Friday, October 23, 2015

Inquiry launched into allegations against DCC bank

Source:  The Hindu:

The Department of Cooperation has begun an inquiry into allegations that the District Central Cooperative Bank (DCCB) in Bidar illegally collected share capital from farmers without proper consent.

The bank allegedly converted funds meant for providing loans into share capital for a super-specialty cooperative hospital. It is said to have collected Rs. 30 crore by deducting 30 per cent to 50 per cent.

Most farmers, who applied for the Rs 20,000-kisan credit card loan, got Rs. 9,880 after the DCCB held back the remaining amount as the hospital’s shares.

The hospital is named after Gurupadappa Nagamarapalli, Bidar MLA from the BJP, who has been the DCCB president for over 25 years.


The Joint Registrar of Cooperative Societies launched the inquiry after a farmer from Bhalki complained that his loan was cut by half and was compelled to buy the shares.

The complainant, Sangappa Sidramappa Kanashetty, alleged that DCCB “cheated thousands of innocent farmers by diverting funds to the hospital”.

While on the one hand, farmers are suffering, government funds are being diverted to build a cooperative hospital on the other.

This is a brazen attempt to hoodwink the government and cheat farmers who have no other way of getting loans, Mr. Kanashetty told The Hindu .

He said that bank officials were forcing him to withdraw the complaint.

Mr. Nagamarapalli denied the allegations.

“We have not violated any Act or rule. We welcome any inquiry,” he said.

He also denied that the bank had tried to pressurise Mr. Kanashetty to withdraw the complaint.

“We are building the biggest cooperative hospital in Karnataka. The people should support our effort rather than oppose it,” he said.

Fourth inquiry

This is the fourth inquiry against DCCB in a decade.

In 2004, the Department of Cooperation had submitted an inquiry report conducted under Section 64 of the Karnataka State Cooperative Societies Act.

The report said the bank had failed in proper risk assessment of loanees and had given loans to ineligible persons, maintained large non performing assets, released loans to persons who had not repaid earlier ones, and resorted to book adjustments to falsely claim that outstanding loans were repaid.

In 2013, the department conducted an inquiry under Section 69 of the Cooperative Societies Act on similar charges and recommended dissolution of the board of directors and appointment of an administrator. The State government did not act on the recommendations of 2004 or 2013.

In 2014, the Finance Department issued notices to the bank for failing to pay Rs. 39.16 lakh in service tax arrears and penalty.

The bank was given three months to pay up and it complied.

The charge: District Central Cooperative Bank illegally collected share capital from farmers


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