DAYS after Reserve Bank of India (RBI) put the last nail in the coffin of Samata Sahkari Bank Limited by cancelling its banking licence with immediate effect, murkier details of financial irregularities by the Board of Directors, are coming up. Shockingly, innocent depositors had parked an amount of Rs 93.72 crore with the bank that’s dead now.
This whopping amount was deposited by some 37,332 depositors who’s fate now hangs in the dark post the RBI final notice. Of these, around 36,000 depositors had deposited an amount each lesser than rupees one lakh, amounting to Rs 34.99 crore. Some 1,161 depositors had more than rupees one lakh each in the form of the deposits with the bank and their fund amount calculates to be Rs 58.72. These deposits include an amount of Rs 25.37 crore that belonged to 92 cooperative institutes. With delicensing of Samata Bank, the process of liquidation will begin after completion of internal audit. South-West Nagpur MLA of Bharatiya Janata Party (BJP) Devendra Fadnavis, perhaps the first person in the city to predict and warn the future of the bank years ago, addressed a meet of the depositors of three banks that are reeling under similar circumstances -- Samata, Mahila and Parmatma Ek Sevak banks. He had also raised the issue of delicensing of Samata Bank in the Legislative Assembly in the ongoing session through an adjournment motion. In reply, Chief Minister Ashok Chavan assured to make a statement on the matter soon. During the meeting he bought to light a couple of shocking facts. The Samata Bank scam was to the tune of Rs 152 crore. The bank’s NPAs today are the highest possible: 100 per cent that amount to Rs 71.95 crore. Many of the dafaulters are absconding with a default amount of over Rs 27.46 crore. The bank has a negative networth of Rs (-) 81.32 crore. Its CRAR too runs in negative of Rs (-) 9.30 crore. It’s total accumulated losses are to the tune of Rs 90.72 crore. The networth was negative at Rs 8121.50 lakh as on March 31, 2007 and negative at Rs 8142.99 lakh as on March 31, 2008. CRAR was negative at 465.08% as on March 31, 2007 and negative at 737.95% as on March 31, 2008. Deposit erosion was 85.69% and 91.87% for the financial year 2007 and 2008 respectively. Raising hopes for the depositors, Maharashtra Government has constituted a committee headed by Chief Secretary to study various aspects related to revival of Mahila Bank and Samata Bank. Due to financial irregularities by the Board of Directors and default by 13 major borrowers in connivance with Bank Management and top officials the Co-operative department was forced to appoint administrator over the bank. As many as 92 cooperative societies had parked funds totalling Rs 26 crore. These societies will get back only Rs 1 lakh from the insurance money. For the rest of their deposits, these societies will have to wait for the official liquidator to sell off the assets and recover the money either from the bank or from the directors. The deposits up to a lakh are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Presently, the financial position of the Bank is precarious and there is no scope for its revival; the bank is not in a position to pay its present and future depositors in full as and when their claims accrue. The RBI in its last notice mentioned that it found that in all likelihood public interest would be adversely affected if the Bank is allowed to carry on its banking business any further. RBI had imposed moratorium under Section 35-A of the Banking Regulation Act on May 24, 2006, restricting withdrawal to Rs 1000 per depositor only. Due to precarious financial condition of the Samata Bank, it was classified as weak and placed under RBI scanner. However the financial condition deteriorated further, the RBI pointed out. The Bank in its reply dated November 11, 2009 had sought one years time to revive the Bank. However the RBI found no justification as no specific proposals for merger and revival of the Bank were submitted. Due to public agitation and last ditch efforts by depositors, the action was delayed by some months, but the inevitable finally happened. The delicensing notice has thus dashed all hopes of revival of the Bank and after Mahila Bank, this is the second bank put under liquidation to pay back deposits of small investors. Why the bank sank?Making an in-depth analysis of the causes that made a coffin for the Samata Bank, MLA Devendra Fadnavis pointed out the following reasons: n Offered high-cast interest rates on deposits to various societies and big depositors. This interest offered were too high and illegal. The bank was dependent and relied on such huge depositors n High cash deposit (CD) ratio of 93% n As the bank levied faulty and illegal interest rates on loans to depositors on liquid assets and cash, Reserve Bank had fined the bank a substantial amount of Rs 92 lakh. n The bank did not use the Rs 14 crore borrowing from Maharashtra Bank for improving its liquidity but forwarded it to the same defaulters as bad loans n The bank never formed any investment policy. Investments were made hedoistically by the management in lure of getting personal commissions or returns n Utter violations and disregard for the rules and regulations of RBI, Cooperatives Act and bank bi-laws n The amount distributed as bad loans (Loans that are least likely to be recovered) was as high as 88% of the total loans offered n Offered loans to societies and groups to an amount much higher than that prescribed by the RBI n Despite RBI directives to cooperative banks, offered huge amounts of loans to builders, contractors and financial companies. The bank even went to the extent of offering loans to such customers of an amount higher than the prescribed limit thereby cocking a noose at the rules and regulations n No self-imposed restrictions or control n Notarisation of mortgage records. Value of assets mortgaged against loans were blown up through valuers by the management itself. In most cases no mortgages were seeked n Sanctioned amount to the tune of crores of rupees despite the borrowers did not paid cheques for IBP n The Board of Directors sanctioned loans and discounts on interests of crores of rupees despite the fact that they had no legal right to sanction it n Recovered assets were sold at much lower prices than their real values for reasons unknown. Many mortgaged movable and immovable assets were returned back despite the borrowers failed to repay the loans n Negative networth and CRAR n The bank has the highest possible NPA of 100% now. It was around 64% earlier last year n Violation of RBI’s directive of making a minimum 15% of the net investment in Government shares. No such investment was made. (The investment made elsewhere was too bad) n No share-linkages for loansTop 20 defaulters Sr No Defaulter Default amount Present status of recovery 1 Vijay Daima Group Rs 18.90 crore Defaulter absconding 2 Abhay Vaidya Rs 15.73 crore Recovery underway 3 Naval Harsh Group Rs 12.32 crore Under enquiry (Art 88) 4 Vijay Khair Group Rs 10.70 crore Case pending in Court (HC) 5 Ashok Potbhare Group Rs 5.96 crore Recovery underway 6 Mohd Sajid Group Rs 5.50 crore Recovery underway 7 Shivaji Mesram Group Rs 4.47 crore Main defaulter is dead 8 Mohit Ved Group Rs 3.98 crore Under Secutarisation Act 9 Prafulla Vaidya Group Rs 2.75 crore Recovery underway 10 Chandrakant Gade Group Rs 2.63 crore Recovery underway 11 Dilip Dani Group Rs 2.06 crore Recovery underway 12 Bhairav Real Estate Rs 2.13 crore Recovery underway 13 Ashoka Safe Deposits Rs 3.83 crore Recovery underway 14 Mahesh Traders Rs 1.28 crore Recovery underway 15 SVM Hospital Rs 97 lakh Recovery underway 16 Sharda Builders Rs 91 lakh Recovery underway 17 Harekrishna Gallery Rs 79 lakh Recovery underway 18 Hemani Group (All bogus accounts): Defaulter absconding Anjana Plastics Rs 4.25 crore Laxmi Enterprises Rs 2.57 crore PM Enterprises Rs 1.75 crore Major depositors who lost their money Sr No Depositor Amount 1 Dharampeth Mahila Society Rs 3,75,86,181 2 Nirmal Urban Credit Society Rs 2,95,78,378 3 New Subhedar Credit Society Rs 2,24,49,369 4 Buldhana Urban Society Rs 2,19,61,229 5 Shrikrishna Sahakari Patsanstha Rs 2,75,04,601 6 Shubham Nagari Sahakari Society Rs 1,61,63,738 7 Central Urban Credit Society Rs 1,25,32,929 8 Jyoti Nagari Sahakari Patsanstha Rs 97,40,250 9 People’s Credit Society Rs 87,16,723 10 Nagmitra Nagari Society Rs 86,02,159 11 Parshuram Urban Credit Society Rs 81,61,574 12 Nagpur Grihanirman Credit Society Rs 80,00,000 13 Ujjwal Credit Society Rs 76,70,889 14 Gopal Krishna Credit Society Rs 62,49,188 15 Pragatishil Sahakari Patsanstha Rs 50,60,558 16 Dr Punjabrao Nagari Society Rs 42,47,017 17 PMG Office Society Rs 41,03,737 18 Dharampeth Gruhnirman Credit Society Rs 33,78,923 19 Anant Credit Cooperative Society Rs 30,56,954 20 Himalaya Sahakari Patsanstha Rs 26,24,988 TOTAL Rs 24,63,89,385Who’s responsible? According to MLA Devendra Fadnavis, the following persons are responsible for making the bank bankrupt: n D S Chimurkar, founder President n Milnd D Chimurkar, President n A K Brahme, Guardian Director (Bhagwaghar branch) n P B Chaudhary, CEO n Sanjay Deshpande, Bhagwaghar Branch Manager n Rohini Kulkarni, Accounts Officer n Keshav Kamle, Recovery Officer n All loan committee members n 27 major borrowers
