An “artificial group” to finance a loan to a “favoured firm” and unsigned land documents are among the ways in which a Delhi cooperative bank — under the purview of the Registrar of Cooperative Societies (RCS) of the Delhi government — allegedly issued fraudulent loans.
As per an RCS order, in June 2017, “40 (illegal) appointments and 62 promotions… (were) done in 2012” and members of the board were fined Rs 5 lakh.
The order added, “The appointment process followed for appointing 40 staff in the bank… are found to be in violation of the various provisions of the Delhi Cooperative Societies (DCS) Act, 2003, and the DCS Rules 2007.”
Jai Bhagwan, earlier with the Congress and now the BJP, was the chairman of the bank between September 2011 and September 2014. He told The Indian Express, “The allegations are baseless and motivated. My nephew had contested elections against the AAP in the Assembly elections and I had helped him. This is why the charges have been fabricated.”
Established in 1969, the Delhi Nagrik Sehkari Bank Ltd had over 1.5 lakh customers and over Rs 506-crore deposits in 2015. The case is being probed by the Petitions Committee and the Questions and Reference Committee in the Delhi Assembly.
The bank had sanctioned a loan of Rs 7 crore in February 2009 and a second one for Rs 8.5 crore in October 2010 to a Delhi-registered firm. An RCS order, in August 2017, found that in financing the loan “for an asset being created outside Delhi” — a hotel in Uttarakhand — the bank had “violated the territorial jurisdiction of the DCS Act”.
In 2015, an RCS-appointed inquiry by P C Jain, special secretary, GAD, had said the “management knowingly created a false group of the ‘company and its individual directors’… with the purpose of facilitating the loan to the group”. Investigators also found scores of loans given on the basis of “unsigned” land documents — in some cases the same land serving as security for multiple loans.
An RBI probe in 2013 highlighted the manner in which this was done, isolating one case where loans were sanctioned to “17 people belonging to the same area”, the general power of attorney being “passed on”.
Visit reports for the same, though signed, had no details, found the RBI. The RBI added, “It may be mentioned that 90% of such loans were NPAs, suffering quick mortality, some even within three months of sanction.”