Land Development Bank starts its winding down process

Other than the Kohlapur branch, which has a board of directors and the Nashik branch which is under an administrator, all other branches of the bank had ceased functioning.

At this moment recovery has to be done from over 35,000 farmers whose land is mortgaged to the bank. The bank has 953 employees and has assets including buildings and open plots worth Rs 550 crores. Many of the properties of the bank are in prime locations and would be quite valuable as properties.

The bank had twice failed to repay the apex bank NABARD which had refinanced it. As the government of Maharashtra was the guarantor of the refinancing packages the state government had to pay NABARD Rs 800 crores for the default. The total expense towards salary and maintenance per month comes to be at least Rs 3 crores which the bank is doing at this moment through recovery.

Earlier in 2015 the state government had announced the decision to wind up the bank due to its chronic poor financial health. Dalvi, while addressing a press conference in Pune recently, announced a special loan waiver scheme for the creditors. As per the scheme the government will waive off Rs 900 crores and the rest of the amount will be recovered at the rate of 6 per cent interest. The scheme is valid till March 31,2016 after which the government will take action against the creditors. While retrenchment of staff has been announced the government has also announced a special scheme of Rs 236 crores for the staff.

‘Once the special recovery scheme gets over the formal process of winding up the bank will start,” said Dalvi.