Maharashtra's apex co-op bank under a cloud

In a jolt to the Maharashtra government, the Reserve Bank of India has recommended the supersession of the board of directors of the Maharashtra State Cooperative Bank and appointed two administrators to manage the bank’s affairs. This followed a negative net worth Rs144.22 crore which came out in the bank’s statutory audit for 2009-10.

Following suspected irregularities in the bank’s functioning, the RBI recommended to the state commissioner of cooperation and the registrar of cooperatives to take action to supersede the MSC Banks’ board. Accordingly, agriculture and marketing principal secretary SK Goyal and planning secretary S Shrivastava have been appointed the new administrators of the apex cooperative bank in the state.

Speaking to newspersons here Saturday evening, Goyal assured the people that “the financial condition of the MSC Bank is sound and depositors need not have any concerns. The decision to appoint an administrative board is primarily directed to further strengthen the financial position of the bank and bring professionalism and transparency.”

As on March 31, the bank’s deposits stood at Rs17,428 crore, of which Rs.1,340 crore are lying in current and savings accounts. The rest are lying under various types of fixed deposits. Besides, the bank has invested another Rs11,986 crore in different government securities. The bank also has a cash balance of Rs1,350 crore, plus its own fund of Rs3,053 crore. The net non-performing assets worked out to 7.5%.

Union agriculture and cooperatives minister Sharad Pawar on Saturday backed the directors of the MSC Bank and said that they hadfollowed the directives of the state government while disbursing loans. Expressing surprise over the dismissal of the borad of direfctors,Pawar said that there was no mismanagement on the part of the board.

He said that the state government had directed the MSCB to disburse loans to some institutions and had provided guarantees for the same. He said that a resolution to that effect was passed by the state cabinet. But this resolution was not followed and the state government did not provide funds against the guarantees when the loans were not recovered. Hence, the bank got into trouble.