RBI asks RoCS to supersede two more banks

The government securities (G-Sec) scam is taking more toll. The Reserve Bank of India (RBI) has asked the Registrar of Cooperative Societies (RoCS) to supersede the boards of Wardha District Central Cooperative Bank (VDCCB) and Osmanabad District Central Cooperative Bank (ODCCB) under the provisions of the Maharashtra Cooperative Societies Act 1960.

RBI sources said that the RoCS is expected to take action in this regards in a day or two under which the District Deputy Registrar of the respective divisions will be appointed as the administrator of these two banks. The involvement of these two banks in the scam has created panic among depositors in the region. The Maharastra government had already served a notice under Section 78 of Maharashtra Cooperative Societies Act 1960, to ODCCB and VDCCB for board dissolution. Both the banks had violated the RBI norms in G-Secs dealing with Mumbai-based brokerage Home Trade, which has been debarred by Sebi from G-Secs trading. ODCCB has an exposure of Rs 30 crore while VDCCB paid Rs 25 crore towards G-Secs but failed to get delivery.

Last week, RBI had moved the RoCS for superseding the board of Nagpur District Central Co-operative Bank (NDCCB) and appointed deputy registrar in the co-operative department of the state government SB Patil as administrator of the bank. The Maharashtra CID had arrested NDCCB’s chairman Sunil Kedar and remanded him to police custody till May 8, in connection with fraudulent G-Secs dealings worth Rs 150 crore.

RBI had recently barred co-operative banks from dealing in G-Secs through securities brokers. The central bank also is said to be investigating whether there was some connection between the bank’s management and the brokers. Some co-operative banks having deposits of over Rs 25 crore were still holding securities in physical form, violating the RBI norms. There are around 52 co-operative banks and over 2,000 unscheduled co-operative banks in the country. Maharashra has 29 district co-operative banks and 639 urban co-operative banks, and the state administration is now keeping a close watch on them.