3 of 6 banks govt wants to help have scam-tainted past

If the state considers the Rs551-crore bailout package for the six district co-operative banks (DCBs) currently in the red, it would mean flushing taxpayers’ money down the drain.

If the state considers the Rs551-crore bailout package for the six district co-operative banks (DCBs) currently in the red, it would mean flushing taxpayers’ money down the drain.

HT Image

Six DCBs – Nagpur, Osmanabad, Jalna, Dhule-Nandurbar, Buldhana, and Wardha – all controlled by political heavyweights, could lose their banking licence on September 30 as per RBI directives, jeopardising credit line to farmers. The banks have a history of mismanagement and serious financial irregularities.

Three of these DCBs - Nagpur, Osmanabad and Wardha - were embroiled in the 2002 gilt scam involving brokerage firm Home Trade.

Congress legislator Sunil Kedar, the then chairman of the Nagpur DCB, invested Rs125 crore in Home Trade without an RBI clearance to invest in public bonds. Similarly, Wardha and Osmanabad banks invested Rs. 25 crore and Rs. 30 crore. None of the banks got the securities in hand. Wardha DCB was controlled by the then NCP leader Suresh Deshmukh and NCP leader-turned-Congressman Pawanraje Nimbalkar (who was later murdered).

Boards of all these banks were superseded but have made a comeback. While Kedar is no longer a chairman, a panel backed by him heads the Nagpur bank. In Wardha, Suresh Deshmukh continues to control the bank. Currently, Nagpur needs assistance of Rs171 crore to resume operations; Wardha needs Rs82 crore and Osmanabad Rs47 crore.

Kedar, who was arrested in the scam, told HT, “I am not on the board now even though people say I support the panel. I could give you bank figures, which have improved since 2002, but not at the moment as I am not in Nagpur.” BM Patil, the Congressman who now chairs Osmanabad bank, said, “Since the scam, we have improved our net worth. We deserve assistance from the state.”