Saturday, August 18, 2018

Thuggery at Cosmos Bank (18/08/2018)

Insider Attack

Euro DECOR PRIVATE Limited:


Term loans and cash credit totaling to Rs. 82.63 crore to through Vile Parle East Branch, Mumbai turning into NPA displaying complete connivance and camaraderie between both sides.   

The borrower company Euro Decor Private Limited was sanctioned term loan and cash credit facilities as follows:


Sr. No.

Type of Facility

Account Number

Amount of Loan

Date of sanction

1

Cash Credit

01760013629

55,00,00,000

24/09/2012

2

Term Loan

01775180657

18,63,00,000

24/09/2012

3

Term Loan

01775121591

5,00,00,000

24/09/2012

4

Term Loan

01780180675

4,00,00,000

24/09/2012

5

Letter of Credit


18,50,00,000

24/09/2012

6

Bank Guarantee


17,35,000

24/09/2012

7

Cheque Purchase


15,00,000

24/09/2012

This company has also given Bank Guarantee of Rs.16.20 crore for its other Group Company, viz., Euro Merchandise (India) Limited, that is NPA. A company, whose net worth as on 31/03/3013 was not more than Rs.16.70 crore is giving the corporate guarantee of Rs.16.20 crore and the bank accepting such corporate guarantee remaining oblivious of facts that are too visible to miss is a pointer to the goings on in the Cosmos Bank. As on 31/03/2013, this Company had also given Bank Guarantees along with other guarantors totaling to Rs.349,02,77,092/- for facilities extended to its other group company Euro Ceramics Limited, which is also NPA.

All these loans became officially NPA on 30/09/2014 and joined the ever expanding list of “quick mortality’ borrowers of Cosmos Co-operative Bank Limited. However, the Company was given a lease of life till next year by technical re-phasing of overdue loans before they eventually became NPA and possibly a total write off.

Three Company Petitions bearing Nos. 645/2013, 646/2013 and 669/2013 were filed in the Hon’ble Bombay High Court by the creditors for the winding up of Euro Décor Private Limited. Petition No. 645/2013 was filed by Vijay Jain for nonpayment of Rs.65 lac by the Company. Petition No. 646/2013 was filed by Ajay Jain for nonpayment of Rs.60 lac and Petition 669/2013 was filed by Sadilal & Sons for nonpayment of Rs.50 lac by the Company. The Hon’ble Bombay High ordered the Company to pay the Petitioner Creditors within a certain period and on terms and conditioned laid down in the said order and further passed order on 17/10/2014 as follows:

“(v) In the event of the Company committing any default (including grace period of 15 days) in payment of the agreed installments and interest hereinabove, the Company Petition shall stand revived without reference to this Court and the same shall stand allowed in terms of prayer clauses (a) and (b), which are reproduced hereunder:
(a)That the Company M/s. Euro Décor Pvt Ltd. be wound up by this Hon’ble Court under the provisions of the Companies Act, 1956;
(b) that the Official Liquidator be appointed as the liquidator of the Company with all the powers under the Companies Act, to take charge of the assets of the Company and to conduct its affairs in the course of winding up and to distribute its assets in accordance with the law;…”

This Company, however, did not comply with the said order as it was already bankrupt and has preferred to go one step further and is now under liquidation.


Meanwhile, the Cosmos Bank had filed for modification of charges charge for Rs.97,30,89,000/- on 30/09/2014 that was originally created on 27/11/2009. This was because the bank re-phased an overdue loan of Rs.7.75 crore (A/c No. 01775180657) and Rs.2.64 crore (A/c. No. 01780180675). The overall facility as on 30/09/2014 was as follows:

  1. Cash credit: Rs.55,00,00,000/- crore (existing)
  2. Term loan: Rs.18,63,54,000/- is rephrased for balance outstanding Rs.7,73,00,000/-
  3. Letter of Credit: Rs.18,50,00,000/- (Existing)
  4. WCTL: Rs.5,00,00,000/- (existing)
  5. Bank Guarantee: Rs.17,35,000/-
  6. Cheque purchase: Rs.15,00,000/-
  7. Out of L/C limit of Rs.18.50 crore, Rs.5.00 crore was interchangeable with cash Credit limit.
Major companies of this EURO group giving cross-corporate guarantees, The Board of Cosmos Bank accepting such dud corporate guarantees and these group companies simultaneously becoming NPAs speak volumes about the ongoing in the affairs of the bank.

Whereas three alert persons filed winding up petition against the Company for its default in payment of Rs.1.75 crore to them and ultimately got the winding up of the company in process, it is really shocking to note that the Bank reschedules the already dead account by technical manipulation of re-phasing the term loan so as to delay the eventual classification of this account as NPA and takes the hit of Rs.97.31 crore. I am sure even you would agree that I would not be wrong if I were to infer that Jains, the Petitioners, were more diligent and alert to protect their financial interest of Rs.1.75 crore than the collective diligence and alertness of the Board of Cosmos Bank for Rs.91.30 crore. Or was it a case of collusive or collaborative non-diligence or negligence? This case also needs a detailed investigation by appropriate law enforcement agencies.

The next review of this dead account was due on 24/09/2015.

The moot question is what did the bank consider when they reviewed Company’s position as on 30/09/2014 when the borrower company was already fighting winding up petitions filed against it by the creditors? And this happens when the then MD Vikrant Ponkshe was employed for his expertise in Risk Analysis and Strategy, when majority of the Directors have LLB qualifications printed on their forehead, when two Directors are practicing CAs and when Self-anointed Chairman Emeritus Dr Mukund Abhyankar is PhD and LLB!!

The Directors of the Bank have a fiduciary relation with the shareholders of the Bank. The Directors are supposed to work within the framework of law and well established prudent banking norms. Any deviation from these norms by the Directors would constitute fraud and criminal breach of trust of the shareholders of the bank. The Directors are liable to make good the loss suffered by the Bank due to mala fide and fraudulent acts from the personal assets of such delinquent directors and employees.

About Rs.97.31 crore odd plus unspecified interest are locked as NPA in this one account where deviation from prudent banking practices and absolute lack of due diligence is prima facie visible, giving rise to criminality. I am concerned how many skeletons are going to tumble out of the closets of the Cosmos Bank. Factors such as disbursement of huge amounts by violation of prudent banking norms/practices and without taking adequate collateral security, questionable guarantors’ gross negligence and total absence of due diligence and quick mortality do point towards serious acts of omission and commission bordering on fraud and criminal conspiracy. In my sincere opinion, this is another fit case for an ‘in-custody’ police investigation.

Since MSM has not covered it, the gullible depositors are not aware about it and the magnitude of Insider Attacks compared to recent Cyber Attack.

So, the loot will continue.

No comments:

Post a Comment