Pune: PMC's ₹500 Crore Cosmos Bank Deal & Sweeping Contract Extension Under Fire

Pune: The Pune Municipal Corporation's (PMC) proposed financial arrangement involving a Rs500 crore fixed deposit and a Rs450 crore overdraft facility from Cosmos Co-operative Bank, along with a two-year extension of sweeping contracts worth nearly Rs100 crore without fresh tenders, came under sharp criticism on Tuesday. PMC Corporator Arvind Tukaram Shinde questioned the administration's decision-making and demanded that Municipal Commissioner Naval Kishore Ram withdraw both proposals, alleging that they bypassed established procedures and could cause financial losses to taxpayers.

Shinde said he had submitted two separate letters to the Municipal Commissioner, seeking intervention in the matters. He alleged that the proposals were pushed through the Standing Committee without adequate scrutiny or competitive bidding.

Questions Over Rs500 Crore Cosmos Bank Deposit

According to documents shared by Shinde, Cosmos Co-operative Bank, in a letter dated Sept 29, 2026, requested PMC to place a deposit of Rs500 crore with the bank. It offered an interest rate of 7.40% per annum for a 16-month period, with quarterly interest payouts, along with an overdraft facility of 95% of the deposit amount at 7.70% interest.

A subsequent proposal submitted by Commissioner Ram on Oct 30 sought approval to place the deposit and avail the overdraft facility. The proposal was placed before the Standing Committee, which reportedly granted approval through Resolution No 1451 on the same day.

Shinde questioned why the civic body was considering a financial arrangement with one specific co-operative bank instead of inviting competitive offers from multiple banks. He also pointed out that PMC was already paying approximately Rs57 crore annually in interest on its existing bonds.

He further questioned the bank's eligibility under PMC's investment guidelines. The Commissioner's letter itself states that, as per existing instructions, investments should be made only in nationalised banks and the Reserve Bank of India's (RBI) Domestic Systemically Important Banks. Shinde argued that Cosmos Bank, being a co-operative bank, did not fall under these categories.

He also cited the financial implications of keeping public money as a fixed deposit while simultaneously borrowing against it. The bank's proposal offers an overdraft at 7.70% against a deposit earning 7.40%.

Shinde alleged that the arrangement could place an unnecessary financial burden on the civic body and demanded an explanation for selecting the bank without a competitive process. He also questioned whether PMC's creditworthiness had weakened, prompting the bank to seek a deposit before extending credit.

Sweeping Contracts Extended Without Fresh Tenders

In the second issue, Shinde objected to the Standing Committee's decision to grant a two-year extension to existing sweeping contractors, involving expenditure of nearly Rs100 crore.

He alleged that the original work had been awarded without following a proper tender process and that the administration had now extended the contracts instead of inviting fresh bids.

Shinde also raised concerns over attendance monitoring, claiming that the contractors themselves were recording the attendance of workers without adequate supervision by PMC officials.

He questioned why the administration had not invited fresh tenders to allow other agencies to participate and potentially offer the same services at lower rates.

Calling for an inquiry, Shinde demanded cancellation of the extensions and initiation of a fresh tender process. He maintained that the Municipal Commissioner had the authority to withhold implementation of decisions that were against the city's interests, even if approved by the Standing Committee.

He urged Commissioner Ram to intervene in both matters and ensure transparency in the use of public funds.