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Suvarna Sahakari Bank

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Suvarna Sahakari Bank
Company typePrivate urban co-operative bank
IndustryBanking
FoundedSeptember 22, 1969; 55 years ago (1969-09-22)
FounderDnyaneshwar Agashe
DefunctMay 20, 2009; 15 years ago (2009-05-20)
FateMerged with Indian Overseas Bank
Headquarters
Shaniwar Peth, Pune, Maharashtra
,
India
Number of locations
12 (2009)
Area served
Key people
Revenue
 (2002)

Suvarna Sahakari Bank was an Indian private urban co-operative bank based in Pune, Maharashtra, India, which operated from its incorporation on 22 September 1969 till its dissolution on 20 May 2009.

History

The bank was started by Dnyaneshwar Agashe on 22 September 1969.[1][2] S. K. Wankhede inaugurated the opening of its first branch.[3] It was started to cater to the banking needs, primarily of Pune's middle class Marathi population.[4][5] The bank was classified as an urban cooperative bank.[6] As of 1972, the bank was headquartered in Shaniwar Peth, Pune,[7] with the Reserve Bank of India (RBI) approving the bank's ability to loan credit schemes for small-scale industries that same year.[8] In 1976, the bank's schemes featured in B. R. Ambedkar's articles on family planning.[9] From 1990, the bank had nine branches in Pune, two in Mumbai and one in Shreepur till the time of its dissolution in 2009.[10][11] In 1998, the bank organized an inter-bank cricket tournament in honour of Panditrao Agashe.[12] By 2002, the bank initiated online banking, and was reportedly worth Rs. 500 crore.[13] By 2003, the bank had installed Sarvatra Technologies' proprietary point of sale terminal.[14] In 2004, Ashutosh Agashe was elected the bank's chairman.[15]

2008 scam allegations

Background

In 2004, Dnyaneshwar Agashe, chairman of the Maharashtra Cricket Association (MCA) at the time, was denied his right to vote in the Board of Control for Cricket in India's (BCCI) Presidential Elections due to allegations of factionalism within the MCA.[16] 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.[17][18][19] 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.[20] In September that same year, the cooperative bank was put under moratorium by the Reserve Bank of India.[21][22] The board of directors for the bank was superseded soon after.[23] The moratorium came into effect on 14 October 2006, with the media demanding that the RBI launch an investigation of the bank's auditors.[24]

In 2007, following the order of moratorium, the State Department of Cooperation appointed Mukund Ghaisas as administrator at the bank.[25] Many of the bank's depositors held demonstrations at Agashe's Aundh residence and threatened criminal actions against the Agashe family,[4] after which a speedy merger was promised by Agashe.[5] Initial non performing assets totaled Rs. 125 crore, 13% against the seven per cent maximum allowable under the RBI norms,[26] despite reports from June 2007 claiming that the bank would resume regular operations by late 2007.[27] 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.[28]

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.[29] Hotel Ranjeet, a hotel owned by Agashe was auctioned off for the same reasons.[30] 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.[26][31][32][33]

Allegations and arrests

On 22 November 2008, Agashe, along with 14 other board members (including his sons Mandar and Ashutosh Agashe),[34][35] was taken into judicial custody; the bank business was charged with a Rs. 436.74 crore scam allegation.[36][37] 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.[38] The case was registered as an economic crime.[39]

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.[40] 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.[41] The bail applications filed at the time for Agashe, his wife, and his sister were subsequently rejected.[42][43]

While in custody, Agashe's health deteriorated and he was admitted to Sassoon Hospital on 22 December, suffering from severe diabetes and gangrene,[44] for which he had previously been denied medical assistance.[45] He later died of a heart attack from complications of diabetes at Sassoon Hospital on 2 January 2009.[46][47] Agashe's son Ashutosh was subsequently released on bail that same month,[44] with his son Mandar being released in March.[48]

Aftermath

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.[22][49] The bank was allowed to be acquired by Indian Overseas Bank in 2009,[50][51] with the Reserve Bank of India approving the merger in April of that year.[52] The merger went through on 20 May that year.[53] The transition of operations resulted in Rs. 14 crore worth deposits being withdrawn.[54]

The bank's case, and failure amidst a political scandal is widely cited today in the Indian banking sector.[55][56][29]

References

  1. ^ "Dnyaneshwar Agashe cremated". The Times of India. TNN. 5 January 2009. Retrieved 15 September 2018.
  2. ^ "Ex-director of Suvarna bank dies". The Times of India. TNN. 4 January 2009. Retrieved 15 September 2018.
  3. ^ Umarji, G. H. (2002). Barve, Ramesh; Vartak, Taraprakash; Belvalkar, Sharchandra (eds.). Putra Viśvastācā : Gaurava Grantha : Jñāneśvara Āgāśe shashṭyabdipūrti nimitta (in Marathi). Puṇe. p. 72. ISBN 978-1-5323-4594-4. OCLC 992168227. Retrieved 25 August 2022 – via WorldCat.{{cite book}}: CS1 maint: location missing publisher (link)
  4. ^ a b "Suvarna protestors halt traffic". The Times of India. Pune. 11 February 2008. Archived from the original on 22 December 2017. Retrieved 15 September 2018.
  5. ^ a b "Arrests will not solve problems: depositors". The Times of India. Pune. TNN. 23 November 2008. Retrieved 25 August 2022.
  6. ^ Kumar, K. Ram (20 June 2021). "PMC Bank's resolution could become a template for rescuing other weak UCBs". Business Line. Mumbai. Retrieved 25 August 2022.
  7. ^ The Industrial & Commercial Directory of Poona. Mahratta Chamber of Commerce, Industries and Agriculture. 1972. p. 126. Retrieved 25 August 2022 – via University of Michigan.
  8. ^ Reserve Bank of India (1972). Special Credit Schemes of Banks, Guidelines: Report of the Committee on Banks' Credit Schemes with Reference to Employment Potential, Guarantee Scheme for Small Loans to Priority and Neglected Sectors, Guarantee Scheme for Loans to Small-scale Industries, Financing of Agriculture by Commercial Banks, Guidelines. p. 140. Retrieved 25 August 2022 – via University of Michigan.
  9. ^ Mangudkar, Manikrao Padmana, ed. (1976). Dr. Ambedkar and Family Planning. S. Mangudkar. pp. 66–67. Retrieved 25 August 2022 – via University of Virginia.
  10. ^ "Cosmos lead race to buy Suvarna Co-op". Mergers India. 3 April 2016. Retrieved 15 January 2022.
  11. ^ Pune A to Z: Map Directory with Classified Commercial Index. S. P. Barve. 1990. p. 33. Retrieved 25 August 2022 – via University of Michigan.
  12. ^ "Inter-bank cricket from Oct 28". The Indian Express. Express News Service. 26 October 1998. Retrieved 17 August 2022.
  13. ^ Business India. A.H. Advani. 2002. p. 24. Retrieved 25 August 2022 – via University of Virginia.
  14. ^ "New software boon for co-op. bank clients". The Times of India. Pune. TNN. 25 July 2003. Retrieved 25 August 2022.
  15. ^ "Agashe heads Suvarna Sahakari". The Times of India. 3 September 2004. Archived from the original on 16 November 2017. Retrieved 25 August 2022.
  16. ^ "Factionalism in state scuttled Pawar's chances". The Times of India. Pune/Kolkata. TNN. 20 September 2004. Retrieved 12 March 2017.
  17. ^ "Agashe consulting lawyers to file writ petition". Zee News. Pune. 1 October 2004. Archived from the original on 11 October 2016. Retrieved 12 April 2019.
  18. ^ "BCCI to hold AGM on January 27". The Tribune. Chennai. Press Trust of India. 15 January 2005. Retrieved 17 December 2017.
  19. ^ "Pawar out on Dalmiya googly: NCP leader not to move court". Business Standard. Kolkata. 30 September 2004. Retrieved 17 December 2017.
  20. ^ Anandan, Sujata. "Its Tharoor's cricket versus Pawar's". The Hindustan Times. Archived from the original on 10 April 2010. Retrieved 17 August 2016. {{cite news}}: |archive-date= / |archive-url= timestamp mismatch; 20 April 2010 suggested (help)
  21. ^ "Suvarna Sahakari Bank placed under moratorium". The Financial Express. Pune. 16 September 2006. Retrieved 15 September 2018.
  22. ^ a b Nambiar, Nisha (4 January 2009). "Agashe dead; depositors now pin hopes on IOB". The Indian Express. Retrieved 18 August 2016.
  23. ^ "Suvarna bank board superseded". The Times of India. TNN. 16 September 2006. Archived from the original on 22 December 2017. Retrieved 25 August 2022.
  24. ^ "Role of RBI, auditors must be investigated". Pune Mirror. 4 December 2008. Retrieved 16 August 2022.
  25. ^ "Ghaisas Suvarna bank administrator". The Times of India. TNN. 1 June 2007. Archived from the original on 22 December 2017. Retrieved 25 August 2022.
  26. ^ a b "Suvarna may merge with Cosmos Co-operative". Business Standard. Mumbai/Pune. 12 September 2006. Retrieved 25 August 2022.
  27. ^ "Suvarna nearing normal functions". The Times of India. Pune. TNN. 4 June 2007. Retrieved 17 August 2022.
  28. ^ "Token fast outside Suvarna bank today". The Times of India. Pune. TNN. 28 April 2008. Retrieved 25 August 2022.
  29. ^ a b "Suvarna to pay interest on deposits from Jan". The Times of India. 19 May 2008. Retrieved 25 August 2022.
  30. ^ "City hotel auctioned to recover dues". The Times of India. 21 June 2007. Retrieved 25 August 2022.
  31. ^ "Suvarna Sahakari Bank placed under moratorium". The Financial Express. Pune. 16 September 2006. Retrieved 19 August 2016.
  32. ^ "Suvarna cheque clearance blocked". Business Standard. Pune. 14 September 2006. Retrieved 15 September 2018.
  33. ^ "Shree Suvarna, Cosmos Co-op Bk in merger talks". Business Standard. Pune. 11 September 2006. Retrieved 15 September 2018.
  34. ^ "Mandar Agashe in police custody". DNA. 2 May 2009. Retrieved 25 August 2022 – via National Library of Catalonia.{{cite news}}: CS1 maint: url-status (link)
  35. ^ "Son's bail rejected". DNA. 1 April 2009. Retrieved 25 August 2022 – via National Library of Catalonia.{{cite news}}: CS1 maint: url-status (link)
  36. ^ "Agashe, others sent to judicial custody". The Times of India. Pune. TNN. 25 November 2008. Retrieved 12 March 2017.
  37. ^ "Cooperative bank fraud lands 21 in soup, 15 arrested". The Indian Express. Pune. Express News Service. 23 November 2008. Retrieved 15 September 2018.
  38. ^ "Pune coop bank in Rs 436-cr scam". Business Standard. Pune. 23 November 2008. Retrieved 17 August 2016.
  39. ^ "Cops can't register case as co-operation dept probe still on'". The Times of India. Pune. TNN. 23 November 2008. Retrieved 17 August 2022.
  40. ^ "Suvarna co-op bank case: 15 arrested". The Times of India. Pune. TNN. 23 November 2008. Archived from the original on 14 November 2017. Retrieved 25 August 2022.
  41. ^ "Agashe, others sent to judicial custody". The Times of India. Pune. TNN. 25 November 2008. Archived from the original on 14 November 2017. Retrieved 25 August 2022.
  42. ^ "Suvarna case: Court defers order on bail". The Times of India. 26 November 2008. Retrieved 25 August 2022.
  43. ^ "Court rejects bail plea in Survarna case". The Times of India. 30 November 2008. Retrieved 25 August 2022.
  44. ^ a b "Son attends funeral under police eye". The Indian Express. Pune. Express News Network. 4 January 2009. Retrieved 25 August 2022.
  45. ^ Khanna, Ruchika (27 April 2010). "INDIAN POLITICIANS' LEAGUE: The gentlemen's game". The Tribune. Retrieved 17 December 2017.
  46. ^ "Former MCA chief Agashe dies". Web India 123. Pune. 3 January 2009. Retrieved 25 August 2022.
  47. ^ Chavan, Vijay (4 January 2009). "Deadend!". Pune Mirror. Retrieved 25 August 2022.
  48. ^ "Mandar will stay with cops". Pune Mirror. 7 March 2009. Retrieved 29 January 2022.
  49. ^ "Hope for depositors as IOB bids for Suvarna". The Times of India. 8 April 2008. Archived from the original on 9 September 2018. Retrieved 25 August 2022.
  50. ^ "Suvarna Sahakari Bank may merge with IOB". Business Standard. Mumbai. 26 November 2008. Retrieved 15 September 2018.
  51. ^ "IOB gets nod to acquire Pune-based co-op bank". Business Standard. Chennai. 3 February 2009. Retrieved 15 September 2018.
  52. ^ "RBI okays Suvarna, IOB merger". The Times of India. Pune. TNN. 3 April 2009. Retrieved 25 August 2022.
  53. ^ "IOB posts 17 per cent rise in business". The Hindu. Chennai. 30 October 2009. Retrieved 25 August 2022.
  54. ^ Nambiar, Nisha (27 May 2009). "Week after Suvarna takeover,a Rs 14-cr deposit dip". The Indian Express. Pune. Retrieved 25 August 2022.
  55. ^ Kasabe, Nanda (1 June 2018). "Devendra Fadnavis seeks RBI directive on cooperative bank merger issues". The Financial Express. Retrieved 15 September 2018.
  56. ^ "CM calls high-level meet to resolve Rupee Bank merger". Indian Cooperative. 1 June 2018. Retrieved 15 September 2018.

Further reading

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