From fraudulent loans issued through forged documents to lakhs spent on laddoos during Diwali, allegations of “rampant fraud” and “irregularities” against a Delhi cooperative bank are being probed by two committees in the Delhi Assembly. A report in this regard is likely to be presented in the Assembly soon, sources said.
Established in 1969, the Delhi Nagrik Sehkari Bank Ltd (DNSBL), described on its website as the “fastest growing cooperative bank in North India”, had 14 branches, over 66,000 shareholders, over 1.5 lakh customers and deposits of over Rs 506 crore in 2015. It falls under the purview of the Registrar of Cooperative Societies (RCS), Delhi government.
A source familiar with an investigation, ordered by the RCS, said, “There have been several investigations, including one into how shareholders’ money was spent on laddoos during Diwali.”
Earlier, a 2015 inquiry led by P C Jain, special secretary, General Administrative Department, had concluded that the bank “indulged in unnecessary profligacy and extravagance while making various conspicuous expenditure”.
Speaking to The Indian Express, DNSBL CEO Upender Garg said, “There are multiple investigations going on. Already, the RCS has directed a fine against all 15 directors of the bank. Non-performing assets are estimated to be Rs 30 crore. We are trying to recover as much of this as possible. A separate committee has been formed to assess the losses to the bank; that report is awaited.”
The allegations came to light in 2012, when Anil Kumar Gaur, a stakeholder and member of the bank, filed a petition in the Delhi High Court, alleging irregularities in DNSBL. Since then, multiple inquiries by the Reserve Bank of India and RCS confirmed that norms were violated, it is learnt.
The matter came up in the Assembly in January 2017, when AAP MLA Akhilesh Pati Tripathi asked about it in the House. It was referred to the Questions and Reference Committee, chaired by deputy speaker Rakhi Birla. In August, a complaint by Vijay Dev, also a stakeholder and member of the bank, was received by the Committee on Petitions in the Assembly, chaired by Saurabh Bhardwaj.
In January 2017, an inquiry report to the RCS highlighted that the Lajpat Nagar branch had the highest non-performing assets (NPAs) and the “maximum number of loan cases sanctioned on the basis of fake document”, it is learnt. Jain further concluded that Jai Bhagwan, the then director of the bank and in-charge of the Lajpat Nagar branch, had a “direct role in mismanaging its branch”.
When contacted, Jai Bhagwan, who was earlier with the Congress and is now with the BJP, said, “The matter is being investigated. But anyone can make allegations. There is a board which makes collective decisions, like how an Assembly makes collective decisions to pass a Bill in the house. The allegations are baseless.”
Checks and balances
According to sources, cases of alleged fraudulent loans at the Lajpat Nagar branch include eight car loans — from February 2011 to October 2011 — amounting to Rs 32.5 lakh, which an August 2017 RCS order termed “disturbing and indicative of the fact that proper checks and balance were not being exercised”.
In 2013, RBI scrutinised the allegations that 80 per cent of the loans here were issued on forged documents, concluding that “the bank had not put in place a proper system of appraisal of loan applications” and that “the repaying capacity of the borrowers was not being assessed”. It added that “loans were sanctioned to different people belonging to the same family and for same purpose”.
The cases scrutinised by the RBI included over 20 loans forwarded on the basis of one tract of land, loans on the basis of power of attorney documents that lacked signatures, and cases where signatures on sureties didn’t match. The 2015 inquiry by Jain also said that the NPAs of three branches — Lajpat Nagar, Badarpur and Karawal Nagar — were “abnormally high”.