The Maharashtra State Co-operative Bank, run largely by Nationalist Congress Party (NCP) leaders, has turned its loss of Rs 1,043 crore in 2009-10 into a profit of Rs 2.87 crore. The wrongdoing was exposed by the auditors of the bank, whose chairman is NCP leader Manikrao Patil and 40 of whose 77 directors are linked to the party. Patil, it is believed, is a puppet in the hands of Deputy Chief Minister Ajit Pawar, who has virtually been running the bank for the past 17 years. Pawar, whose motto is transparency in administration, has ignored the bank’s violation of general accounting standard norms in an attempt to hide the huge loss.
The auditors of the bank, M/s Joshi Nair and Associates, have said the bank’s accounts were poorly maintained and the profit and loss account is grossly inaccurate. India Today has exclusive access to the auditors’ report, which states: “The bank has shown a net profit of Rs 287.22 lakh as on 31.03.2010. However, the same has been not calculated as per general accounting standards. The bank has incurred a loss of Rs 1,043.18 crore for the year ended on March 31, 2010”.
Ironically, President Pratibha Patil appealed for transparency in the banking sector at the MSC Bank’s centenary celebration that began on October 11 in Pune. “Banking and finance sectors survive on customers’ faith. So banks should be in a position to keep this faith through their progressive steps,” she said.
The MSC Bank was established to strengthen the co-operative sector. It provides monetary help to district banks, which grant loans to farmers. However, the NCP-controlled management of the bank has failed to speed up recovery of loans and curb corruption. MSC Bank is the biggest loan provider to sugar factories in the state and is the apex bank in the state’s co-operative sector. It gave loan guarantees to at least four sugar factories, which have long shut down. However, the bank failed to recover loans amounting to around Rs 3,000 crore.
The audit report states that the bank did not include the Non-Performing Assets (NPAs) of Rs 767.22 crore in its balance-sheet even though the figure is required for analysis. Most of the borrower units of the bank are leased out by the bank, the liquidator or the borrower himself. The sustainable amount of rent is in arrears.
And that’s just the tip of the iceberg. The bank is suspected of crediting an income tax refund of Rs 1.39 crore as income. It wrongly debited expenses of Rs 2.65 crore incurred on behalf of borrowers when those were expected to be debited to the respective borrowers’ accounts. The gratuity liability of the bank is Rs 76.45 crore. However, it has provided a gratuity fund of Rs 73.13 crore. The bank has not provided details of interest of Rs 12 lakh on unclaimed matured term deposits of Rs 3.51 crore and did not take into account the depreciation in the value of investment which runs into around Rs 129.86 crore.
The anomalies in a key bank of the state have prompted social activist Anna Hazare to launch a movement against the bank and other social issues. “If the state Government does not take action against the culprits, I will surrender my Padma Bhushan to the President,” Hazare says. The bank chairman says that he is ready to give an account of the bank’s expenditure.