Mandya co-op bank faces fraud suit

Mandya City Co-operative Bank Ltd (MCC), Mandya, which sought an assistance of Rs 62.40 lakh to “waive the debts sought by 292 agriculturists,” from the Reserve Bank of India (RBI), is set to face action.

The Mandya district authorities are set to frame the charges shortly.

The action follows the Comptroller and Auditor General (CAG) report in Parliament, which brought to the fore serious lapses in the implementation of the Rs 52,000-crore farm debt waiver scheme.

The other three banks mentioned in the report are Lokapavani Mahila Sahakari Bank (Mandya), Simsha Sahakara Bank Ltd (Maddur), and Sri Guru Siddeshwara Cooperative Bank Ltd (Hubli). While the department ordered an inquiry into the alleged irregularities against all the three banks, charges were proved in the case of MCC Bank.

The co-operation department, which had failed to initiate any action all these months, swung into action following an uproar in Parliament, which led to the RBI taking serious note of the matter.

On Friday, Assistant Registrar of Co-operative Societies (ARCS), Mandya, will file a civil suit in the court of the Deputy Registrar of Cooperative Societies (DRCS) seeking action against the MCC bank board and initiation of the recovery process of the debt waived.

ARCS Guruprasad told Deccan Herald that the bank had filed an appeal in the DRCS court against notices served by the ARCS, and sought a stay. “Since the court has not stayed the matter, we have decided to file a civil suit against the bank for misusing funds availed under the scheme. We also have suo motu powers to take action against the bank,” he said.

Violations in disbursement of funds came to light when members of the bank – H Shankare Gowda, H K Ramalingegowda and K Devalingegowda – alleged that 292 applicants were non-agriculturists who had sought guaranteed/security loans, loan against salary, vehicle loan and jewellery loan from 2001 onwards.

The applicants, however, turned defaulters, following which the MCC sought an assistance of Rs 62.40 lakh from the Centre on the pretext of waiving farm debts.

“The bank does not even have the provision to grant agriculture loans, as it is an urban bank. Wonder how the RBI overlooked this aspect,” Guruprasad said.

Inquiry officer Y Madaiah (former ARCS official) had held the then management (of 2008) comprising B T Nagaraju (president); C Mahesh (vice president), members Andanigowda, K G Ananth Rao, M L Manjunath, Sumana, B Lingaraju, K Krishna, B T Kempaiah responsible for the irregularity.

He had recommended action and initiation of the recovery process from the bank, in his report of June 31, 2012. Following this, the ARCS had served notices to the MCC, but had failed to follow it up.

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