Rawal Bank scam: Audit report nailed directors in 2015

MUMBAI: Just as chief minister Devendra Fadnavis transferred the Dadasaheb Rawal Cooperative Bank scam probe from a Special Investigation Team to the Crime Investigation

MUMBAI: Just as chief minister Devendra Fadnavis transferred the Dadasaheb Rawal Cooperative Bank scam probe from a Special Investigation Team to the Crime Investigation Department, in an alleged bid to shield the BJP MLA and now minister Jaykumar Rawal last year, a report by a special district auditor in 2015 had indicted all bank directors, including Rawal, for mismanagement and collapse of the bank.

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The report, dated September 17, 2015, was submitted to the SIT just two days before the final order of transfer was issued.

Rawal, the grandson of cooperative baron Dadasaheb Rawal, was the director of the bank for more than 10 years. The CID investigation that pegged the scam at Rs36 crore had let Rawal off the hook and paved the way for his induction in the cabinet earlier this month. His induction and the CM’s clean chit, however, did lead to controversy with the Opposition.

The Hindustan Times had reported earlier this week that CM Fadnavis’ clean chit to Rawal may backfire. The auditor’s report studied violations by the bank in 23 Non Performing Assets accounts and compiled three earlier Comptroller and Auditor General (CAG) reports – from 2003 to 2006. It revealed loans were disbursed in violation of the Banking Regulation Act, 1949; the Maharashtra Co-operative Societies Act, 1961-62, Mumbai Stamp Duty Act, 1958, directives of Reserve Bank of India and those by the state co-operatives department.

The loans were given without checking credit worthiness of the firms, project reports on their business, in excess of exposure limits stated by RBI, any due diligence by the bank and in some cases, without keeping any collateral against the loans.

A majority of these NPA accounts were also traced back to relatives and firms controlled by the directors, including Rawal.

Rawal, however, said he played a small role in the bank’s functioning.

“This is a political witch-hunt. This bank was set up in 1957, and until 2004, it was making profits. I became a director only in 2004 and played a very small role in the bank’s functioning. It was chaired by my uncle. My political rival, Dr Hemant Deshmukh from the ruling alliance, made a complaint and created an atmosphere where depositors started panicking and demanding money back and those who had taken loans couldn’t return money immediately, so we declared bankruptcy,” Rawal said.

Fadnavis, in his clean chit last week, had also said the probe was shifted to CID as it is a more autonomous agency in the face of complaints against the SIT as being politically motivated.

Of the 23 NPA accounts, at least six were loans given to firms controlled by the Rawal family, including Kanhaiya Traders, Swodhadharak Vidyarthi Sanstha, Krishiraj Traders, Jaisingh Finance Private Limited, Kesariya Traders and Nature Fresh Cold Storage.

The report notes Krishna Agency, Keshariya Traders and Kanhaiya Traders were disbursed loans worth Rs70 lakh, Rs60 lakh and Rs27 lakh without any collateral.

Other relatives of the Rawal family, who got loans that turned bad, include the minister’s aunt Vijayadevi Rajput, his cousin Chattrapal Rajput, kin Jaisingh Rawal, and Ranveersingh Rawal.

The report specifically studied loans worth Rs1.86 crore given to three relatives of the bank directors, including Chattrapal, Rawal’s cousin.

Chattrapal got Rs81 lakh from the bank. In all these transactions, the loan was given without scrutiny of requisite documents, the stated purpose of the loan or payment of any stamp duty.

The report also slammed the bank board for misrepresenting the real state of finances and not taking any action to recover loans from NPAs, after it was apparent the loans had gone bad.

“The bank board of directors took no legal steps to recover loans, as a result the depositors’ monies got locked, leading to its collapse... In the 2005-06 audit report, the bank losses were reported at Rs14.49 crore, but the board showed the losses at Rs22 lakh. Even when the bank’s net worth stood at a negative Rs761 lakh, the bank board resorted to falsifying accounts and presenting a false picture before its depositors and members,’’ states the report.

The report said the bank directors and officials were squarely responsible for its collapse and should face action.

Rawal maintained the case was one of political vendetta. “This is one of the rarest cases where a cooperative bank’s licence was cancelled because of political vendetta. Which cooperative bank doesn’t have some audit paras against it? Today, none of our depositors are complaining and have been paid back. Out of those NPA loan accounts, nine have already paid along with interest. My own savings and my family’s savings worth Rs2.40 crore are still locked in the bank and this bank could have been revived if not for political opponents.”