Compulsory reference of NPAs more than Rs.1 crore to Investigation agencies for criminality in Cosmos Co-operative Bank.

Cosmos Bank: New age Thuggery (17/10/2018)

E-mail sent to Board of Cosmos Bank and CGM, DCBS, RBI, Mumbai.

October 17, 2018

Board of Directors

The Cosmos Co-operative Bank Limited

Cosmos Tower

Plot No-6, S.No-132/B, ICS Colony
Ganeshkhind Road

Pune – 411007           

Kind Attn.:      

Mr. Milind Kale – Chairman, E-mail:  milind.kale@cosmosbank.in

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

Sir,

Sub:     Compulsory reference of NPAs more than Rs.1 crore to Investigation agencies for criminality in Cosmos Co-operative Bank.

This has reference to my numerous requests in this regard made to you and your colleagues on the Board of Directors of the Bank to come clean on the issues of NPAs. However, you have steadfastly refused to offer any explanation.

I draw your attention to the instructions given by the Finance Ministry about how to deal with NPA accounts more than Rs.50 crore.

Finance Ministry on Tuesday, the 27^th 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 jeweller 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.”

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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 had already brought out 62 accounts that are more than Rs.50 crore, the limit set by Finance Ministry to compulsory investigation of criminality.

I am once again giving you the list of NPAs known to me and informally admitted by you, Mr. Krishnakumar Goyal and Mr. Mukund Abhyankar informally 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. The Board of Cosmos Bank must refer these accounts to investigation agencies like CBI/EOW and if required to ED/DRI.

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 dead in four months – Maleychandra Madhavchandra Biswas – the promoter is a relative of top politician of that time as told by you from time to time for reasons best known to you)	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)	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 slowily tumbling out.  

You are therefore requested to inform the shareholders:

1. Whether Cosmos Bank has Vigilance Department?
2. If YES, who is the head of such Vigilance Department and what has the Vigilance Officer done in these cases?
3. If Bank does not have any Vigilance Department, what are the lawful and palatable reasons for the same?
4. Have you referred these accounts that have become NPAs within a short span of 4 months to 13 months with nil or negligible collateral security to Investigation agencies like CBI/EOW, ED/DRI?
5. If you have referred to Investigation agencies, kindly provide the details of such reference.
6. If you have not yet referred these accounts to Investigation agencies as is mandated by the Finance Ministry, kindly provide the lawful, logical and palatable reasons for the same.

Since so far you have not responded to any of my queries, I am releasing this to e-mail in the social media to appraise and apprise the Depositors as well as Shareholder about your demonstrated discomfort and revealed reluctance in going after the scamsters and their collaborators within the bank.

I am also causing this matter be known to the appropriate authorities to wake them up from their pretended slumber.

Thanking you.

Yours faithfully

Kishor Satwick

CC:

1.    Shri R. L Sharma, Chief General Manager, Department of Cooperative Bank Supervision, Reserve Bank of India, Central Office, C-9, 1st floor, Bandra-Kurla Complex, Bandra (East), Mumbai – 400 051, E-mail: dcbscocgm@rbi.gov.in – for initiating immediate action.