MSC Bank attaches assets of 26 co-op sugar, spinning mills

The Maharashtra State Cooperative Bank (MSCB) has attached the properties of 26 cooperative sugar and spinning mills and agro industries for the non-payment of dues worth Rs 788 crore between 2003 and March 31, 2011. The bank is also exploring options of an outright sale of these units.

To bring in transparency in the disposal of property and to fetch prices that are not below the market value, the bank has invited proposals to appoint consultants to carry out due diligence, valuation and, subsequently, the sale of secured assets under the Securitisation and Reconstruction Of Financial Assets and Enforcement of Security Interest Act (Sarfaesi Act).

A senior state government official, speaking on the condition of anonymity, told Business Standard, “MSCB intends to sell the properties of cooperative sugar, spinning and other agro-based industries, taken in possession under the Sarfaesi Act on an ‘as is where is’ basis for the recovery of loans. Apart from conducting due diligence, the consultants would also assist the bank in deciding the reserve price of the assets. The sale would be carried out through a competitive bidding process, by issuing a public tender.” He said the bank had organised a pre-bid meeting on August 3, and the last date for submitting the bids would be August 8.

The move by bank administrators S K Goyal and Sudhir Shrivastav is crucial, since the National Bank for Agriculture& Rural Development (Nabard), in its inspection report for the bank’s accounts of 2009-10, had said the bank had not streamlined the procedure for adopting a non-discriminative and transparent policy for taking action under the Sarfaesi Act. Nabard had also said the bank could not get adequate prices for the sale of 28 units (with total loan outstanding of Rs 849 crore as on March 31, 2010), due to the faulty implementation of the Sarfaesi Act.

According to Nabard, the bank did not initiate any action on putting in place a system to periodically review and monitor the top management, which resulted in inordinate delays in action, resulting in losses to the bank. Nabard had also suggested that senior bank officers be made accountable for any delay or deviation from the provisions of Sarfaesi Act.