Janata Sahakari takes Rs 8-crore hit

RBI officials in Mumbai confirmed that the investigations on Janata Sahakari’s sticky accounts were conducted along with 23 other co-operative banks in the state and it has been asked to take suitable action to recover its funds from Home Trade and Giltedge. “Janata Sahakari and Indusind Bank were associated with Home Trade but they do not have any direct exposure to the Home Trade’s G-Sec scam,” said the RBI spokesperson in Mumbai.

P.J. Puntambekar, CEO of Janata Sahakari Bank, said its funds loaned to Home Trade will be recovered as it is backed by government securities, public sector bonds and collateral in the form of immovable property. “The bank possesses the securities in physical form and has authenticated the securities,” says Puntambekar. In a worse case scenario disposing off the land and building that was offered as collateral security would also be considered. In the event the duo fail to pay back the credit, the bank will find it difficult to sell the tainted securities. The property offered as collateral is located in Pune and Ahmedabad. Post-carnage, the Ahmedabad property is unlikely to attract any premium or even buyers at a discount. The bank would then have to add this amount to their already huge non-performing asset basket which stands at 18 per cent gross.

Home Trade had banked with Janata Sahakar since inception three years ago. Home Trade was introduced to the bank by Sheth who has been banking with Janata Sahakari for the last 10 years. “The conduct of the account was consistently good and was fully serviced so we continued to grant them the limit of Rs 3 to 4 crore,” he says. Janata Sahakari has been in the red for the last three years. The bank’s deposits are to the tune of Rs 1,650 crore while the loan portfolio is Rs 1,140 crore with Rs 572 in investments. If this loan turns into an NPA, it will have to be provided for and it will add to the bank’s burden.