Nabard Detects Lapses In Wbsc Banks Soybean Trade

National Bank for Agriculture and Rural Development (Nabard), in its statutory inspection of West Bengal State Cooperative Bank Ltd (WBSCB), Calcutta, in November-December 1997, has again detected violation of Section 8 of the Banking Regulation Act, 1949 with regard to the banks soybean trading.

A copy of the inspection report, that has been forwarded to Amit Kumar Deb, secretary, department of co-operation, government of West Bengal, by K G Karmakar, chief general manager, Nabard, has also been sent to the chief general manager, RBI, regional office, Calcutta.

Karmakar has urged upon Deb to conduct an enquiry into the entire soybean transaction and assess the reasons for the banks continuing to indulge in trading activities involving losses for the bank in spite of the specific advice of Nabard to the bank to desist from such practices. In terms of Section 8, co-operative banks are prohibited from carrying on trading transactions.

 

The previous inspection report dated May 8, 1996, had also pointed out violation of Section 8 by WBSCB. Besides, in a letter dated March 6, 1996, addressed to WBSCBs managing director, Nabard, had enumerated major deficiencies pointed out during the wrap up discussions with the board of directors after completion of the previous inspection

But despite these repeated warnings from Nabard in 1996, WBSCB has continued to violate the provisions of the Act.

The managing director of WBSCB, B B Sengupta did not want to discuss this confidential report. All the information will be available with Nabard, he said.

Karmakar has also observed that though WBSCB did not continue to trade in soybean seeds during the kharif 1997 season as it did in 1996, the bank has not yet completed all the accounting formalities till the date of completion of the present inspection. The bank is reported to have incurred a loss of about Rs 16.55 lakh in respect of procurement of soybeans during 1995 and about Rs 8-10 lakh in 1996. The auditor has observed a number of irregularities.

In a letter to the banks general manager, the auditor has raised doubt as to whether any tender was floated in respect of procurement of soybean seeds weighing 199.98 tonnes as found in the banks compliance report made to the Nabard.

Doubt has also been raised as to whether any tender was floated in respect of subsequent purchases of soybean seeds.

According to the inspection report, 1996 the overdues of the bank under short term loans amounted to Rs 14.56 crore and estimated erosion in the value of assets of the bank as on September 30, 1995 was Rs 18.11 crore.