A day after some of its topmost functionaries, including CEO and managing director Ravindra Prabhakar Marathe, were arrested in connection with an ongoing investigation into cases of cheating and fraud by the beleaguered DSK Group, a scheduled Annual General Meeting of the Bank of Maharashtra (BoM) turned stormy on Thursday, with shareholders questioning the management over its dealings with the DSK Group.
A press release from the bank said some shareholders had raised the issue of the loan disbursed to the DSK Group — which is accused of cheating thousands of its investors of over Rs 2,000 crore — and the management had clarified its position.
“Replying to concerns raised by a few shareholders with regards to the amount advanced to M/s D S Kulkarni Developers Limited, Mr (A C) Rout (executive director of the bank) explained that the bank’s present outstanding exposure to the group is Rs 94.52 crore, which is fully secured. The bank has already declared M/S DSK Developers Limited and its promoters as wilful defaulters. Recovery processes like SARFAESI action have already been initiated by the Bank and some of the properties of the firm have been put under auction,” the release stated.
Some of the shareholders The Indian Express spoke to, however, said they were not satisfied with the bank’s response.
“Concerns about the DSK account were being raised since 2015, which the bank had overlooked. More than 1,200 cheques issued by the DSK Group company to its depositors, drawn on the Bajirao Road branch of the bank, had bounced but the management did not do anything,” Suhas Vaidya, president of the Bank Shareholders Association, who is also a shareholder in the Bank of Maharashtra, told The Indian Express.
On Wednesday, Pune City Police had arrested Marathe, BoM Executive Director Rajendra Gupta, Zonal Manager Nityanand Deshpande, and former CEO and managing director Sushil Muhnot for their role in sanctioning the allegedly ‘illegal’ loan of about Rs 100 crore to DSK Developers Limited for the company’s Dream City project. The officials have been remanded in police custody for five days.
Vaidya said he, and some other shareholders, had raised questions over the financial health of the bank.
The bank press release, however, claimed that the bank was in robust financial health. “He (Rout) further added that the operating profit for the year ended March 31, 2018 increased by about 20 per cent year on year with improvement in efficiency parameters like net interest margin and cost to income ratio. The bank has further improved its CASA (Current and Savings Accounts) ratio to an all time high of 47.7 per cent in total deposits that helped in reducing interest expenses. Bank achieved robust cash recovery from NPAs along with three fold increase in recovery in written off accounts,” the press release stated.
The shareholders, meanwhile, also expressed their disappointment over the fact that only two of the eight directors of the bank attended the AGM. While two of the directors — Marathe and executive director Rajendra Gupta — were arrested, four of the remaining six directors also chose to stay away. Only Rout and Deendayal Agrawal, chairman of the audit committee of the bank, were present at the AGM.
“We were told that the directors were unable to attend the meeting due to personal commitments. The date of the AGM was intimated to everyone almost two months ago, so this excuse is not acceptable,” Vaidya said.