‘MSC Bank did not commit any wrongdoing’

The Economic Offences Wing investigating the alleged Rs25,000 crore fraud at the Maharashtra State Co-operative Bank has maintained that the bank suffered no loss due to loans granted to sugar factories and their subsequent auctions, as claimed by the Enforcement Directorate.

The EOW had earlier this year approached the court insisting to close the case and accept the closure report submitted in September 2020. The EOW claimed that “no cognisable offence is made out even after it reevaluated the case as pointed out by the original complainant and Enforcement Directorate”. The ED had submitted its first prosecution complaint in connection with the MSCB fraud case in April last year and continues to further investigate the case.

However, the EOW claimed that considering the objections, the investigation team had in October 2022 taken up further investigation. The agency, however, relied on the report of a committee of the retired district judge Panditrao Jadhav, appointed by the cooperative commissioner, submitted in February 2021. The committee was appointed on February 6, 2020.

The EOW claimed that in its report judge Jadhav had stated that “the bank has not suffered any unfair loss due to the loan given to the factories and that the bank is recovering the amount owed the factories in a lawful manner”. The report also said that the bank had not committed anything unauthorised.

The agency has claimed that the case was registered based on the inquiry conducted under the Maharasthra Cooperative Societies Act, and “now the report of the independent inquiry conducted under the act itself states that no wrongful loss was caused to the bank due to the loans given to these factories”.

In the report, which is accessible now, the EOW has said, “In the comprehensive investigation of the said crime, it was found that the accused did not commit any cognizable crime.”

“The investigation conducted on the basis of the information provided by the Enforcement Directorate and the statements recorded and the documents obtained on the basis of the points in the protest petition did not reveal any unfair loss or any cognizable act to the bank,” reads the report. EOW has requested the court to accept the closure report submitted in 2020.

It is claimed that National Bank for Agriculture and Rural Development (NABARD) in 2011 had after an inquiry claimed that the board of the bank was responsible for financial mismanagement which led to ballooning of non-performing assets. It was further claimed that this was majorly due to granting loans to sugar co-operatives and spinning mills in violation of all norms and later auction of these factories and mills much below the reserve price.