M'rashtra state co-op bank to sell off 25 sick sugar mills

For the first time in the history of the cooperative banking sector in the state, the Maharashtra State Co-operative Bank Limited (MSCB) has decided to sell-off 25 sick sugar co-operative mills to recover dues worth a staggering Rs 1,100 crore.

Eleven out of these 25 sugar co-operatives are located in Vidarbha where the bank stands to recover Rs 645.5 crore.

Interestingly, all these cooperatives have politicians as their founding chairmen and are in the cotton belt of Maharashtra, a region infamous for farmers' suicides.

The MSCB had attached the plant and machinery of these sugar mills and had given three months to the managements to file a reply. All sugar cooperatives are defunct. When the cooperatives failed to reply, the MSCB decided to go ahead with its decision to sell the assets of the sick sugar mills.

The bank would regularly be inviting bids for auction of these sugar mills starting this week. Bidders will be asked to deposit Rs 50 lakh as earnest money, said Ravindra Duragkar, vice-chairman of MSCB.

He said the bank had approached the Maharashtra government and discussed the issue of the bank guarantee with chief minister Vilasrao Deshmukh.

The state government had given bank guarantee for the sum extended by the MSCB to the mills and Deshmukh assured that a sum of Rs 200 crore will be given to MSCB before March 31, 2007.

According to Duragkar, the Reserve Bank of India (RBI) and the Maharashtra government had signed a memorandum of understanding on December 13, 2006, to implement the recommendations of Vaidyanathan Committee.

As per the MoU, the Maharashtra government is to revoke the guarantee taken against loan for sugar co-operatives following which it will be able to access the Centre?s Rs 15,000-crore package designed to upgrade the co-operative sector, he said.

The total exposure of MSCB towards various cooperatives in the state was to the tune of Rs 12,000 crore. The interest was as low as 6 per cent per annum. Of this, a sum of Rs 2,000 crore was disbursed to 119 sugar mills while the rest had been loaned to spinning mills and urban cooperative banks.

The politicians of the region who are associated with the mills which have been attached by the bank, include former MP Uttamrao Patil, former minister Manikrao Thakre, Santosh Korpe, former minister Ranjit Deshmukh, former chairman of Land Development Bank Baburao Tidke, former director of Land Development Bank Gajananrao Rambhad, former minister late Ram Meghe, former MLA Yeshwant Sherekar, and former minister Babasaheb Dhabekar.