Mr.
N S Vishwanathan
Dy.
GovernorReserve Bank of India
Central Office Building
19th Floor
Shahid Bhagatsingh Road
Mumbai – 400001
E-mail: dgnsv@rbi.org.in
Sir,
Sub: RBI’s
demonstrated failure to act on Complaint regarding Fraud NPAs – Cooperative Banks
– New Age Bank Robbery/ Thuggery in Cosmos
Co-operative Bank Limited, Cosmos Towers, ICS Colony, Ganesh Khind Road,
Pune – a multi-state cooperative bank.
Ref: 1. My complaint letters dated 21/08/2018,
07/09/2018 and 09/10/2018 sent by email.
2. Letter dated 25/08/2018 from
Central Registrar of Co-operative Societies, New Delhi addressed to you to
investigate the complaint as the nature of complaint falls within your domain.
3. Letter dated 28/11/2018 from EOW,
Mumbai Police.
4. My letter dated 30/11/2018
5. Letter dated 07/12/2018 from Ministry
of Finance directing RBI to investigate this frauds.
6. My follow-up letter dated
17/12/2018
All
the above letters dealing with the captioned subject are on record of the
Reserve Bank of India.
I
have been following up my detailed complaint against the Board of Directors of
Cosmos Co-operative Bank Limited with RBI since 21/08/2018. The entire issue
has been stonewalled, or so it seems from the complete inaction by RBI in this
regard. The demonstrated discomfort and revealed reluctance of RBI to initiate
action in these fraud NPA cases and your blessings to Mr. Mukund Abhyankar and
his colleagues on the Board of Cosmos Co-operative Bank as boasted by Abhyankar
himself has forced me to pin this letter to you for doing necessary.
Let me first draw
your attention to the instructions given by the Finance Ministry about how to
deal with NPA accounts of more than Rs.50 crore.
Finance Ministry on
Tuesday, the 27th February, 2018 had directed PSU Banks to probe all
NPA accounts of over Rs. 50 crore for possible fraud and accordingly report the
cases to CBI. The direction comes amid state-owned lender PNB reporting
Rs. 12,700 crore fraud through alleged fraudulent misuse of letters of
undertaking (LoUs) by billionaire jeweler Nirav Modi and associates. Besides,
other PSBs too have approached investigating agencies as borrowers (as in the
case of Rotomac Group and Simbhaoli Sugars) have not returned loans.
Financial Services
Secretary Rajiv Kumar, through a tweet informed that managing directors of PSBs
have been directed to detect bank frauds and refer cases to the CBI - “PSB MDs
directed to detect bank frauds & consequential willful default in time
& refer cases to CBI. To examine all NPA accounts more than Rs. 50Cr for
possible fraud.”
PSBs have also been
asked to involve Enforcement Directorate (ED)/ Directorate of Revenue
Intelligence (DRI) for violations of PMLA, FEMA or Export Import norms.
Rajiv Kumar further
said the Chief Vigilance Officer of the Bank concerned will have to vet
complaint and coordinate with CBI for frauds exceeding Rs. 50 crore. Also,
banks will have to seek borrower status report from Central Economic
Intelligence Bureau (CEIB) on the account turning NPA and CEIB will have to
revert in a week. Banks have to involve ED/DRI “if conditions warrant,” under
the framework for timely detection, reporting, and investigation of large value
bank frauds.
Although, the Finance
Ministry had referred to PSBs, there is no reason to believe that Finance
Ministry has exempted Co-operative banks of Private Banks from this reporting.
I am once again
giving you the list of fraud NPAs known to me and admitted by Mr. Milind Kale –
Chairman, Mr. Krishnakumar Goyal - Director and Mr. Mukund Abhyankar – Group
Chairman during some of the various meetings.
The
limit of Rs.50 crore for possible criminality is fixed considering the volume
of loans and advances of the PSBs. The same yardstick cannot be applied to a
co-operative bank like Cosmos Bank. Considering the magnitude of operations,
the limit for co-operative Banks for compulsory reference to CBI/EOW for
investigation into the criminality is Rs.1 crore. Since the Board of Cosmos
Bank has failed to refer these accounts to investigation agencies like CBI/EOW
and if required to ED/DRI for obvious reasons, it is incumbent upon RBI to step
in and take corrective measures immediately.
The large accounts
that deserve reference to investigation agencies are listed below:
Table
– 1
Rs. In Crore
Sr. No.
|
Particulars of Defaulter/Scamster
|
Amount in Rs.
|
1
|
Brainer Impex Private Limited together with MBPY Exim
Private Limited (became NPA in four months)
|
130.15
|
2
|
Euro Multivision Limited: (became NPA within a year)
|
278.59
|
3
|
Euro Décor Private Limited: (became NPA within a year)
|
82.63
|
4
|
Euro Ceramics Private Limited: (became NPA within a
year or so)
|
59.68
|
5
|
Euro Merchandise (India) Limited: (became NPA within a
year or so)
|
32.20
|
6
|
Other entities in Euro Group: as confirmed by Directors
Krishnakumar Goyal, Mukund Abhyankar and Milind Kale (same fate as other Euro
companies mentioned above)
|
445.00
|
7
|
Kalanikethan Textiles And Jewels Private Limited:
(within 6 to 9 months – Rs.45 crore NPA of HDFC Bank was bought by Cosmos
Bank).
|
89.30
|
8
|
Rosary Education Trust, Pune: within 1.5 years
|
46.50
|
9
|
Noble Exchange Environment Solutions Pune LLP: (within
2 years)
|
31.21
|
10
|
Pratibha Logistics Private Limited:
|
52.00
|
11
|
Pratibha Shipping Limited:
|
157.51
|
12
|
Graf Laboratories Private Limited: (within two years or
so)
|
114.75
|
13
|
Krishna Structural Steel (India) Limited: (within a
very short time)
|
85.00
|
14
|
Roji – Tasha Stampings Private Limited: (within a short
time)
|
20.00
|
15
|
TKT Hightek Cast Private Limited, Ahmadabad: (within 2
years)
|
113.94
|
16
|
S K Wheels Private Limited: (within a short time)
|
109.47
|
17
|
Hollywood Academy: (within a short time)
|
41.39
|
18
|
Dilip Chhabria Design Pvt Ltd:(within a short time)
|
47.00
|
19
|
Parshuram Forge Private Limited: (within a short time)
|
50.15
|
20
|
Country Club Hospitality & Holdings P. Ltd: (within
a short time)
|
60.00
|
21
|
Tricot Impex Private Limited: (taken over from SBI in October 2015)
|
30.00
|
22
|
Sachin Travels Limited: (within a short time)
|
23.95
|
23
|
Desai Tusharkumar Nanubhai:
|
27.26
|
24
|
Shri Kankeshwari Agro Pvt Ltd: (Rs.30.00 crore taken
over from Bank of Baroda in October
2015)
|
32.85
|
25
|
Snehadeep Structure Pvt Ltd.: (within a short time)
|
25.31
|
26
|
Shubhada Tools Industries Private Limited: (within a
short time)
|
22.70
|
27
|
Nectar Prints Private Limited: (within a short time)
|
20.40
|
28
|
Citrus Resorts Bangaluru Private Limited: (within a
short time)
|
19.93
|
29
|
Little Master Auto Cast Pvt Ltd.: (within a short time)
|
21.75
|
30
|
Janata International: (within a short time)
|
18.48
|
31
|
Anoushka Medicare & Diagnostics Pvt Ltd: (within a
short time)
|
18.19
|
32
|
Pandit Automotive Sangli Limited: (this loan was
transferred from SBI in October 2015)
– (within one and half years)
|
16.94
|
33
|
Pandit Automotive Satara Limited: (this loan was also
transferred from SBI in October 2015)
– (within one and half years)
|
16.00
|
34
|
Manan Autolink Private Limited: (within a short time)
|
58.20
|
35
|
Saptasatij Metatech Private Limited: Rs.102.62 crore
(within a short time)
|
102.62
|
36
|
Tristar Cars Private Limited: (This company has
satisfied all loans of Tata Capital Finance amounting to Rs.1.58 crore in
Match 2016. The Cosmos bank has written off Rs.50.35 crore meekly during FY
2016-17 and 2017-18. The loan was sanctioned in March 2013)
|
50.35
|
37
|
Shakti Bio Science Limited: (Rs.50.26 crore taken over
from Union Bank of India in March 2013 to eventually write off in Cosmos
Bank’s books)
|
42.58
|
38
|
Rotoflow Polymers Private Limited: (Rs.17.96 crore
written off in FY 2017-18, the balance in earlier years. Loan sanctioned in
December 2013 onwards.)
|
49.90
|
39
|
K A Malle Pharmaceuticals Limited:
|
15.23
|
40
|
Duke Corporation Limited: (The loan was mainly utilized
to satisfy loan of Rs.15.00 crore from Export Import Bank of India and
Rs.20.00 crore from Citi Bank in July – November 2010 and the rest is the
history)
|
50.00
|
41
|
Masscorp Limited: (within a short time)
|
25.00
|
42
|
Dhanshree Infratech Private Limited
|
6.80
|
43
|
Shubh Tex Production Pvt Ltd: (within a short time)
|
7.90
|
44
|
Bogus vehicle loans at various Branches: (instant loss)
|
25.00
|
45
|
Surface Graphics
Private Limited:
|
8.21
|
46
|
Shirish Polychem
Limited
|
14.00
|
47
|
Crystal Clear Veg
Oil Refinery Pvt Ltd.: within 4 months)
|
23.63
|
48
|
Mirco Dynamics Pvt
Ltd.:
|
10.00
|
49
|
Little Woods
Nursery: (in 8 months)
|
00.70
|
50
|
Woodstock
Helicopters Pvt Ltd:
|
12.31
|
51
|
Goenka Omprakash
Basantla:
|
4.80
|
52
|
Glaacia Cosmetics
Pvt Ltd: (within a year)
|
2.73
|
53
|
Lokhandwala
Mohammad Abdul
|
14.00
|
54
|
Arya Distributors
|
2.61
|
55
|
Lokseva Pratisthan
|
0.76
|
56
|
Ranjana Newspirnt
Imports
|
1.22
|
57
|
Balaji Dhanya Bhandar
(Pro. Deeparan Chowdhary)
|
2.81
|
58
|
Control Automation
Pvt Ltd.
|
2.11
|
59
|
Sumo Industries P.
Ltd.
|
5.12
|
60
|
Balaji Cars Pvt
Ltd.
|
13.45
|
61
|
Patel Anil
Kanjibhai
|
14.50
|
62
|
New Phalton Sugar
Works Limited
|
10.12
|
Total
|
2,916.89
|
The
above list is only illustrative and not exhaustive. There are many more
NPA skeletons hidden in the cupboards of the Board of Directors of the Bank and
they are slowly tumbling out. The
recovery, if any, in all above cases cannot exceed 2% as per the private
admission given by Mr. Krishnakumar Goyal in the presence of Mr. Mukund
Abhyankar and Mr. Milind Kale in view of either no collateral security is on
record or the collateral security offered is criminally overvalued. The
published annual reports also underline this position. All these cases
represent instant NPAs and/or Quick NPAs and therefore need to be investigated
for fraud.
He told me statutory
auditors only give report in the prescribed format, collect the fees and go
away. There were some pressure from the RBI inspection staff. However, they are
taken care of by Mr. Mukund Abhyankar
who has many friends in RBI and one among them is very powerful who prevails
upon any query raised by inspection staff about the objectionable business of
the Bank. After much prodding, your name came up as the main support base of
Mukund Abhyankar and his associates manning the Board of Cosmos Bank. You were
then Executive Director of RBI and co-operative sector was in your portfolio.
The above figure of Rs.2,916.89 crore constitutes about 27.1% of NPA ratio in
Cosmos Bank. Just because NPA has gone above 15%, RBI had put many nationalized
Bank under PCA. Just for Rs.400 crore odd NPAs, RBI appointed Administrators on
Rupee Co-operative Bank in 2013 but NPAs worth Rs.4,000 odd crore in Cosmos
Bank have failed to invoke any response from RBI! Why have you left out Cosmos
Bank from similar action?
At the cost of making
little diversion, I may state here that in 2009-2010, when I had first
complained to RBI, UBD, Worli, Mumbai against Cosmos Bank for the wholesale
violation of RBI master circular prohibiting the co-operative banks from giving
loans, advances and any other credit facility to the Directors, their relatives
and entities where they have substantial interest, it was your name that had
been thrown at me by Mukund Abhyankar who was the Chairman of the Cosmos Bank
at that time for stalling the investigation. My enquiries with CGM, UBD, Garment
House, Worli at that time also hinted at pressure being out by you to ignore
the complaint and the CGM office had the audacity to tell me not to pursue that
complaint. It was only when I directly approached Dr. Subba Rao, the then RBI
Governor that the investigation was completed and Cosmos Bank was fined Rs.5
lac in November 2010.
Now let me come back
to the present issue of fraud NPAs.
After the resignation of Managing Director Vikrant Ponkshe on 31/12/2016,
I had many joint meetings with Mr. Mukund Abhyankar – Group Chairman, Mr. Milind
Kale – Chairman and Mr. Krishnakumar Goyal – Director on the fraud NPAs as
listed in the table above through the years 2017 and 2018. I had asked them
pointed questions. However, Mukund Abhyankar nonchalantly dismissed my
questions and openly challenged me to file complaint against them with RBI. The
full confidence that RBI would not initiate any action was perhaps emanating
from your elevation as the Dy. Governor of RBI looking after, inter alia, Department of Co-operative Banking Regulation, Deposit Insurance and Credit
Guarantee Corporation (DICGC), Financial
Stability Unit (FSU), Inspection Department, Risk Monitoring Department (RMD). In fact, after your elevation as Dy.
Governor in June 2016, Abhyankar & Co. had become very bold and never
bothered about RBI and its inspection staff. During my conversation with Mr.
Abhyankar, he repeatedly invoked your name and explained how close he has been
to you in co-operative banking sector working on various platforms including
one high power committee on co-operative banking, etc. etc. in the presence of
other two Directors of the Cosmos Bank. Abhyankar also boasted before me how
you hoisted him on the troubled Rupee Co-operative Bank Limited, Pune as one of
the Administrators! It is a different matter that mass protests against
Abhyankar resulted into his exit in less than 2 months.
Besides invoking your name, Mukund Abhyankar, Milind Kale and
Krishnakumar Goyal as well as ex-MD Vikrant Ponkshe had also invoked names of politicians
and had tried to impress me by telling how some of the defaulters/fraudsters
are related/associated to them and my efforts to cleanse the corruption in
Cosmos Bank would eventually be an exercise in futility. Many staff members
have narrated to me the ‘dirty’ tactics deployed by the Cosmos Board to
‘convince’ the RBI inspection staff to ignore the fraud NPAs that cannot be
printed here.
It would not be an
exaggeration if I were to say that the shamelessness of the corrupt is at its
vulgar peak on the 12th floor in Cosmos Tower.
Abhyankar had also boasted
how he managed to get RBI permission for disbursement of 2.8% dividend despite
heavy loss, huge NPAs and recent cyber-attack through your indulgence. The
staff also speak about Abhyankar’s closeness with you quite openly and blame
you in private for the current mess in the Bank. Recently, Abhyankar has been
telling the staff that he has managed to get permission from RBI that the loss
of Rs.95 crore suffered by the Bank in cyber-attack can be written off by
spreading over 2 or 3 years and not in one year all thanks to you. This is
becoming very alarming. Under which law or prudent financial norms such
deferment of loss that has already crystalized is justified? This is all window
dressing wantonly applied apparently under your blessings just to delay the
inevitable in Cosmos Bank.
The buck for the total
callousness shown so far by RBI w.r.t. fraud NPAs in Cosmos Bank in my opinion
stops at your doors Mr. N S Vishwanathan and nowhere else. The confidence of Mr.
Mukund Abhyankar, the Group Chairman of the Bank that nothing would happen from
RBI sufficiently justifies such inference. The
rot seems to be so deep rooted in RBI that even after Finance Ministry issuing
directions on 07/12/2018 to investigate the complaint regarding fraud NPAs, RBI
has done absolutely nothing. The ‘autonomous’ status of RBI cannot be construed
to this extent that it is not even answerable to Government of India and
Citizens of India.
I
have already given detailed analysis of many of the above accounts to RBI vide
my letter dated 21/08/2018. Economic terrorism is more dangerous than
Islamic terrorism. And even you would agree that the fraud NPAs constitute ‘economic terrorism’. It is incumbent
upon you to go after these economic terrorists or white collar terrorists whose
capability to inflict damage to the nation is more than the terrorists from
across the border.
I once again request
you to take this matter seriously and initiate investigation by suspending this
corrupt Board of Directors and appointing Board of Administrators. If you are
not in a position to initiate any corrective and punitive action against the
corrupt Board and their employees as well as fraud borrowers, kindly let me
know the lawful, logical and palatable reasons for your such inability within seven
days from the receipt of this letter so that I can approach the other
forum/fora to highlight the deep rooted corruption in the system at various
levels and bring this rot to the knowledge of public at large through the media
– both social and main stream to wake you up from your pretended slumber.
Hope you would take
the matter seriously.
Thanking you.
Yours faithfully
Kishor
Satwick
CC:
1.
Mr. Shaktikanta Das, Governor, Reserve Bank
of India, 18th Floor, Central Office Building, Shahid Bhagat Singh
Marg, Mumbai – 400001 for information and initiating necessary action. E-mail: governor@rbi.org.in
2.
Mr. Arun Jaitley, Hon’ble Finance Minister,
North Block, New Delhi – 110001. E-mail: fmo@nic.in, for information and necessary action.
