MSC Bank loan scam: Police closure report finds ‘no criminality’

Mumbai: The Mumbai Police’s closure report in the alleged Maharashtra State Cooperative (MSC) bank loan scam has found no criminality as the loans did not benefit any individual. The closure report which was filed recently gave a clean cheat to deputy chief minister Ajit Pawar and others. The case pertains to loans to co-operative sugar factories (CSFs), spinning mills and other processing units. It is alleged that top executives and office bearers were given loans in a fraudulent manner. Most of the 48 directors of the MSC bank at the time when the alleged fraud was committed between 2001 and 2011, were elected representatives from various parties, including Pawar.

The findings of the report have revealed that “the loan amounts were credited directly to the bank account of the borrowing institution and no cognizable offense was found as the amount was not credited to any individual account.”

Further, it has also been concluded that the loans sanctioned to the institutions were approved unanimously or by a majority in the meeting of the directors of the banks. The allegations of the complainant are civil and not criminal in nature, the report stated.

The complainant had cited the report of National Bank for Agriculture and Rural Development (NABARD) which pointed out alleged anomalies. However, the police’s closure report has mentioned that NABARD’s findings are more pertaining to the policies and was observatory and informative in nature. “The findings of the NABARD report do not amount to any criminal offence,” the closure report revealed. The report findings revealed that if the director of MSC bank is also a director of a CSF, it is not wrong to give a loan to that factory. It has also been concluded that the loans sanctioned to the institutions were approved unanimously or by a majority in the meeting of the directors of the bank. It revealed that the loans were not given for the benefit of an individual.

The report observed that movable and immovable properties of the CSF’s are mortgaged at the time of long-term lending of loans. All those loans are secured, it said.

According to the report, actions were taken against the factories which were unable to repay loans. Action was taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, also known as the SARFAESI Act. It added that such debt-ridden factories were seized, and the proceeds of the sale have been credited to the loan accounts.

The Bombay high court (HC) in August last year had directed the Economic Offences Wing (EOW) of the Mumbai Police to register a first-information report (FIR) in the case. The HC issued the directive on a public interest litigation (PIL) filed by activist Surinder Mohan Arora, who alleged lack of action by the police on his complaint regarding the fraud.

The 57-year-old Andheri resident sought action against the political leaders and bank officials on the basis of a 2011 NABARD inspection report and reports of inquiry under provisions of the Maharashtra Co-operative Societies Act, 1960.

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