BJP’s Pravin Darekar-led Mumbai cooperative bank gets notice over losses, loans to sugar factories

Bharatiya Janata Party (BJP) legislator Pravin Darekar-led Mumbai District Central Cooperative Bank Limited has been served notice by the state cooperation department

Bharatiya Janata Party (BJP) legislator Pravin Darekar-led Mumbai District Central Cooperative Bank Limited has been served notice by the state cooperation department for alleged discrepancies on six counts, including losses in the last financial year, reduction in capital receipts, recovery of loans to sugar factories and corporate companies and loans to cooperative housing societies for their self-redevelopment.

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In a letter dated September 18, cooperation commissioner and registrar Anil Kawade formed a team of three officials in Mumbai to examine alleged irregularities in the bank, one of the leading cooperative district financial institutions in the state. The team led by divisional joint registrar Bajirao Shinde has been asked to check into losses of ₹47.99 crore and capital adequacy ratio (CAR) to 7.11% in the financial year 2019-20. The team has also been directed to examine loans given to sugar factories and corporate loans and their recovery, expenditure on the modernisation of bank offices, including its core banking solutions over the last five years, and loans to cooperative housing societies under its ambitious self-redevelopment scheme.

Darekar, leader of opposition in the legislative Council, has, however, said that the notice is not an inquiry but an inspection of account books, and the action was politically motivated. The cooperation department team has been asked to submit its report within a month. “It is true that we sustained losses of ₹47 crore in the last financial year, but they have been made up within the second quarter which ended on September 30. Similarly, the CRAR has been increased to 10% now. They have been talking about computerisation, which was never done in the last five years. Our recovery of loans to the sugar factories and corporate companies is up to mark and the loans helped us in earning ₹125 crore. They have been saying that there was no Reserve Bank of India (RBI) permission taken for the self-redevelopment scheme. We recently met RBI officials and they praised our initiative,” he said, adding that the team deputed for the examination of the records will be handed over all documents.

The bank has been steeped in controversy over irregularities in its account books over the last few years. The bank, led by Darekar as its chairman, faced various charges of irregularities, including disbursement of loans of ₹2.35 crore to relatives of the chairman using fake documents. National Bank for Agriculture and Rural Development (NABARD), the regulating authority, had directed the state cooperation department in March 2018 to file a first information report (FIR) regarding the misappropriation of funds by two of the bank’s branches in Borivli. In March 2015, the economic offences wing of the Mumbai Police registered an FIR against Darekar and three other officer bearers for misappropriation of funds and embezzlement amounting ₹128 crore. They faced charges of misusing the overdraft facility, dubious transactions in the names of around 60 labour credit societies formed in a single day and irregularities of ₹5.9 crore in allotting a contract to set up a disaster recovery system – a backup for IT-related operations.

According to an official from the cooperation department, political pressure prevented any solid action from being taken in the past. “The bank has faced allegations of irregularities and embezzlement in the past too, but no action has been taken as yet. No FIR was filed despite NABARD directives to the government for fraudulent transactions. The EOW has completed its investigation in ₹128 crore scam but no charge sheet has been filed owing to political pressure from the then BJP-led state government. The action in that case and even in other cases is unlikely, even after the change in power in the state. Arrests of the accused under section 88 and action of attachment of properties of the directors under section 98 of the Cooperation Act was possible, had the inquiry been taken to the logical end. The fresh inquiry ordered by the cooperation commissioner is a routine process and could prove to be grievous if it is conducted seriously,” an official from the department said.

Darekar, who was a Maharashtra Navnirman Sena (MNS) legislator from 2009 and 2014, joined BJP after his defeat in the 2014 Assembly elections. BJP sent him to the Legislative Council in June 2016 and he was elected leader of opposition in the upper house last year.

Darekar said that the notice sent was out of political ego and claimed that the government is attempting to suppress his voice. “The bank sent a notice to the cooperation department for the recovery of ₹250 crore against the guarantee given by the government for loans to the sugar factories. We demanded to not give new guarantees to the sugar factories until the old guarantee to banks like us was settled. The notice by the cooperation department is because of our notice for the recovery of guarantee to them. The government wants to suppress my voice,” he said.

The legislator added that he has been given clean chit by the Bombay high court in all other cases pending against him.