Maharashtra govt puts Rs 521 crore of depositors’ money at risk, says CAG report

Audit agency comes down heavily on the state for failing to act against cooperative banks on verge of closure.

Written by Sandeep A Ashar | Mumbai | Published: August 2, 2015 2:16:34 am
CAG, CAG report, maharashtra cag, maharashtra cag report, cag report maharashtra, maharashtra government, maharahtra news, india news, indian express The CAG has rapped the state government for “failure to take cognisance of the deteriorating financial position of these district central co-operative banks (DCCBs) and initiating timely action”.

Unearthing political interference in the cooperatives sector yet again, the Comptroller and Auditor General (CAG) of India has blamed the state government for blocking of Rs 521 crore of deposits in five financially decrepit district cooperative banks.

In a report presented to the state legislature on July 31, the CAG has rapped the state government for “failure to take cognisance of the deteriorating financial position of these district central co-operative banks (DCCBs) and initiating timely action”.

The banks under the scanner include the DCCBs in Wardha, Buldhana, Nagpur, Dhule, and Osmanabad. The state government’s failure directly impacted farmers in these areas since the primary aim for these banks is to provide crop loans for their sowing needs.

Although the lapse mainly pertains to the period when the Congress-NCP regime was in power in Maharashtra, government officials admitted that the financial condition of these lending institutions continued to be precarious.

Almost all of these banks are controlled by political heavyweights in the state.

According to norms, finances related to a district fund and all sums received by it are kept in the DCCBs.

The CAG has remarked that the National Bank for Agriculture and Rural Development (NABARD), on whose recommendation the Reserve Bank of India issues licences to such banks, had in July 2011 asked the state’s chief secretary to issue orders directing these banks to formulate an action plan for the funds parked as deposits, after its inspections for the fiscal years 2009-10 and 2011-12 revealed that the their financial position was deteriorating and their operations remained unsatisfactory.

The government, however, did not act on this recommendation till July, 2012, by which time the RBI had already issued orders prohibiting the banks from conducting any banking business including acceptance and repayment of deposits. The RBI orders were issued in May, 2012.

The CAG has observed that the Zilla Parishads continued to transact with these banks despite the RBI orders jeopardising the depositors’ interest. It has said that in Buldhana Rs 127 crore remained blocked, whereas in Nagpur the amount blocked was Rs 146 crore and Wardha it was Rs 5.14 crore.

Although RBI’s moratorium on the bank in Osmanabad was lifted in June 2013, the CAG has observed that about Rs 59 crore remained blocked. Deposits amounting to Rs 94 crore remained blocked in the Dhule and Nandurbar DCCB.

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