The Economic Offences Wing (EOW) of Mumbai Police is investigating frauds involving eight co-operative banks with the latest addition being the Rs 4,355-crore Punjab and Maharashtra Co-operative (PMC) Bank scam.
EOW officers said most of these co-operative banks had gone bust and the RBI has imposed restrictions on withdrawals. With thousands of crores of depositors’ money getting blocked, there is a need to tighten regulatory and supervisory mechanism for co-operative banks in order to ensure that such frauds are not repeated, they said.
While the government has already hinted at amending the Banking Regulation Act and the Co-operative Societies Act to improve the regulatory oversight of co-operative banks, a senior officer said that apart from PMC Bank, which had deposits of Rs 11,000 crore, cases have been registered against five banks over the years and in two cases there are preliminary enquiries (PEs) that may result in an FIR. “While we investigate co-operative and private banks, nationalised banks are investigated by central agencies. Majority of the cases we have are co-operative banks,” an officer said.
Cases where FIRs have been registered include the CKP Co-operative Bank where a PIL was also filed in the High Court. The bank, which was set up in 1951, has its head office in Matunga and has eight other branches in Mumbai and Thane. Since May 5, 2014, the RBI has imposed restrictions on withdrawals under the Banking Regulation Act. An officer investigating the case said that the FIR was registered in 2016 and there are 23 accused in the case. Investigation is still in progress.
Apart from this, another high-profile case that the EOW is investigating is the Maharashtra State Cooperative Bank scam, where an FIR was registered on the instructions of the Bombay High Court in August against NCP leader Ajit Pawar and 70 others. The accused allegedly caused losses worth around Rs 1,000 crore to the bank between 2007 and 2011. The case is being probed by an ACP-rank officer.
The EOW had also registered an FIR in 2016 against the directors of Kapol Co-operative Bank for causing losses to the tune of Rs 50 crore. The RBI has imposed restrictions on withdrawals by depositors. It is a community-driven bank established in 1939 and has 15 branches out of which 14 are based in the city. Apart from this, the EOW had in 2015 registered an FIR in the Konkan Prant Sahakari Bank whose licence had been suspended by the RBI in 2013. Investigation is in progress.
“While everyone is talking about the PMC case, there are at least five cases where we are investigating FIRs against cooperative banks. Some of these cases are bigger then PMC,” said an officer. Unlike other crimes where arrests and charge-sheet are of prime importance, here the victims, who are depositors, are more interested in getting their money refunded than seeing the accused behind the bars, he said.
Unlike regular crimes, once the EOW receives a complaint, it first registers a PE (preliminary enquiry) and checks the allegations before registering an FIR. “Registering an FIR can have a ripple effect and hamper a financial organisation. Our role is to check if there is any criminality involved. For example, if we find papers were forged or there is proof of a quid pro quo, only then do we register an FIR,” an officer said.
According to bankers, customers in these co-operative banks are from lower and middle class families, small units, pensioners and housing societies who are unable to withdraw money due to the RBI curbs. There are 37 urban co-operative banks with registered offices in Mumbai and five in Nagpur.
Currently, the EOW is investigating two PEs, one of which is likely to be converted into an FIR soon, an officer said.
“Majority of the complaints we receive are regarding co-operative banks. While in some cases the problems emanate from it being owned by politicians, there is a greater need to have strict rules and monitoring in order to ensure that as unpaid loans begin to pile up, the concerned authority is informed about it. In these cases, the scams came to light only when it was too late and the depositors turn out to be the one who have to pay the price,” a senior officer who has overseen several such investigations said.