Maharashtra State Cooperative Bank (MSCB) is always hot copy for the media. This time round the bank has gone out of its way defending the state deputy chief minister Ajit Pawar whose name figures in a petition before the Bombay high court seeking registration of FIR in a scam involving a largescale diversion of funds of the bank.

MSCB has told the high court that Mr Ajit Pawar’s name is being mentioned to gain cheap publicity.

One Mr Shankarao Bhosale from Satara has filed the controversial petition.

Mr Bhosale states depite the appointment of a board of administrators on the advice of RBI, the board has done nothing to recover defaulted loans and therefore urges the court to direct them to start criminal proceedings with the economic offences wing.

MSCB has told the court that the petitioner who is vice-president of a sugar factory has taken loans from the bank and has been defaulting on them. The petitioner is therefore only blackmailing the bank and hiding his own illegalities.

The petioner, however, maintains Mr Ajit Pawar’s followers and associates who are also members of the NCP have availed themselves of crores of rupees of loans from the bank and are not willing to repay these loans.

It is no secret that Mr Pawar and his followers have decisively been dominant over the years in the management board of MSCB.

Confusion of election symbols has led to postponement of the elections to the Maharashtar State Cooperative BanK (MSCB) employees union. Shrikant Bhuyarkar who was a candidate from the ruling Sahkar panel and contesting for the post of treasurer had his rival’s election symbol torch against his name.

This angered the opposing Parivartan panel.

The parivartan panel charged that the confusion was deliberate and the opposite panel was not willing to abide by democratic norms. The election should be held every three years as per rules of the union but sahkar panel had been in power for the last several years, parivartan panel complained.

Sources say fresh elections would be held on the 16th September now.

Nabard, primarily conceived to act as a catalyst for rural development, celebrated its 30th Foundation day in Mumbai on Thursday without any participation from the cooperative banks.

It invited almost all the commercial banks but chose to sideline the cooperative banks that happen to be one of its main subjects. Only exception was the Maharashtra State Cooperative Bank but it chose not to send any representative.

Interestingly, the speakers including the Governor of Reserve Bank of India dwelt mostly on the subject of cooperatives exposing Nabard’s pettiness in the matter.

In an ideal situation Nabard and the cooperative banks should have been partners in the endeavour of developing agricultural India.
NAFSCOB, the apex federation of the cooperative banks was also ignored.

When Indian Cooperative contacted Nafscob Managing Director Dr Bhima Subranmaniyam to know his reaction he was quick to add “may be our writing frequent letters to PM and the President is not liked by Nabard”.

The story of hostilities between Nabard and Nafscob dates back to five years ago.

Nabard is not the only organization that keeps the cooperative institutions and their leaders at arm’s length. Only recently was IFFCO’s booking of Vigyan Bhawan overruled by the Environment Ministry even though the former had booked it well in advance.

Such slights have become commonplace and unless a self-less and dynamic cooperative leadership appears on the horizon the Babus would keep rubbing the cooperatives the wrong way. What an appalling commentary on a country of 25 crore cooperators!

The congress party in Maharashtra is trying to shake off its image of a party that invariably supports industry.

This explains why the state party has asked the Maharashtra govt to promote the interests of farmers by standing guarantee for the loans to be provided by the Maharashtra State Cooperative Bank.

According to the party, the harvesting season has started and lakhs of farmers badly need bank loans.

Talking to reporters, the state party president listed some of the districts where farmers are in a bad way. He would soon lead a delegation and meet the Chief Minister, he added.

The cooperative banks’ financial woes are just refusing to go away in Maharashtra.  After the Maharashtra State Cooperative Bank, several district cooperative banks have surfaced as candidates for a similar bailout.

At least, half a dozen district cooperative banks are in serious financial difficulties and have been stopped from accepting fresh deposits.

According to Harshavardhan  Patil , Minister Cooperatives,  the crisis-ridden banks would , in the foreseeable future , be  inspected by Nabard and if given a clean bill of health they would be able to get their banking licence.

A source familiar with the cooperative banking scene in Maharashtra, however, says at least two of the six district cooperative banks seem past redemption as their negative net worth is extremely high.

Maharashtra State Cooperative Bank is being charged with hiding some material and important information from its stakeholders.

Buzz is some crucial pages are missing from the auditor’s report and this gives rise to widespread speculation about the bank   systematically indulging in irregularities.

There are reports of the bank refusing to share information with its stakeholders.

The bank is accused of not abiding by the principle of transparency and getting its reputation further besmirched by its reckless behaviour.

Ever since the RBI has given Maharashtra State Cooperative Bank a clean bill of health, the bank is bubbling with new ideas and plans.

It is so excited that it has decided to venture into wholly new businesses. It feels its work with sugar and spinning mills is over. It has maxed out on this sector.

MSCB has begun preparing itself for a large-scale diversification into corporate financing, information technology, manufacturing and engineering, infrastructure and energy.

MSCB officials say even if the bank is largely withdrawing from the conventional businesses, it would not stop helping fisheries, floriculture, sericulture and food processing in the cooperative sector.

Union Agriculture Minister Sharad Pawar’s party NCP in Maharashtra must be heaving a sigh of relief as the RBI has issued banking licence to the Maharashtra State Cooperative Bank controlled by the party.

The RBI had dissolved the board of directors of the bank on the ground that the bank had indulged in serious financial irregularities. It was Nabard that had checked the bank’s financial transactions and hit upon the gaps in them.

Readers could recall that dissolution of MSCB Board had led to much heartburn among NCP supporters and a flash point was averted between Congress and NCP at the behest of Senior Pawar.  Ajit Pawar, Deputy Chief Minister was peeved with the Chief Minister who cited NABARD recommendations as the basis behind his action.

MSCB also happened to be the largest cooperative bank of the country which was soon overtaken by the Saraswat Bank headquartered in Mumbai only.

Following the dissolution of the bank’s management by the RBI, there was some uncertainty surrounding the future of the NCP controlled bank.

The RBI move has come as a much needed relief especially to Ajit Pawar whose acolytes were at the helm in the bank.

Informed sources say, there are hundreds of banks in the country that are sans the RBI licence. These banks have to obtain the RBI licence or they cease to be banks.

Maharashtra State Cooperative Bank has long been in crisis but the state govt has nothing to find a satisfactory way of dealing with the crisis.

It is against this background that an organisation called Jan Manch has petitioned the Nagpur bench of the Bombay high court to intervene in the matter.

Taking cognizance of the petition, a division bench of the court has issued notices to the state govt, Nabard, Reserve Bank of India, cooperatives commissioner and MSCB.

A recent audit report had revealed that the bank had given loans to sugar factories that violated fundamental financial norms.

Sources say the bank had not only indulged in unsustainable financial transactions but also messed up its administrative affairs. For example, the bank did not shift a bulk of its staff and allowed them to stay at the same place for long when as per rules their shifting was necessary.

They add now that the court has taken up the matter the prospects of the crisis being resolved have brightened up.

A few years ago who would have believed that Maharashtra State Cooperative Bank- the jewel among the cooperative banks would struggle to obtain banking licence. Controlled by Ajit Pawar men the Bank looked sure-footed till yesterday.

But it has not been able to obtain a banking licence from the Reserve Bank of India. The bank had to obtain it by the close of March.

The take-over of Bank had generated such a political storm in the State that at one point of time it seemed to lead to an end of relation between the two ruling allies-Cong and NCP. But the deft move by senior Pawar saved the situation.

When an administrator was appointed it was thought that MSCB would be put on track sooner than later.

The cooperative department of the Maharashtra govt has expressed its hope that the apex bank would soon issue the licence.  According to the dept. officials, MSCB has met the conditions laid down by the RBI and Nabard.

There are more than a hundred   banks that have failed to get the RBI licence and the case of MSCB is not unusual.

In the event of these banks not being able to get the RBI licence , they  have no choice but to  transform into  a cooperative credit society or unite  with another bank.

The MSCB’s failure to obtain the licence has seriously affected its reputation.

There are certain things, however, that present a different picture of the bank. For example, MSCB has risk weighted assets worth nearly ten thousand crore and its non-performing assets count a mere couple of hundreds of crore.