2 Bengal co-ops may be superseded
The boards of Bhatpara-Naihati Co-operative Bank and Boral Co-operative Bank might be superseded by the Reserve Bank of India if ongoing investigations reveal violations of RBI norms, said officials of the apex bank.
In cases of gross and deliberate violation, punishment may entail filing of criminal complaints against board members of the banks.
The official said: "RBI has initiated investigations into alleged irregularities in their books of accounts relating to deals made in government securities and gilts trading".
In a simultaneous move, the National Banks for Rural & Agricultural Development has initiated a probe into the investment portfolio of all regional rural banks.
"Although there was no report from RRB till now we are doing an examination as a prudence measure," said a top Nabard official.
"This is a proactive step that we are taking which will allow us to find out if any irregularities exist," he added. The total process is expected to take 15 days.
RBI initiated a probe into the books of these banks relating to investments made in various securities and is looking into possible links between the scam tainted brokerage houses like Home Trading run by Sanjay Agarwal.
"We are still inspecting the books of these two banks would be able to come up with a decision in a couple of days," explained the central bank official.
RBI has already put in place an enhanced level of vigilance into the books of all urban cooperative banks in West Bengal, Maharashtra and Gujarat.
The enhanced supervision is likely to be completed in another seven days following which a report would be submitted.
However, officials of the Bhatpara-Naihati Co-operative bank sang the opposite tune and said there had been special visits from RBI officials. They said there has been no irregularities in the bank's investments.
Sources at Boral Co-operative Bank said that RBI officials had visited them but could not say if they had found any lapses in their books of accounts. The bank's chief executive officer could be contacted either at his office or his residence.
Sources in the co-operative banks said that while norms did direct investments by all urban co-operative banks in a certain ratio in gilts and G-secs, many banks routed their investment decision either through a broking farm or through the state level co-operative bank.
In view of the 15-30 day delay in actual delivery of securities to banks, banks had to trust brokers with their orders and run the risk of brokers attempting to defraud them in the execution of orders.