Srinagar, Aug 17: On the 76th anniversary of India’s independence, Prime Minister Narendra Modi addressed the nation from the Red Fort’s ramparts. His message, “Those who robbed India shall pay,” struck a chord with the stakeholders of J&K Cooperative Bank, who are victims of a Rs 223 crore fraud.
“Those who fled the country after looting banks during the tenure of the previous government, we have seized their property and are trying to get them back. Some have been forced to go behind the bars. We are trying to ensure that those who looted the country are compelled to return,” PM said in his message to the nation.
A long way from the Red Fort, J&K State Cooperative Bank stakeholders, executives, and account holders recalled how a Rs 223 crore loan scam had wreaked havoc on their beloved bank and caused the bank’s financial situation to worsen.
Informing about the case, they said that “J&K State Cooperative Bank sanctioned a loan of Rs 250 crore in favour of a non-existent society namely River Jehlum Co-operative House Building Society (RJCHBS) in April 2019, out of which Rs 223 crore were disbursed and transferred to the bank accounts of the purported landowners.”
“The loan had been sanctioned for the “establishment of a satellite township at Shivpora, Sonwar Srinagar” on a patch of land measuring 257 kanals and 19 Marlas. However, in 2020, during the course of investigations conducted by the Anti Corruption Bureau, it came to the fore that the loan had been sanctioned and disbursed in gross violation of the bank norms, there being grave discrepancies in the documentation as well, and post disbursement monitoring reported by the NABARD in its inspection pointing to gross deficiencies in the loan application, appraisal, the process of sanction, and in violation of the delegation of sanctioning of the loan.”
“The ACB had registered an FIR 04/2020 in the matter under the relevant provisions of the law. Furthermore, ACB had also frozen the amounts initially lying in bank accounts and mutual funds of the landowners, amounting to Rs. 202 crores, which was the part amount of the original loan amount disbursed by the bank in favour of the so-called RJCHBS and transferred to the accounts of thelLandowners by the said so-called society. ACB had also produced a challan in the court of Special Judge Anti-corruption, Srinagar against Ex. Chairman of the bank and others. The Board of Management of the Bank also attached the then Managing Director and the then General Manager of the Bank who were subsequently placed under suspension for some time and then reinstated but were given non-sensitive assignments.”
However, the loan scam has an adverse impact on the bank as the bank had no option but to create a 100% provision against the said loan in its financial statements as on 31-03-2021 which were put into the public domain on 30-09-2021. Subsequent to 100% provisioning of this bad advance, the Balance Sheet and Financial Statements of the Bank as on 31-03-2021 reveal that the bank has an accumulated loss of Rs.24423.55 lakhs. The Net-worth of the bank has dropped to Rs. -19733.50 lakhs. The Capital Adequacy Ratio (CRAR) of the bank has plunged to -49.64%. The Gross NPA has swelled to Rs.27858.81 lakh, the net NPA being 14.33 %. The bank is faced with a liquidity crisis. The three District Central Co-operative banks of Jand K have an aggregate investment of about Rs. 200 Crore in the shape of fixed deposits. In the present scenario, the bank is not in a position to pay the said deposits back to the DCCBs, if demanded,” officials informed.