The Maharashtra State Co-operative Bank — the state’s apex credit agency for the agriculture and co-operative sector — is unlikely to get back on its feet soon.
The bank’s politically strong board, dominated by the Nationalist Congress Party (NCP), was dissolved following a Reserve Bank of India notice in May, as a result of the indictment of the bank by the National Bank for Agriculture and Rural Development (NABARD).
The NABARD, in its inquiry report, had slammed it for mismanagement and financial indiscipline. Two state-appointed bureaucrats are currently running the bank and its control is unlikely to go back to politicians until next year.
“The bank will have to get a valid license from the RBI and that may not happen even by March next year. There is no question of holding elections for a new board any time soon,” said a senior minister, requesting anonymity.
The decision to supersede the board had led to fissures between the ruling allies, Congress and NCP, with the latter alleging that the move was politically motivated.
The bank controls the entire rural economy and with local self-government elections scheduled from November this year, control of the bank would have given NCP a definite advantage.
Post dissolution, administrators — agriculture secretary SK Goel and finance secretary Sudhir Srivastav — had found that the bank had improved its numbers substantially since the NABARD report last year.
The bank’s latest balance sheet (2010-11) shows a positive net worth of Rs238 crore, instead of the negative worth of Rs144 crore recorded in 2009-10. The bank has also registered a profit of Rs15.8 crore, as compared to earlier losses worth Rs776 crore.
This prompted speculation in the NCP camp that the state would conduct elections for the board again. However, sources said that chief minister Prithviraj Chavan ruled this out.
Sources in the chief ministers’ office said, “After an internal audit, NABARD will visit the site again and conduct an audit. Even if the bank has a positive net worth now, it has never been properly managed, with credit being given on personal rather than financial basis.”