Suvarna Sahakari Bank

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Suvarna Sahakari Bank was a private Indian co-operative bank based in Pune, Maharashtra, which operated from its incorporation in 1969 till its dissolution in 2009...

History[edit]

The bank was started by Dnyaneshwar Agashe in 1969.[1][2][3][4] It was started to cater to the banking needs, primarily of Pune's middle class Marathi population.[5][6][7][8][9]

2008 scam allegations[edit]

Background[edit]

In 2004, Agashe, chairman of the Maharashtra Cricket Association at the time, was denied his right to vote in the BCCI Presidential Elections due to allegations of factionalism within the MCA.[10] The denial to Agashe to exercise his franchise saw Sharad Pawar losing by one vote in the election for the post of the President of the BCCI.[11][12][13]

By 2006, the bank business started having financial troubles, with some sources alleging that the bank's failure was backlash for the controversial BCCI presidential elections.[14] In September that same year, the cooperative bank was put under moratorium by the Reserve Bank of India.[15][16] The board of directors for the bank was superseded soon after.[17]

In 2007, following the order of moratorium, the State Department of Cooperation appointed Mukund Ghaisas as administrator at the bank.[18] Many of the bank's depositors held demonstrations at Agashe's Aundh residence and threatened criminal actions against the Agashe family,[19] after which a speedy merger was promised by Agashe.[20] Initial non performing assets totaled Rs. 125 crore, 13% against the seven per cent maximum allowable under the RBI norms.[21] After the non-performing assets of the bank grew to more than 43%, account holders and depositors held a day long token fast to protest against the misinformation provided in regards to the alleged duped loans.[22]

In 2008, the RBI gave the bank permission to pay interest on deposits made from January to June 2008; Agashe mortgaged personal property worth Rs. 200 crore in lieu of the recovery of the deposits worth Rs. 725 crore.[23] Hotel Ranjeet, a hotel owned by Agashe was auctioned off for the same reasons.[24] Cosmos Bank planned to acquire the bank after it hit this roadblock with the RBI and the subsequent announcement of the proposed merger with Cosmos led to large-scale panic withdrawals by Suvarna customers.[21][25][26][27]

Allegations and arrests[edit]

On 22 November 2008, Agashe along with 14 other board members was taken into judicial custody; the bank business was charged with a Rs. 436.74 crore scam allegation.[28][29] The arresting police stated that the accused along with six others allegedly misused their rights and sanctioned loans mostly to firms owned by themselves and then defaulted the loans, thereby duping the depositors. The arrests were made after a complaint was filed by Rajesh Jadhavar, a special auditor with the Cooperatives Department at the Maharashtra government.[30]

The judicial magistrate remanded Agashe and the 14 other suspects to police custody, with provisions of medical assistance if required, citing the senior citizenship of a majority of the accused.[31] The economics offenses wing of the crime branch conducted a raid of all the homes of the accused, including Agashe's Aundh home to recover Rs. 1.5 lakhs. The prosecution stated that upon discovery of the money, further interrogation of the accused was necessary and alleged that the accused had disbursed loans to people close to them by flouting RBI rules.

In return, Agashe's defense counsel claimed that Agashe and his family had sold off various properties for the repayment of the loan. The defense counsel also stated that the Agashe family had extended full cooperation with the police and submitted that the family would repay another Rs. 80 crore after the issue of Suvarna's merger was settled. The defense also raised the issue of foul play, when the first information reporting of the allegations was not produced before the court three days after registering the case and further contended that the loans had been sanctioned by the bank's disbursement committee, a committee Agashe was not a member of.[32] The bail applications filed at the time for Agashe, his wife, and his sister were subsequently rejected.[33][34]

While in custody, Agashe's health deteriorated and he was admitted to Sassoon Hospital on 22 December, suffering from severe diabetes and gangrene,[35] for which he had previously been denied medical assistance.[36] He later died of a heart attack from complications of diabetes at Sassoon Hospital on 2 January 2009.[37][38]

Aftermath[edit]

Upon Agashe's death, the depositors of the bank approached Indian Overseas Bank for help after the bank's accumulated losses were estimated at over Rs. 350 crore.[16][39] The bank was finally dissolved and merged with Indian Overseas Bank in 2009.[40][41]

The bank's case, and failure amidst a political scandal is widely cited today in the Indian banking sector.[42][43][44]

References[edit]

  1. ^ "Dnyaneshwar Agashe cremated - Times of India". The Times of India. Retrieved 2018-09-15.
  2. ^ "Agashe dead; depositors now pin hopes on IOB". The Indian Express. 2009-01-04. Retrieved 2018-09-15.
  3. ^ "Ex-director of Suvarna bank dies - Times of India". The Times of India. Retrieved 2018-09-15.
  4. ^ "Suvarna Co-op bank case: 15 arrested". epaper.timesofindia.com. Retrieved 2018-09-15.
  5. ^ "Suvarna protestors halt traffic". epaper.timesofindia.com. Retrieved 2018-09-15.
  6. ^ "Suvarna Bank Board suspended". epaper.timesofindia.com. Retrieved 2018-09-15.
  7. ^ "Ghaisas Suvarna bank administrator". epaper.timesofindia.com. Retrieved 2018-09-15.
  8. ^ "Arrests will not solve problems: depositors". epaper.timesofindia.com. Retrieved 2018-09-15.
  9. ^ "Token fast outside Suvarna bank today". epaper.timesofindia.com. Retrieved 2018-09-15.
  10. ^ "Factionalism in state scuttled Pawar's chances". The Times of India. Retrieved 2017-03-12.
  11. ^ "Agashe consulting lawyers to file writ petition". Zee News. 2004-10-01. Retrieved 2019-04-12.
  12. ^ "BCCI to hold AGM on January 27". The Tribune. Chennai. 15 January 2005. Retrieved 2017-12-17.
  13. ^ Bureau (2004-09-30). "Pawar out on Dalmiya googly". Business Standard. Retrieved 2017-12-17.
  14. ^ Anandan, Sujata (2010). "Its Tharoor's cricket versus Pawar's". Hindustan Times. Retrieved 2016-08-17.
  15. ^ "Suvarna Sahakari Bank placed under moratorium". The Financial Express. Retrieved 2018-09-15.
  16. ^ a b Nambiar, Nisha (2009). "Agashe dead; depositors now pin hopes on IOB". Indian Express. Retrieved 2016-08-18.
  17. ^ "Suvarna bank board superseded". Times of India. 16 September 2006.
  18. ^ "Ghaisas Suvarna bank administrator". Times of India. 1 June 2007.
  19. ^ "Suvarna protestors halt traffic". Times of India. 11 February 2008.
  20. ^ "Arrests will not solve problems: Depositors". Times of India. 23 November 2008.
  21. ^ a b "Suvarna may merge with Cosmos Co-operative". Business Standard. 12 September 2006.
  22. ^ "Token fast outside Suvarna bank today". Times of India. 28 April 2008.
  23. ^ "Suvarna to pay interest on deposits from Jan". Times of India. 19 May 2008.
  24. ^ "City hotel auctioned to recover dues". Times of India. 21 June 2007.
  25. ^ "Suvarna Sahakari Bank placed under moratorium". The Financial Express (India). 2006. Retrieved 19 August 2016. The Cosmos Banks plans to acquire the Shree Suvarna Sahakari Bank has hit a roadblock with the Reserve Bank placing the Suvarna Sahakari Bank under moratorium.
  26. ^ Reporter, B. S. (2006-09-14). "Suvarna cheque clearance blocked". Business Standard India. Retrieved 2018-09-15.
  27. ^ Reporter, B. S. (2006-09-11). "Shree Suvarna, Cosmos Co-op Bk in merger talks". Business Standard India. Retrieved 2018-09-15.
  28. ^ "Agashe, others sent to judicial custody". Times of India. 25 November 2008. Retrieved 2017-03-12.
  29. ^ "Cooperative bank fraud lands 21 in soup, 15 arrested - Indian Express". archive.indianexpress.com. Retrieved 2018-09-15.
  30. ^ "Pune coop bank in Rs 436-cr scam". Business Standard. 2008. Retrieved 2016-08-17.
  31. ^ "Suvarna co-op bank case: 15 arrested". Times of India. 23 November 2008.
  32. ^ "Agashe, others sent to judicial custody". Times of India. 25 November 2008.
  33. ^ "Suvarna case: Court defers order on bail". Times of India. 26 November 2008.
  34. ^ "Court rejects bail plea in Survarna case". Times of India. 30 November 2008.
  35. ^ "Son attends funeral under police eye". Indian Express. 4 January 2009.
  36. ^ Khanna, Ruchika (27 April 2010). "INDIAN POLITICIANS' LEAGUE: The gentlemen's game". The Tribune. Retrieved 2017-12-17.
  37. ^ "Former MCA chief Agashe dies". Web India 123. 3 January 2009.
  38. ^ "Deadend!". Pune Mirror. 4 January 2009.
  39. ^ "Hope for depositors as IOB bids for Suvarna". Times of India. 8 April 2008.
  40. ^ Reporter, B. S. (2008-11-26). "Suvarna Sahakari Bank may merge with IOB". Business Standard India. Retrieved 2018-09-15.
  41. ^ Reporter, B. S. (2009-02-03). "IOB gets nod to acquire Pune-based co-op bank". Business Standard India. Retrieved 2018-09-15.
  42. ^ "Devendra Fadnavis seeks RBI directive on cooperative bank merger issues". The Financial Express. 2018-06-01. Retrieved 2018-09-15.
  43. ^ "CM calls high-level meet to resolve Rupee Bank merger - Indian Cooperative". Indian Cooperative. 2018-06-01. Retrieved 2018-09-15.
  44. ^ "Suvarna to pay interests on deposits from Jan". epaper.timesofindia.com. Retrieved 2018-09-15.