Written queries sent to the Board of Directors of Cosmos Co-operative Bank Limited posted in public interest and specifically for the information of Shareholders as well as Depositors.
August 27,
2018
Mr. Milind
Kale
Chairman
The Cosmos
Co-operative Bank Limited
Cosmos Tower
Plot No-6,
S.No-132/B, ICS Colony
Ganeshkhind Road
Ganeshkhind Road
Pune – 411007 E-mail:
milind.kale@cosmosbank.in
Sir,
Sub: Queries in terms of Note 3 pertaining to
the accounts of the bank covered by Item No. 2(A) of the AGM agenda –
regarding.
Please
refer to Notice dated 10/08/2018 calling for the AGM of the bank on 02/09/2018.
Item No. 2(A) is adoption of the accounts. Note 3 appended to the said notice
provide that members should submit their queries relating to the business to be
transacted in the said AGM on or before 30/08/2018.
In
terms of Note No. 3, I am submitting my queries to relating to the accounts
covered by Item No. 2(A) of the agenda of the AGM.
I
have been asking you about various cases of quick NPAs and Still Born NPAs.
However, you have steadfastly neglected and/or failed to provide me any
information. Many more such NPA cases are under my study from peripheral angle.
As you have demonstratively failed to explain those accounts, and as I see a
resolute reluctance and defiance on your part to furnish the same from my
meetings with yourself, Ex-MD Mr. Vikrant Ponkshe, Group Chairman Dr. Mukund
Abhyankar and Director Mr. Krishnakumar Goyal, I have already compiled a
dossier of all these cases for thorough investigation by the appropriate
agencies.
I
have been asking you to come clean on some specific NPAs as listed below:
- Brainer Impex Private Limited together with MBPY Exim Private Limited: Rs.130.15 crore (became dead in four months – Maleychandra Madhavchandra Biaswas – the promoter is a relative of top politician of that time as is told by you from time to time for reasons best known to you)
- Pratibha Logistics Private Limited: Rs.52.00 crore
- Pratibha Shipping Limited: Rs.157.51 crore
- Euro Multivision Limited: Rs.278.59 crore (became NPA within a year)
- Euro Décor Private Limited: Rs.82.63 crore (became NPA within a year)
- Euro Ceramics Private Limited: Rs.59.68 crore (became NPA within a year or so)
- Euro Merchandise (India) Limited: Rs.32.20 crore (became NPA within a year or so)
- Other entities in Euro Group: Rs.445.00 crore as confirmed by Directors Krishnakumar Goyal, Mukund Abhyankar and Milind Kale (same fate as other Euro companies mentioned above)
- Kalanikethan Textiles And Jewels Private Limited: Rs.89.30 crore (within 6 to 9 months)
- Rosary Education Trust, Pune: Rs.46.50 crore
- Noble Exchange Environment Solutions Pune LLP: Rs.31.21 crore (within 2 years)
- Graf Laboratories Private Limited: Rs.114.75 crore (within two years or so)
- Krishna Structural Steel (India) Limited: Rs.85.00 crore (within a very short time)
- Roji – Tasha Stampings Private Limited: Rs.20.00 crore (within a short time)
- Sachin Travels Limited: Rs.23.95 crore (within a short time)
- TKT Hightek Cast Private Limited, Ahmadabad: Rs.113.94 crore (within 2 years)
- Bogus vehicle loans at various Branches: about Rs.25 crore (instant loss)
- PBG Mall at Vashi – Sold to ARC at throw away price.
- S K Wheels Private Limited: Rs.109.47 crore (within a short time)
- Hollywood Academy: Rs.41.39 crore (within a short time)
- Dilip Chhabria Design Pvt Ltd: Rs.33.93 crore written off this year out of Rs.47.00 crore sanctioned. (within a short time)
- Parshuram Forge Private Limited: Rs.50.15 crore (within a short time)
- Country Club Hospitality & Holdings P. Ltd: Rs.60.00 crore (within a short time)
- Tricot Impex Private Limited: Rs.30.00 crore (taken over from SBI in October 2015)
- Desai Tusharkumar Nanubhai: Rs.27.26 crore
- Shri Kankeshwari Agro Pvt Ltd: Rs.32.85 crore (Rs.30.00 crore taken over from Bank of Baroda in October 2015)
- Snehadeep Structure Pvt Ltd.: Rs.25.31 crore (within a short time)
- Shubhada Tools Industries Private Limited: Rs.22.70 crore (within a short time)
- Nectar Prints Private Limited: Rs.20.40 crore (within a short time)
- Citrus Resorts Bangaluru Private Limited: Rs.19.93 crore (within a short time)
- Little Master Auto Cast Pvt Ltd.: Rs.21.75 crore (within a short time)
- Janata International: Rs.18.48 crore (within a short time)
- Anoushka Medicare & Diagnostics Pvt Ltd: Rs.18.19 crore (within a short time)
- Pandit Automotive Sangli Limited: Rs.16.94 crore (this loan was transferred from SBI in October 2015) – (within one and half years)
- Pandit Automotive Satara Limited: Rs.16.00 crore (this loan was also transferred from SBI in October 2015) – (within one and half years)
- Manan Autolink Private Limited: Rs.58.20 crore (within a short time)
- Saptasatij Metatech Private Limited: Rs.102.62 crore (within a short time)
- Tristar Cars Private Limited: Rs.50.35 crore (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)
- Shakti Bio Science Limited: Rs.42.58 crore (Rs.50.26 crore taken over from Union Bank of India in March 2013 to eventually write off in Cosmos Bank’s books)
- Rotoflow Polymers Private Limited: Rs. 49.90 crore (Rs.17.96 crore written off in FY 2017-18, the balance in earlier years. Loan sanctioned in December 2013 onwards.)
- K A Malle Pharmaceuticals Limited: Rs.15.23 crore
- Duke Corporation Limited: Rs.50.00 crore (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)
- Masscorp Limited: Rs.25.00 crore (within a short time)
- Dhanshree Infratech Private Limited: Rs.5.74 crore written off out of Rs.6.80 crore.
- Shubh Tex Production Pvt Ltd: Rs.7.90 crore (Rs.3.98 crore w/off this year) – (within a short time)
Besides
this, I have also asked you to come clean on foreign travel expenses of
Directors, deals with Laco Services where the daughter of Adv. Panchpore, the
Director of the Bank has 60% stake, etc. Working of Cosmos Foundation → Cosmos
HR & Multi Services Private Limited → Quality HR & Multi Services
Private Limited. Unfortunately you have not been forthcoming on any of the
issues.
During
all my visits to your office where I met you and Krishnakumar Goyal and Mukund
Abhyankar, except courtesy tea/coffee and occasional biscuits, I did not get
any explanation from you on the direct questions asked.
However,
since you are a practicing Chartered Accountant and ably guided, assisted by
Mr. Sunil Sabnis, another practicing Chartered Accountant, (since resigned) I
draw your attention to the statements made by the Board every year in the
annual report that is reproduced hereinbelow for the sake of brevity:
“CREDIT
SUPERVISION CELL
Post-disbursement
monitoring of large size borrowers and restructured accounts is carried out by
your Bank’s Credit Supervision Cell. It is currently headed by Chief General
Manager under the active control and guidance of Joint Managing Director.
Monitoring
of large loan accounts and restructured accounts is being done regularly by
this Cell…..” [Emphasis
supplied]
This
statement is till FY 2015-16. For the current FY 2016-17, you have replaced the
words Joint Managing Director with the words Managing Director as the Jt.MD has
been promoted as MD after the resignation of Mr. Vikrant Ponkshe as the MD of
the Bank and extremely short term stint of Mr. Srinivas Joshi as Bank’s MD.
The
NPAs touched by me elaborately are the classic examples of diversion of funds
for purposes otherwise than what was stated while sanctioning the loans, out
right loot and scoot and various other issues. Brainer Impex and MBPY Exim are
holding out loud and clear how the loot
and scoot technique has been successfully deployed by the Directors. This
was also resorted to by other scamsters in couple of other cases. In many cases
it seems loans were given to the already defaulting borrowers just to get them
off the hook of Nationalsed Banks and Private Banks. The chronology of the
events is too apparent for any person of ordinary prudence to miss and they
definitely raise serious questions touching the honesty and integrity of the
Board as well as the Senior Staff.
I
had been to your Cosmos Towers number of times. First meeting was with Mr.
Vikrant Ponkshe. The second meeting was with Dr Mukund Abhyankar at Cosmos
Towers where he wanted to discuss only Arhana Family and Rosary School. Even in
that one solitary case that Dr Mukund Abhyankar wanted to discuss with me, he
could not provide answer to any of my pointed queries and he ultimately started
boasting of his connections with RBI Officials and Politicians. It would be quite interesting to see which
RBI official and/or which Politician is going to come to his or your rescue
when detailed complaint, which is under compilation, is filed before the
regulatory bodies and investigating agencies. During my interaction with
your Ex-MD Mr. Vikrant Ponkshe, I came to know that the loan proposals never
came to him for discussion or appraisal. The last stop for all loan proposals
was the Jt. MD, Suhas Gokhale.
At
this background, I am sure even you would agree with me that the role of Credit
Supervision Cell working under the active control and guidance of Mr. Suhas Gokhale,
the repeated lapses in the stated objective of the said Cell need a thorough
investigation by the Investigating Agencies.
The
repeated, or shall I say deliberate? – failure as demonstrated by the working
of Credit Supervision Cell can be explained away by giving two reasons:
- Mr. Suhas Gokhale who is controlling and guiding the working of this cell ‘is incompetent’.
- Mr. Suhas Gokhale who is controlling and guiding the working of this cell ‘is influenced by some extraneous considerations’.
Now
let us examine the first reason, i.e. Competency. Since Mr. Suhas Gokhale is
working with the Bank since more than 20 years or so and has been occupying the
Chair of Jt. MD for quite a long time, I tend to give him a benefit of doubt as
far as his competence is concerned, regardless of lack of information about his
formal school/college education.
This
leads us to second reason, i.e. being influenced by some extraneous
considerations. The repeated failure, lending another clean facility of
Rs.23.50 crore even after having an NPA of about Rs.79 crore and ending up with
enhanced NPA of about Rs.103 crore, sanctioning fresh loan to associate
companies of an already NPA company, diversion of funds, giving loans to
defaulters of other banks and taking the write off in our bank’s books, etc.
etc. unfortunately loudly point towards this factor.
Now the question is:
what are those extraneous considerations? This question assumes serious overtones and connotations
particularly when some of the accounts listed above have become NPA within a
quarter.
I
am sure as a practicing CA, you would appreciate these points. You are the
Chairman of a Co-operative Bank. Being a practicing CA, your duty assumes more
responsibility towards financial prudence, as well as misfeasance, corruption,
fraud, etc.
On
one occasion during our meeting in your office in May 2018, you had made a
statement in connection with Kalanikethan
Textiles & Jewel Private Limited, Hyderabad that you did not know that the
said borrower had loan with HDFC Bank, Hyderabad. When I pointed out that the
entire takeover of the loan from HDFC Bank as well as additional sanction is
well recorded in the Board Resolution No. 237 dated 11/03/2014 and Resolution
No. 13 (10/1) dated 20/03/2014, you changed your argument to saying it is the
collective responsibility of the Directors and Krishnakumar Goyal in
addition said he trusted the wisdom of others! Is it not sheer nonsense that
the financial affairs of the bank are managed in such a casual and deceitful
manner with no remorse of whatsoever nature? It is a tragedy that the loss
arising out of such fraud is sought to be played down by the entire Board as a
trivial issue in a most remorseless manner. I therefore call upon you to explain to the shareholders about this hara kiri by the Board jeopardizing the
finances of the Bank.
I also call upon you to
spell out to the shareholders what steps you are taking to investigate the
repeated failure of the ‘Credit Supervision Cell’ that ‘is working under the
active control and guidance of Mr. Suhas Gokhale’.
In
this context, it is apposite to refer to the Criminal Revision Application No.
170 of 2016, wherein all 13 Directors and the Managing Director of the Bank
have stated before the Hon’ble Sessions Court at Pune that:
“Directors do not deal with loan proposal
applications and documents. It is for Loan Committee to consider it. The Board
of Directors only grant sanction.”
This
bizarre submission by the entire Board of Directors before the Court of Law is
very important for the shareholders to reach to the bottom of NPAs and ensure
that delinquent directors and employees are dealt with in accordance with law
to make good the loss suffered by the Bank. In order to go to the root cause of
NPAs, it is necessary to know about the delegation chart giving exposure-wise
limit-wise power to sanction a credit proposal. To the best of my knowledge,
the sanctioning authority is accountable for the account turning into NPA and
the consequences thereof – both civil and criminal. That is a matter of
subsequent post mortem (detailed
investigation).
The
Board of Directors has set up various sub-committees for governance. These
sub-committees essentially comprise of members of the Board of Directors and
Senior members of the management like Chief General Managers which are
co-opted.
The
bank has the following Loan Committees:
- Pune Region & Outside Branches Region Loan Committee
- Mumbai & Gujarat Region Loan Committee
Kindly explain to the
shareholders about:-
i)
The
composition of these Loan Committees.
ii)
The
Role of these Committees.
iii) Chart of exposure limit wise
delegation of authority from the Board of Directors to the Managing Director,
to Chief General Manager, to Branch Manager, etc.
iv) The powers of these Loan Committees
with reference to TOD, dilution of security, release of any guarantor, etc.
v)
Minutes
of the Loan Committees who sanctioned the loans to various defaulters so far
reported by me as summarized in my letter dated 26/08/2016.
vi) The basis on which the Directors have
sanctioned those loans.
vii) The names of the Directors who have
sanctioned those loans.
viii) The minutes of the Board of Directors
wherein those loans were sanctioned.
The
Bank also has the following sub-committees:
- Audit Committee
- PNPA Monitoring Committee
- Fraud Monitoring Committee
- Recovery Committee (Pune Region & Outside Branches Region)
- Recovery Committee (Mumbai & Gujarat Region)
Kindly explain to the
shareholders about:
i) The composition of these Committees.
ii) The role of these committees.
iii) The minutes of the meetings of these
Committees where the NPAs, Recovery, Internal Vigilance, Monitoring of
Diversion of Funds and Money Laundering in the defaulters’ accounts summarized
by me in my letter dated 26/08/2016 are discussed.
The
detailed explanation on these lines would help shareholders to understand the
roles played by the concerned Directors or Employees and fix the vicarious
liability on the concerned personnel relating to dubious and fraud NPAs.
I
request the Bank to spell out the remedial action it proposes to initiate
against the guilty ones in this regard and not threaten me with another
nonsensical letter from one of the panel advocates acting like a stooge of the
Board. I can say so because during my meetings with you and Mr. Vikrant
Ponkshe, I was given to understand that the nonsensical reply by Adv. Sadanand
Kulkarni was at the behest of Adv. Shripad Panchpor, the Director of the Bank
with the express approval of the entire Board. However, I refrain from drawing
further inferences at this stage so as not to deviate from the subject of this
letter. I also request the advocates on the Board as well as Panel of the Bank
to read the landmark judgment given by the Bombay HC on 09/12/2016 defining and
underlining an Advocate’s role in upholding the law rather than misusing his
position and legal knowledge to hoodwink the system. Detailed observations made
by the Bombay High Court squarely apply to the wisdom of likes of Adv. Sadanand
Kulkarni as displayed in his letter dated 25/07/2016 in response to my
questions vide letter dated 31/05/2016 vis-à-vis present state of affairs.
This
issue is very relevant to examine the state of affairs of the Bank to decide on
the vicarious liabilities of the Directors and other Senior Management Staff of
the Bank for financial misfeasance, personal enrichment, criminal breach of
trust, corruption/fraud (for example Directors not doing anything in cases
where borrowers with political connections have sold the mortgaged property out
and out with so many advocates on the Board and their relatives on the Advocate
panel prima facie doing nothing or
the cases of instant/infant NPAs, diversion of funds), etc. etc.
All
these cases do point towards ‘being influenced by extraneous consideration’.
And the shareholders of the bank have a right to know what those extraneous
considerations are. As you are a Chairman of the Bank and also a practicing CA,
you have professional competence to appreciate these points.
I therefore call upon
you to elaborate to the shareholders on the steps being initiated by you on
each of the cases raised by me in this letter with reference to corresponding
detailed letters that are already on your file on the following lines to the
shareholders in the AGM scheduled for 02/09/2018:
- When was the loan application received?
- What is the type of Loan?
- Who did the appraisal?
- Had you done the background check of the applicants and how was it done?
- What are the reasons to neglect the basic and apparent facts that the applicant is already a defaulter of other Banks?
- What is the date of loan application and date of sanction?
- Who did the scrutiny of securities offered – both primary and collateral?
- What was the due diligence done by the Board when it accorded its sanction?
- How many Board Members dissented from giving their approval?
- What is the date of disbursement?
- Who did the post disbursement inspection to ensure funds are used for the purposes for which they were lent?
- Why did you fail to notice diversion of funds?
- When did the account become NPA and when was it written off in the books of account?
- When did you file the recovery suit against the Borrowers and their respective Guarantors? If any?
- What is the net worth of the Guarantors accepted by the bank – if at all there are any guarantors?
- What is the value of securities attached by the bank?
- What is the amount so far recovered by the bank against each case?
- Have you fixed responsibility on any Director or Senior Management including the MDs – past and present for repeated negligence as repeated lapses and negligence cannot be called innocent by any stretch of logic?
- What was the consideration that forced you to take over dead/weak loans of other banks as listed above and then writing them off in our bank’s accounts thereby eroding the deposits of the public as well as jeopardizing the liquidity of the bank?
I also request you to
read out this letter along with detailed letters in each of these cases before
the ensuing AGM to be held on 02/09/2018 as integral part of Item No. 2(A) of
the Agenda and spell out the action initiated or proposed to be initiated by
you with time-bound schedule. This letter is served on you in terms of Note 3
appended to the Notice dated 10/08/2018. Kindly also note that in terms of Note No. 3 to the
notice, this requisition is served on you sufficiently in advance.
I
must state here that I had also sent you queries to be answered before the
shareholders in the previous AGMs in September 2016 and 2017 vide letters dated
26/09/2016 and 12/09/2017 respectively. However, being fanatically loyal to
your now well established recalcitrant, disdainful and arrogant behavior, you
chose to ignore the same.
However,
kindly note that your failure this time to read out this letter and explain to
the shareholders first about the emergence of such dubious/fraud NPAs and
bought out NPAs and then the action taken or to be taken would constitute a
serious offence as you would be hiding vital information from the shareholders
and their decision on adoption of accounts would not be an ‘informed’ decision and can be viewed as obtained through deceit
and misrepresentation and/or misinformation. The lapse would be reported to the
appropriate forum and would be dealt with decisively in accordance with law of
land at your risk as to the cost and consequences thereof. This would also put
the sanctity of the AGM in jeopardy, which you please note. And in any case,
kindly be loudly informed that adoption of accounts by the shareholders does
not absolve the Board of criminal liability in respect of the dubious/fraud
loans and NPAs.
This
requisition is being sent to you by e-mail, which is legally accepted mode of
communication when sent to the official e-mail id of the recipient as held by
various High Courts and Apex Court in number of cases.
Thanking
you.
Yours
faithfully
Kishor Satwick
CC:
- Mr Suhas Gokhale, MD: E-mail: suhas.gokhale@cosmosbank.in
- Dr Mukund Abhyankar, Gr. Chairman: E-mail: mukund.abhyankar@cosmosbank.in
- Mr Krishnakumar Goyal, Director: E-mail: krishnakumar.goyal@cosmosbank.in
