The Opposition on Friday slammed the state government for the financial mess in the apex cooperative bank — the principal funding agency for all cooperatives and agriculture in Maharashtra — controlled by political heavyweights in the Nationalist Congress Party (NCP) and the Congress.
Taking the aid of the recent NABARD report on the Maharashtra State Cooperative Bank, Bharatiya Janata Party (BJP) legislator Devendra Phadnavis demanded that no mercy be shown and the bank’s board be dissolved and criminal proceedings be initiated against the board members for financial mismanagement and fudging of accounts. He also demanded that an administrator be named by the government to clean up the mess and restructure the bank.
While Phadnavis did not take names, politicians across party lines have representation on the board. The VIP list starts with deputy chief minister Ajit Pawar, former Congress minister Vijay Vadetiwar, NCP MP Ishwarlal Jain, PWP legislators Jayant Patil and Minakshi Patil, BJP senior leader Pandurang Phundkar and former NCP minister Vijay Singh Mohite Patil.
The NABARD inquiry report sent to the state government in February this year has pointed out gross financial indiscipline, lack of banking prudence and ignoring nine out of 11 directives of the Reserve Bank of India. Some of the charges against the bank include fudging of balance sheets to show profit of Rs2 crore when the bank was facing losses worth Rs798 crore. It also does not have a valid banking licence from the RBI.
The NABARD report downgraded the bank from B grade in 2008-09 to D grade in 2009-10.
“The MSC bank is facing bankruptcy because of financial mismanagement by the board and its strong political affiliations. Loans have been given out on personal and political credentials rather than financial parameters,” said Phadnavis.
For instance, Pen Urban Cooperative Bank, which was in the red was offered cash credit of Rs40 crore, the Maharashtra Housing Finance with negative worth was offered loans worth Rs100 crore. The bank has also given loans to sugar cooperatives controlled by ministers.
The bank has a negative net worth of Rs144 crore, its capital adequacy ratio is at 1%, Phadnavis said. Under the securitisation act, even after attaching 81 properties, including sugar factories worth Rs3,000 crore, the bank has not sold the properties due to political pressure. Many were sold at less than the offset prices. Also, despite facing losses, the bank bought eight new vehicles for Rs78 lakh.
Cooperative minister Harshvardhan Patil, however, dismissed the charges that the MSC bank was facing liquidation. “It’s true that debt recovery has affected the bank but the state of affairs are not as projected by the Opposition.” He said the efforts to recover loans from defaulters were on. 'The bank is functioning as per RBI and NABARD guidelines.''
The state government has been given 45 days to respond to the NABARD report. However, sources in the government said given the political patronage of the bank, the state would bail it out of the financial crisis by offering increase in share capital and grants. In the supplementary budget cleared in this session, the state had provided ad hoc grant worth Rs270 crore to the bank.