Apex agriculture bank says the co-op bank has not even acquired an RBI licence since its inception in 1961.
Even as a political slugfest has ensued in the corridors of Mantralaya over the dismissal of the board of directors of the Maharashtra State Cooperative Bank (MSCB), the fact of the matter is that the bank is indeed in poor health.
This is more than evident in the 265-page inspection report of National Bank for Agriculture and Rural Development (Nabard) on MSCB based on which the Reserve Bank of India (RBI) dismissed the board of directors of the bank.
The Nabard report (a copy of which is in the possession of DNA) pulls no punches and tells the story as it is. The most damning indictment by Nabard is the fact that MSCB, formed on May 1, 1961, is an unlicenced bank. This is because the bank is unable to maintain the 4% CRAR (capital to risk weighted asset ratio) as prescribed by the RBI. This, of course, is just the tip of the iceberg. There are several glaring omissions on the part of the bank which the report elucidates very clearly.
According to Nabard, the bank should have recorded a loss of Rs1,014 lakh in 2008-09, instead of a profit of Rs1,778.2 lakh had it truthfully made a requisite provision as per the IRAC (income recognition, asset classification) norms.
Nabard said that MSCB had not declared a dividend during 2008-09 and hence it was wrong for the bank to appropriate Rs300 lakh towards the centenary year celebrations of the cooperative movement in 2010.
Slamming the bank for a sharp deterioration of its net worth, the report points to the whopping 31% of non-performing assets (NPA) with the bank. The Nabard report criticises the bank for camouflaging the NPA position by violating laid down norms and not reflecting a true picture of its financial position as on March 31, 2010. “An amount of Rs66,390.50 lakh pertaining to non-performing assets (NPA) and Rs8,035.91 lakh pertaining to overdue interest receivable was removed from the balance sheet, thereby camouflaging the NPA position,” the report says.
Highlighting the steep decline in profitability of the bank (Rs 24.31 crore in 2007-08 to Rs2.87 crore in 2009-10), the report criticises the bank for ‘camouflaging of provisioning requirements and not providing certain items of liabilities and frequent use of General Reserve fund for the purpose of arriving at profit’.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}