Minal Khopkar’s 80-year-old mother needs immediate medical attention. Ms. Khopkar, a resident of Pen in Raigad district of Maharashtra, has three fix deposits worth Rs 20 lakhs in the Pen Co.op Urban Bank Ltd. But her mother’s knee replacement surgery cannot take place, since she is unable to access her accounts. She is not alone. The Kotwalvadi Trust, working for the tribal children in Raigad district has been writing letters to numerous state authorities, to release their Rs 8 lakh trapped in the bank. These are not isolated examples. Around, 1,95,775 account holders of the bank have been saying similar thing from last two years.
The man allegedly responsible for their sufferings, the alleged mastermind of Rs 758 crore scam in the bank, Shishir Dharkar, the former president of Nationalist Congress Party (NCP) for the Pen assembly constituency and former chairman of the bank, held a lavish wedding of his daughter in Mumbai, four months ago. Few months before the wedding, Vibhavari Bhave, 55, tried to commit suicide after she could not withdraw her husband’s savings of a lifetime, worth Rs 26 lakh, from the same bank.
Except for the arrest of bank’s internal auditor Sunil Dutt Sharma on Monday last week in South Mumbai, who overlooked the financial irregularities of the bank from past 10 years, no concrete action has yet been taken to provide justice to the victims of this financial scam.
The investigation by the Central Bureau of Investigation (CBI) in 2010 in the alleged case of cheating the Mineral Scrap Trading Corporation (MSTC), a government of India enterprise under Ministry of Steel, for Rs 480 crore had unfolded another scam of worth Rs 758 crores in the co-operative banking sector in Maharashtra. Two years later, the victims of the scam, mostly from the poor and middle class families await justice from the finance ministry, while the perpetrators remain untouched. The demand to merge this bank with a nationalised bank has been pending with the finance ministry on which no action has been taken yet.
The CBI report showed that Mr. Dharkar, the then chairman of the Pen Co.op Urban Bank Ltd, was instrumental in mortgaging the assets of the bank for availing the advance of Rs 480 crores from MSTC. Following the report, the Reserve Bank of India (RBI) swung in to action and inquiry of the bank in September 2010. In the same month the Board of Directors (BoD) were removed and three administrators were appointed by the Commissioner for Cooperation and Registrar of cooperative Societies. The administrator ordered the re-audit for year 2008-09 and 2009-10 of bank’s accounts.
The re-audit report exposed the fake figures of profit presented by the bank. It became clear that the bank had suffered loss of Rs 403 crores in the year 2008-09 and Rs 651 crores in the next financial year. The BoDs had kept the fact hidden from the depositors of the bank. It also became clear from the re-audit reports that the BoDs had disbursed loans worth Rs 758 crores to 128 individuals and companies without any paperwork or mortgage during the financial year 2008-09, 2009-10 and 2010 to September 2010. On closer investigation it was found that it was the cartel of around 25 people who formed different companies and were beneficiaries of the loans.
“The Board of Directors jointly and severally have failed to exercise control and supervision over the sub-committees and overall control and manage the affairs of bank in the interests of shareholders, depositors and public by violating various guidelines issued by RBI in their various circulars,” said the re-audit report, prepared by Kirtane and Pandit.
Following the writ petition filed by the depositors of the bank, the Bombay High Court put a stay on the sell of bank’s immovable properties. The RBI, on February 10, 2012, in spite of orders from the Bombay High Court to not cancel the licence without its prior permission, issued a notice cancelling the licence of the bank.
The Pen Co.op Urban Bank Ltd was set up in 1935 and was duly registered under the provisions of Maharashtra Co-operative Sector Act,1960. At present the bank has 18 branches, of which three are operating in Mumbai while rest are in the neighbouring district of Raigad, where the bank was originated. In total, the bank has 1,95,775 depositors with the deposits amounting Rs 664 crores.
Naren Jadhav, executive president of the Pen Urban Bank Thevidar Khatedar Sangharsh Samiti, a body formed by depositors to represent them, blames RBI officials. “How can they classify the bank as grade 2 at first place? It clearly means that the RBI officers were also hand-in-glove with the BoDs and other staff members of this bank,” he said.
“Cancelling a licence is the first step towards the liquidation of the bank and we do not want it at all,” said Mr. Jadhav. There are accounts of educational institutes, credit societies, trusts, religious committees, housing societies and even the Pen municipal council in the same bank. “Thousands of people are dependent on this money. Liquidation of the bank will further jeopardise the chances of getting money back. We have requested the Finance Ministry to revoke the licence cancellation and to allow the bank for a merger with a nationalised bank,” he said.
“I had saved money for my mother’s operation. Why can’t I use my money? Why are we being punished for the crime committed by others?” asked Ms. Khopkar.