MSCB projected healthy picture, didn’t mention NPAs: Nabard’s 2010 report

Complainant Surinder Mohan Arora, whose PIL in the Bombay high court resulted in the probe, alleged in his FIR that the bank’s funds were misused to purchase fancy number plates for vehicles for chairman and vice-chairman and money allocated for b...

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“The loans were sanctioned by a committee that included director Ajit Pawar,” the official added.
Mumbai: The Maharashtra State Cooperative Bank did not list nonperforming assets and projected a healthy picture despite making losses, alleged a 2010 Nabard inspection report which ED and the Mumbai Police have used to begin a preliminary probe against NCP leader Sharad Pawar, his nephew Ajit Pawar and over 70 other politicians.

Complainant Surinder Mohan Arora, whose PIL in the Bombay high court resulted in the probe, alleged in his FIR that the bank’s funds were misused to purchase fancy number plates for vehicles for chairman and vice-chairman and money allocated for board members’ tours they never undertook.

“The bank purchased a car for the managing director’s use for Rs 21.25 lakh and paid Rs 75,000 for a fancy number plate,” Arora alleged in his FIR. The bank also paid hefty amounts for fancy numbers plates for two more vehicles for the chairman and vice-chairman’s use, the FIR alleged, while asking who was responsible for such losses.


“Certain amount was advanced to Mahalaxmi Tours and Travels and Girikand Travels for arranging the study tours of board members.

However, board members did not go on study tour, which caused loss to the extent of Rs 7.30 lakh,” the FIR alleged.

The bank had violated Income Recognition Asset Classification norms “as a result of which accounts did not reflect a true picture of its financial position as on March 31, 2010.
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Rs 66,390.59 lakh pertaining to loans and advances (NPAs) and Rs 8,035.91 lakh pertaining to overdue interest receivable and provision there against were removed from the balance sheet, thereby camouflaging the NPA position.

There was a shortfall in provisioning in respect of non-performing assets and also item of liabilities to the tune of Rs 77,886.16 lakh as on March 31, 2010,” the Nabard report had said.

The report alleged the bank falsely showed Rs 2.87 crore net profit, though correct accounting procedure would have shown a net loss of Rs 775 crore. “NPAs were intentionally not mentioned in the balance sheet,” the report alleged.

Nabard findings are important “as it dwells on the role of the directors and the sanctioning committee which allowed loans granted to cooperative sugar factories without adequate collaterals and also allowed sale of weak factories below reserved prices. In both cases, loans were either sanctioned to cooperative sugar factories directly or directly linked to the board of directors, mainly comprising politicians or sold to their kin,” alleged an official. The probe will try to trace ultimate beneficiaries and scrutinise 2007-11 transactions, when the bank sanctioned loans to over 30 sugar factories.
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“The loans were sanctioned by a committee that included director Ajit Pawar,” the official added.

Investigators are in the process of collecting documents and writing to auditors and the bank. “While we have a copy of the Nabard report, we will soon write to it to share findings on which the report was based. Also, we will write to the bank to give us details on the bank manual, loans and sale procedures,” said another official.
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