Even as the Modi-led Government at the Centre is still under pressure over the recent scams related to banks, another such case is emerging unbelievable details.

The Uttarakhand State Cooperative Bank Limited (USCB) is under scrutiny for massive irregularities that have emerged in the method of operations being conducted. The bank seems to have left no stone unturned as it broke almost all rules to run non-performing assets (NPAs) worth Rs 165 crore. It has lent out huge loans to companies that deal in liquor and sugar, and also to other small and medium farmers by violating the very charter of a rural bank. It also lent money to the relatives of board members without any collateral.

The authority which is probing the details into the scam is The National Bank for Agriculture and Rural Development (NABARD), the regulator for rural and agricultural banking. It pointed out that sanctions were accorded without proper appraisal of loan by the branches or head office. Most of these loan proposals were applied between the period of March 2016 and May 2017 by the general manager (banking), who was last year elevated to the post of managing director of the bank in April 2017.

 

NABARD then alerted the Reserve Bank of India (RBI) in the year September 2017 to dissolve the USCB board and replace it with a management committee consisting of banking professionals. NABARD’s chief general manager DN Magar, further wrote to the state government calling for action: “The board had not taken up the issue of default by the following relatives of existing board members and had not initiated any action against as per Uttarakhand Cooperative Societies Act/Rules 2003. Reeta Pant wife of Naveen Pant (director of the bank) owes Rs 4.42 crore and entire outstanding amount is overdue. The bank had wrongly classified it as Standard. Rajesh Pant, brother of Naveen Pant (director of the bank) amount Rs 5.97 crore classified under Standard category as on 31.03.2017 instead of Sub-Standard since the account was overdue from 06.12.2016. I request you to kindly conduct investigation into the activities of the Board and Chief Executive Officer and take appropriate action.”

Rajendra Prasad, who served as managing director of the bank between 2009 and February 2017 told in an interview that all the loans were sanctioned when he was at the helm of affairs. However, he blamed the then general manager (banking) Deepak Kumar, who is at present managing director, for the irregularities and sanctioning loans for liquor contracts. Prasad also said Kumar misled him and the board.

“He gave me the appraisal reports to put up before the board. Then I asked him in writing whether he ensured the guarantee of the loans and his response was affirmative, however, at least six members of the board objected to the loan proposals for liquor. Subsequently, I ordered an inquiry into proposals put up by the general manager and a report revealed that loans were sanctioned without ensuring security and some relatives of some board members were also beneficiaries, which is a clear conflict of interest. In October 2016, I issued him a show cause notice seeking his response but he did not reply. A rejoinder was sent to him in January 2017 but he chose not to reply. Subsequently, I wrote to the registrar of societies, Uttarakhand, asking the state government authorities to recall Kumar’s services. The state machinery and board sided with him and even NABARD tried to cover up the scam, as all the loans sanctioned would eventually turn NPA. I also wrote to NABARD chief general manager (Magar) with documentary evidence as late as on December 2017, for immediate action but he didn’t do anything and I am still awaiting justice in irregularities at the bank that I had built from scratch,” Prasad said during his allegation.