State seeks internal audit of MSC Bank | mumbai | Hindustan Times
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State seeks internal audit of MSC Bank

mumbai Updated: Jun 09, 2011 01:27 IST
Ketaki Ghoge

The state-appointed administrators have recommended an internal audit of the Maharashtra State Co-operative (MSC) Bank to ascertain the current situation of the bank and decide the way forward. The institution is under the scanner for mismanagement and violation of banking norms.

Last month, the Reserve Bank of India (RBI) asked the state government to dissolve the board of directors of the MSC Bank and appoint administrators for the bank as it had a negative worth of Rs144 crore.

“It has been decided to conduct an internal audit to check the current financial health of the bank because there has been representation that the bank is no longer in the red. If the bank’s financial health is better, then we have the option to write to the NABARD pointing this out,’’ said a senior official on condition of anonymity.

The state would then have an option to conduct elections to elect the board once again.

The decision to conduct an audit now comes on the heels of severe backlash from the Nationalist Congress Party (NCP) that dominated the bank and has termed the action as smacking of political conspiracy by the Congress.

NCP leaders had said that the bank was not in the red and the NABARD report on which the action was based is outdated. “The NABARD inspection took place in March 2010 and their report was submitted to us a year later in April 2011.

In one year, we had taken various corrective steps as a result of which the bank as on March 2011 had a surplus of around Rs238 crore,” said Manickrao Patil, former chairman of the MSC bank. Patil said the action was taken in haste.

He added that the bank had managed to recover some dues, its income from interest had increased to Rs240 crore and the government provided grant for defaulting on guarantees worth Rs270 crore in the last one year.

“We have been saying that the government has been the bank’s biggest defaulter. If it had not defaulted on the guarantees it had provided on loans, we would have never had net worth,” Patil added.