Pathankot Hindu Urban Co-Op Bank BoDs placed under suspension

The Board of Directors of the Hindu Urban Cooperative Bank, Pathankot, has been placed under suspension and put on notice to explain as to why action should be not be taken against them as they have failed to perform their expected duties in a transparent and professional manner.

Informing this, the Punjab Cooperative Societies registrar Arvinder Singh Bains said that the Bank’s financial health has been severely eroded thereby putting the interest of depositors of the bank at a grave risk.

Singh said that the department received complaints from the public and representations from the staff of the Bank regarding the mismanagement by the Board of Directors.

A detailed enquiry was got conducted by the Joint Registrar, Cooperative Societies, Jalandhar Division, and the enquiry pointed out that the Reserve Bank of India (RBI), while conducting the inspection of the bank, has put the bank on notice under Self Corrective Action for the second consecutive year, he said.

The bank has shown its Capital to Risk (Weighted) Assets Ratio (CRAR) to be nine per cent on March 31, 2017, whereas after the inspection of RBI, it has been lowered to 0.68 percent as the bank had not made the required provisions in its books of accounts, said Singh.

Singh said that the bank’s NPA (non-performing asset) has shot up to 48 percent, which is very high.

Further, the Board of the Bank indiscriminately extended financial benefits to certain selected defaulters of the Bank by charging lower rate of interest or waiving off the penal interest to be charged from them by going beyond their jurisdiction and without any policy, said Singh.

He cited that the Board reduced the rate of interest from 13 to 12 per cent in case of Mahajan Lamination Works, from 12.5 to 12 percent in Vikas Ventures, from 13 to 12 percent in Venus Public Resort, waived off penal interest of Rs 43.39 lakhs in case of Transworld Sellways, Rs 26,49,321 in case of  Sai Enterprises, Rs 4,21,361 in case of SS Timber and Rs 62,949 in case of Narinder Singh.

There are many such cases where Board has taken a decision beyond its jurisdiction and has worked in a way detrimental to the interests of the Institution, said Singh.

The Registrar said that the enquiry report has also indicated that certain individuals, families or groups of individuals have unduly been favoured by giving very high amount of advancement to them and recovery is not affected from such loanees which has grossly affected the financial health of the bank.

The Bank, in fact, has to recover Rs 99.69 crores from only 44 big defaulters.

“Hence, the management of the bank has woefully failed to protect the interests of the institution, its depositors, its members and share holders compelling the Department to step in and suspend the Board,” said the Registrar, adding that Cooperative Societies’ deputy registrar Bhupinderjit Singh Walia has been appointed as Administrator and he has assumed charge on May 11.