Charged with wasting Rs 118 crore for unwarranted help to bank in home base.
After being removed from office over the Adarsh housing scam, former Maharashtra chief minister Ashok Chavan has collected another black mark, this time from the Union Comptroller and Auditor general (CAG).
It has rapped his government for extending “injudicious” assistance of Rs 118.50 crore to the Nanded District Central Cooperative Bank, located in the latter’s home district. The money, the CAG report made clear, had effectively gone down the drain. A Chavan-led cabinet committee approved the proposal in August 2009, with retrospective effect from March 2008.
Chavan, who was CM between December 2008 and November 2010, is one of those named in the Central Bureau of Investigation’s First Information Report in the Adarsh scam.
The CAG report, for the state government’s accounts for the year ended March 31, 2010, was tabled in the legislature on Thursday. It observed that the loan was sanctioned despite the Nanded bank’s poor financial condition. An inspection report by the National Bank for Agriculture and Rural Development (Nabard) in September 2009 revealed the bank’s net worth was negative at the end of 2008-09 and its crop loan disbursements were on a decline during 2004-09. The bank had not complied with the Reserve Bank of India’s directions regarding acceptance and payment of deposits, and had defaulted on repayment to the Maharashtra State Cooperative Bank (MSCB).
Further, the Nabard report said the Nanded bank’s borrowing power under the Banking Regulation Act’s rules remained nil and non-performing assets (bad loans) as a percentage to loans outstanding had increased to 70.7 per cent as on March 31, 2009, from 58.5 per cent as on March 31, 2008. The net worth remained negative during 2009-10.
Against this backdrop, CAG said: “The government assistance of Rs 118.50 crore came in useful to the Nanded cooperative bank only to discharge its liabilities, which were of the order of Rs 310.67 crore. However, the real objectives for sanctioning of the grant, especially for the improvement of net worth and increasing crop loan disbursements, were not achieved.”
The state government’s justification was that the bank’s financial position had improved after the conversion of a loan of Rs 100 crore in June 2009. The bank’s share capital of Rs 10 crore was also converted into a grant. In view of this, the state government said, RBI had given relaxation in certain conditions and the bank was now is in a position to refund and accept deposits up to Rs 25,000.
CAG said the government’s reply was not acceptable, as the objective of improving the financial status of the bank was not achieved and the RBI intimated in December last year that the restrictions imposed on the bank were still in force.