Cooperative bank officials found guilty of misappropriating public money will have their personal assets seized and auctioned.
Cooperation Minister ST Somashekhar has directed the department to appoint an officer expressly for this purpose.
It has also been decided to commission a comprehensive audit of all district cooperative banks either by the National Bank for Rural Development (NABARD) or by a private agency.
The decision came in the wake of large-scale irregularities in district co-operative central (DCC) banks, many of which were allegedly perpetrated by administrative committee members of the banks.
During a review meeting held recently, irregularities at Shivamogga and Gulbarga DCCs were blamed on members of administrative committees. In the case of Gulbarga DCC, loans worth Rs 92 crore were allegedly sanctioned illegally to friends and relatives of the administrative committee members.
In the case of Shivamogga, Rs 62.72 crore was misappropriated between 2004 and 2013 and the interest of the misappropriated amount itself had surged to Rs 59 crore.
Speaking to DH, Somashekhar said that the government would appoint an officer ranked joint registrar or above to seize and auction properties of those members found guilty of embezzlement from DCCs.
“This will be in addition to the district-level officers deputed to assess the financial condition of the cooperatives,” he said.
A government order appointing the officer will be issued shortly. Of the four banks reviewed by the minister recently, irregularities were found in half of them. Rest will be assessed in the coming days, he said.
Commenting on rating DCCs, he said that the banks would be graded based on loans sanctioned, recovery and other parameters.
“The department is yet to finalise whether it will be NABARD or an independent agency that will do the grading,” he said.
The department will also form a vigilance squad to monitor co-operative banks. The squad will ensure regular auditing of the DCC finances and will ensure transparency in the bank’s affairs, Somashekar added.