Nishikant Khajuria
JAMMU, Dec 29: The Reserve Bank of India (RBI) and Registrar Cooperative Societies, J&K, have strongly reprimanded the management of Citizen’s Cooperative Bank Ltd (CCBL), Jammu for wasteful expenditures and thus incurring losses.
“The bank (CCBL) continues to spend lavishly on purchase of new vehicles, renovation of chambers and creation of new posts without prior approval of RCS despite its negligible audited profit for the year ended March 31, 2013,” says the official communiqué, issued by RBI Deputy General Manager D S Rana to the CCBL General Manager, a copy of which is in possession of the Excelsior.
Further, the CCBL management has been asked to ensure implementation of the provisions of Supervisory Action Framework (SAF) and sent copy of the minutes of the Board meeting to RBI.
The RBI has issued this communiqué, UBD.JMU.No 283/12-01-13/2013-14, dated December 19, 2013, taking cognizance of complaint letter by one of the CCBL Directors, Varinder Singh Jamwal.
The perusal of the letters revealed that the Board meetings in your bank (CCBL) are not conducted in a proper way; details of agenda items are not circulated among the esteemed Director and dissent on the decision, if any, by any member, is not properly recorded in the minutes, says the RBI communiqué.
The RBI further points out that important items like recoveries made in NPAs, new loans sanctioned during intervening period, steps taken by the bank to contain Operative and Administrative expenses as stipulate in Supervisory Action Framework (SAF) imposed by the RBI since March 2012 etc, are not prepared and put up to the Board members.
“In view of the above, you are advised to ensure proper conduct of Board meetings covering all aspects and implement the provisions of SAF in letter and spirit to bring the bank back to the track of profitability, directs the RBI in its letter adding that a copy of the Board meeting minutes may be sent to the apex bank in future.
Not only RBI but Registrar Cooperative Societies J&K, has also pointed out the wasteful expenditure over fleet of vehicles by CCBL, which is not commensurate to its business undertaken, number of branches and area of operation.
“The fact that Devika Urban cooperative Bank Udhampur and Urban Cooperative Bank Anantnag despite having no vehicles, have conducted a business of Rs 50.42 crore and Rs 37.38 crore respectively for the year 2012-13 whereas during the same period, business of Rs 41.48 crore only was conducted by CCBL, which owns six four wheeler vehicles and four two wheelers,” says the letter number RCS/B&F/G-78/2013/552-62, dated December 11, 2013, issued to the bank by Registrar Cooperative, Sudershan Sharma.
Astonishingly, the banks having higher number of vehicles have higher amount of losses, which is further swelling due to high capital and revenue expenditure on account of vehicles, the Registrar observes the mismatch.
Incidentally, RCS vide its letter RCS/B&F/G-78/2013/552-62, dated December 11, 2013, has also expressed its displeasure on the avoidable expenditures incurred by the bank and has advised to exercise austerity measures avoiding extravagance.
As earlier reported by the Excelsior, notwithstanding poor financial condition of the bank, the top management of CCBL resorted to wasteful expenditure worth lakhs of rupees without seeking approval of the elected Directors.
Further, RBI inspection of the CCBL is going on and according to the sources bank NPAs are likely to double this year, which hint of bad loaning by the management.
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