Govt assures action, says Liquidator being appointed
*Questions over MD’s power to transfer funds
Sanjeev Pargal
JAMMU, Feb 19: Several BJP MLAs today described as “economic fraud and offence” the crisis in J&K State Co-operative Agriculture & Rural Development Bank Ltd (SCARD) and wanted to know whether the Managing Director had the power to transfer Rs 180 crore plus funds.
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Cooperative Minister Javid Ahmed Dar, however, assured the agitated legislators that those involved will not be spared and a Liquidator will be appointed soon. He said issues of the employees will also be looked into.
Raising supplementary to clubbed question of Dr Rajeev Kumar Bhagat, Vikram Randhawa, Surjeet Singh Slathia and Vijay Sharma, all BJP MLAs during Question hour in the Assembly, BJP MLA RS Pathania described as “economic fraud and offence” what has happened in SCARD saying the Reserve Bank of India (RBI) guidelines have been violated.
“It is nothing but Rs 223 crore scam,” Pathania said.
Surjeet Singh Slathia wanted to know who transferred Rs 180 cr from the bank and whether the Managing Director had authority to do so.
“There are 22,000 account holders and people have been saying that their hard-earned money is lost,” Slathia said.
Vikram Randhawa said the situation is such in the Bank that it is bankrupt though it hasn’t been declared as such so far.
“Where the public money has gone? Who are the defaulters? Who are the loanees? All these issues need to be explained,” Randhawa said, adding the Government is custodian of the bank and what action it has initiated against those running the institution.
BJP MLA Rajeev Bhagat said the account holders should be released 25 percent of the amount immediately for marriages and medical treatment.
Another BJP MLA Vijay Sharma said that not only the farmers but even retired employees too have deposited money in the bank. Asserting that the Government’s prestige is at stake, Sharma said the
Government hasn’t mentioned any time-frame for releasing amount of the depositors.
Asserting that concerns raised by the House members are genuine, Cooperatives Minister Javid Dar said financial condition of the bank was bad for the last two to three years.
“There has been Rs 180 crore worth liabilities of the bank. A Liquidators has been proposed to identify genuine claims, assets etc. When the Liquidator is appointed, who will do whatever possible for the depositors,” Dar said, adding that those involved will not be spared. He also assured that interests of the employees will also be taken care of.
He said the SCARD is not registered under the Banking Regulation Act, 1949 and therefore does not fall under the purview of the Reserve Bank of India. He added that the Bank is presently under the control of the UT Government through the Registrar of Co-operative Societies (RCS) and the Administrative Department of Cooperatives.
“The Bank has not been declared bankrupt and the Government has initiated the process of liquidation in accordance with the provisions of the Jammu and Kashmir Co-operative Societies Act, 1989 due to prolonged financial and operational distress,” Dar said.
The Minister explained that the Bank’s financial stress developed gradually due to accumulated losses, weak governance and internal control systems, poor loan recovery and liquidity pressures. He added the situation worsened due to inadequate refinance support from the National Bank for Agriculture and Rural Development (NABARD) and limited financial assistance from the UT Government, as the Bank was largely dependent on refinance and government support and as a result, liabilities exceeded assets, severely affecting the Bank’s ability to meet depositor obligations.
The Minister said that the Bank has stopped payments of matured fixed deposits, including at Bishnah Branch, due to acute liquidity constraints, leaving several depositors awaiting disbursement. He informed the House that the repayment of depositors forms part of the overall liquidation and depositor-protection framework approved by the Government. He also said that a comprehensive Know Your Customer (KYC) verification exercise covering all branches, including Bishnah has been completed to authenticate depositor claims.
The Minister said that upon issuance of winding-up order and appointment of Liquidator(s), duly verified claims will be settled in a phased manner strictly as per statutory provisions and the prescribed order of priority.
He further stated that the Deposit Insurance and Credit Guarantee Corporation (DICGC) mechanism has not been invoked as it applies only to banking institutions registered under the Banking Regulation Act, 1949, adding that J&K SCARD Bank is not covered under the Act.
Reaffirming the Government’s commitment to safeguarding depositor interests, the Minister said that a detailed projection of depositor liabilities has been compiled and submitted to the Government for consideration, including provisioning through the budgetary process in accordance with law.
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