloud. The National Bank for Agriculture and Rural Development (NABARD), on Monday, sent a notice to SDCCB seeking clarification on wrong loans leading to the bank’s negative net worth.
In its audit report for 2008-09 and 2009-10, NABARD observed that SDCCB’s credit had exceeded its deposits. The bank had offered loans worth Rs 168 crore to three cooperative sugar factories — Vasantdada, Manganga and Mahankali — even though these institutions had their loan accounts in “short margins”, meaning default.
Action against SDCCB came four days after RBI appointed administrators over MSC bank, which is the principal funding agency for all district cooperative banks in the state. Instead of showing those loans as non-performing assets (NPA), the SDCCB showed them as ‘profit making’ in its accounts. The NABARD in its notice under section 11 (1) asked bank directors to reply within 30 days. The bank and the three sugar factories, to whom it has given loans, are largely controlled by NCP and Congress leaders. NABARD has also observed that the bank wrongly allotted 5% dividend to its member credit societies.
SDCCB chairman Dilip Vagyani termed NABARD’s action “politically motivated”. Vagyani and other SDCCB directors said NABARD should have referred to bank accounts of 2010-11 instead of the previous two years.
“Accounts of the latest year show that our bank has recorded profit worth Rs 18 crore. NABARD’s hasty action only suggests it was done on other grounds,” Vagyani said.
The bank directors have decided to appeal against the notice before the central finance secretary. Meanwhile, deputy chief minister Ajit Pawar said, “When I go to Mumbai I will check all account related documents of the bank and will talk to chairman Manikrao Patil as there have been contradictory reports about its condition.”
Pawar and his party criticised the Congress for the RBI’s decision to supersede the bank, terming it a “political move”. Responding to allegations, chief minister Prithviraj Chavan said in Solapur that the state cooperative bank does not belong to any particular party.