Suvarna Sahakari Bank Explained

Suvarna Sahakari Bank
Type:Private urban co-operative bank
Fate:Merged with Indian Overseas Bank
Num Locations:12
Num Locations Year:2009
Founder:Dnyaneshwar Agashe
Hq Location City:Shaniwar Peth, Pune, Maharashtra
Hq Location Country:India
Revenue Year:2002
Industry:Banking

Suvarna Sahakari Bank was an Indian private urban co-operative bank based in Pune, Maharashtra, India, which operated from its incorporation on 22 September 1969 till its dissolution on 20 May 2009.

History

The bank was started by Dnyaneshwar Agashe on 22 September 1969.[1] [2] S. K. Wankhede inaugurated the opening of its first branch.[3] It was started to cater to the banking needs, primarily of Pune's middle class Marathi population.[4] [5] The bank was classified as an urban cooperative bank,[6] and was one of the authoirised credit guarantors for small-scale industries by February 1971.[7]

As of 1972, the bank was headquartered in Shaniwar Peth, Pune,[8] with the Reserve Bank of India (RBI) approving the bank's ability to loan credit schemes for small-scale industries that same year.[9] Jagdish Agashe also served as the bank's manager at the time.[10] In 1976, the bank's schemes featured in B. R. Ambedkar's articles on family planning.[11]

From 1990, the bank had nine branches in Pune, two in Mumbai and one in Shreepur till the time of its dissolution in 2009.[12] [13] In 1998, the bank organized an inter-bank cricket tournament in honour of Panditrao Agashe.[14] By 2002, the bank initiated online banking, and was reportedly worth Rs. 500 crore.[15] By 2003, the bank had installed Sarvatra Technologies' proprietary point of sale terminal.[16] In 2004, Ashutosh Agashe was elected the bank's chairman.[17]

2008 scam allegations

Background

In 2004, Dnyaneshwar Agashe, chairman of the Maharashtra Cricket Association (MCA) at the time, was denied his right to vote in the Board of Control for Cricket in India's (BCCI) Presidential Elections due to allegations of factionalism within the MCA.[18] The denial to Agashe to exercise his franchise saw Sharad Pawar losing by one vote in the election for the post of the President of the BCCI.[19] [20] [21] By 2006, the bank business started having financial troubles, with some sources alleging that the bank's failure was backlash for the controversial BCCI presidential elections.[22] In September that same year, the cooperative bank was put under moratorium by the Reserve Bank of India.[23] [24] The board of directors for the bank was superseded soon after.[25] The moratorium came into effect on 14 October 2006, with the media demanding that the RBI launch an investigation of the bank's auditors.[26]

In 2007, following the order of moratorium, the State Department of Cooperation appointed Mukund Ghaisas as administrator at the bank.[27] Many of the bank's depositors held demonstrations at Agashe's Aundh residence and threatened criminal actions against the Agashe family,[4] after which a speedy merger was promised by Agashe.[5] Initial non performing assets totaled Rs. 125 crore, 13% against the seven per cent maximum allowable under the RBI norms,[28] despite reports from June 2007 claiming that the bank would resume regular operations by late 2007.[29] After the non-performing assets of the bank grew to more than 43%, account holders and depositors held a day long token fast to protest against the misinformation provided in regards to the alleged duped loans.[30]

In 2008, the RBI gave the bank permission to pay interest on deposits made from January to June 2008; Agashe mortgaged personal property worth Rs. 200 crore in lieu of the recovery of the deposits worth Rs. 725 crore.[31] Hotel Ranjeet, a hotel owned by Agashe was auctioned off for the same reasons.[32] Cosmos Bank planned to acquire the bank after it hit this roadblock with the RBI and the subsequent announcement of the proposed merger with Cosmos led to large-scale panic withdrawals by Suvarna customers.[28] [33] [34] [35]

Allegations and arrests

On 22 November 2008, Agashe, along with 14 other board members (including his sons Mandar and Ashutosh Agashe),[36] [37] was taken into judicial custody; the bank business was charged with a Rs. 436.74 crore scam allegation.[38] [39] The arresting police stated that the accused along with six others allegedly misused their rights and sanctioned loans mostly to firms owned by themselves and then defaulted the loans, thereby duping the depositors. The arrests were made after a complaint was filed by Rajesh Jadhavar, a special auditor with the Cooperatives Department at the Maharashtra government.[40] The case was registered as an economic crime.[41]

The judicial magistrate remanded Agashe and the 14 other suspects to police custody, with provisions of medical assistance if required, citing the senior citizenship of a majority of the accused.[42] The economics offenses wing of the crime branch conducted a raid of all the homes of the accused, including Agashe's Aundh home to recover Rs. 1.5 lakhs. The prosecution stated that upon discovery of the money, further interrogation of the accused was necessary and alleged that the accused had disbursed loans to people close to them by flouting RBI rules.

In return, Agashe's defense counsel claimed that Agashe and his family had sold off various properties for the repayment of the loan. The defense counsel also stated that the Agashe family had extended full cooperation with the police and submitted that the family would repay another Rs. 80 crore after the issue of Suvarna's merger was settled. The defense also raised the issue of foul play, when the first information reporting of the allegations was not produced before the court three days after registering the case and further contended that the loans had been sanctioned by the bank's disbursement committee, a committee Agashe was not a member of.[43] The bail applications filed at the time for Agashe, his wife, and his sister were subsequently rejected.[44] [45]

While in custody, Agashe's health deteriorated and he was admitted to Sassoon Hospital on 22 December, suffering from severe diabetes and gangrene,[46] for which he had previously been denied medical assistance.[47] He later died of a heart attack from complications of diabetes at Sassoon Hospital on 2 January 2009.[48] [49] Agashe's son Ashutosh was subsequently released on bail that same month,[46] with his son Mandar being released in March.[50]

Aftermath

Upon Agashe's death, the depositors of the bank approached Indian Overseas Bank for help after the bank's accumulated losses were estimated at over Rs. 350 crore.[24] [51] The bank was allowed to be acquired by Indian Overseas Bank in 2009,[52] [53] with the Reserve Bank of India approving the merger in April of that year.[54] The merger went through on 20 May that year.[55] The transition of operations resulted in Rs. 14 crore worth deposits being withdrawn.[56] The bank's case, and failure amidst a political scandal, has been widely cited in the Indian banking sector.[57] [58] [31]

Further reading

Notes and References

  1. News: Dnyaneshwar Agashe cremated . 5 January 2009 . . . 15 September 2018.
  2. News: Ex-director of Suvarna bank dies . 4 January 2009 . . . 15 September 2018.
  3. Book: Umarji . G. H. . Putra Viśvastācā : Gaurava Grantha : Jñāneśvara Āgāśe shashṭyabdipūrti nimitta . Barve . Ramesh . Vartak . Taraprakash . Belvalkar . Sharchandra . 2002 . Puṇe . 978-1-5323-4594-4 . 72 . 992168227 . mr . 25 August 2022 . WorldCat.
  4. News: Suvarna protestors halt traffic . subscription . https://web.archive.org/web/20171222054057/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/02/11/5/Ar00510.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=347258&Keyword=(%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe)&skin=pastissues2&AppName=2&ViewMode=GIF . 22 December 2017 . . 11 February 2008 . . 15 September 2018.
  5. News: Arrests will not solve problems: depositors . 23 November 2008 . . . . 25 August 2022.
  6. News: Kumar . K. Ram . PMC Bank's resolution could become a template for rescuing other weak UCBs . . 20 June 2021 . . 25 August 2022 . en.
  7. Book: Reserve Bank of India . Reserve Bank of India . Supplement to the Reserve Bank of India . February 1971 . . 93 . 22 February 2024 . Gokhale Institute of Politics and Economics.
  8. Book: The Industrial & Commercial Directory of Poona . 1972 . . 126 . 25 August 2022 . . en.
  9. Book: Special Credit Schemes of Banks, Guidelines: Report of the Committee on Banks' Credit Schemes with Reference to Employment Potential, Guarantee Scheme for Small Loans to Priority and Neglected Sectors, Guarantee Scheme for Loans to Small-scale Industries, Financing of Agriculture by Commercial Banks, Guidelines . 1972 . . . 140 . 25 August 2022 . en.
  10. Book: Industrial and Commercial Directory of Pune . 1972 . . . 307 . 22 February 2024 . Gokhale Institute of Politics and Economics.
  11. Book: Mangudkar . Manikrao Padmana . Dr. Ambedkar and Family Planning . 1976 . S. Mangudkar . 66–67 . 25 August 2022 . . en.
  12. News: Cosmos lead race to buy Suvarna Co-op . 3 April 2016 . 15 January 2022 . Mergers India.
  13. Book: Pune A to Z: Map Directory with Classified Commercial Index . 1990 . S. P. Barve . . 33 . 25 August 2022 . en.
  14. News: Inter-bank cricket from Oct 28 . 17 August 2022 . . . 26 October 1998 . en.
  15. Book: Business India . 2002 . A.H. Advani . 24 . 25 August 2022 . . en.
  16. News: New software boon for co-op. bank clients . . . . 25 July 2003 . 25 August 2022 . en.
  17. News: Agashe heads Suvarna Sahakari . subscription . 25 August 2022 . https://web.archive.org/web/20171116131602/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2004/09/03/3/Ar00304.xml&CollName=TOI_PUNE_ARCHIVE&DOCID=164529&Keyword=%28%28%3Cmany%3E%3Cstem%3EAshutosh%3Cphrase%3E%3Cmany%3E%3Cstem%3EAgashe%29%29&skin=pastissues2&AppName=2&ViewMode=GIF . 16 November 2017 . . 3 September 2004.
  18. News: Factionalism in state scuttled Pawar's chances . 20 September 2004 . . . . 12 March 2017.
  19. News: Agashe consulting lawyers to file writ petition . 1 October 2004 . . en . 12 April 2019 . deviated . https://web.archive.org/web/20161011114746/https://zeenews.india.com/home/agashe-consulting-lawyers-to-file-writ-petition_180121.html . 11 October 2016 . Pune.
  20. News: BCCI to hold AGM on January 27 . 15 January 2005 . . . . 17 December 2017.
  21. News: Pawar out on Dalmiya googly: NCP leader not to move court . 30 September 2004 . . . 17 December 2017.
  22. News: Its Tharoor's cricket versus Pawar's . https://web.archive.org/web/20100420062843/http://blogs.hindustantimes.com/singly-political/2010/04/16/its-tharoor%E2%80%99s-cricket-versus-pawar%E2%80%99s/ . dead . 20 April 2010 . . Sujata . Anandan . 17 August 2016.
  23. News: Suvarna Sahakari Bank placed under moratorium . . 16 September 2006 . . 15 September 2018 . en-US.
  24. News: Agashe dead; depositors now pin hopes on IOB . . Nisha . Nambiar . 4 January 2009 . 18 August 2016.
  25. News: Suvarna bank board superseded . subscription . https://web.archive.org/web/20171222054055/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2006/09/16/3/Ar00300.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=202051&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . 22 December 2017 . 25 August 2022 . . . 16 September 2006.
  26. News: Role of RBI, auditors must be investigated . 16 August 2022 . . 4 December 2008 . en-IN.
  27. News: Ghaisas Suvarna bank administrator . subscription . 25 August 2022 . https://web.archive.org/web/20171222054020/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2007/06/01/3/Ar00303.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=25821&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . 22 December 2017 . . . 1 June 2007.
  28. News: Suvarna may merge with Cosmos Co-operative . 25 August 2022 . . . 12 September 2006.
  29. News: Suvarna nearing normal functions . 17 August 2022 . . . 4 June 2007 . en . Pune.
  30. News: Token fast outside Suvarna bank today . 25 August 2022 . . . 28 April 2008 . Pune.
  31. News: Suvarna to pay interest on deposits from Jan . https://web.archive.org/web/20190105043628/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/05/19/3/Ar00302.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=396959&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . dead . 5 January 2019 . subscription . 25 August 2022 . . 19 May 2008.
  32. News: City hotel auctioned to recover dues . https://web.archive.org/web/20190105043544/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2007/06/21/3/Ar00300.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=34397&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . dead . 5 January 2019 . subscription . 25 August 2022 . . 21 June 2007.
  33. News: Suvarna Sahakari Bank placed under moratorium . . 16 September 2006 . . 19 August 2016.
  34. News: Suvarna cheque clearance blocked . 14 September 2006 . . . 15 September 2018.
  35. News: Shree Suvarna, Cosmos Co-op Bk in merger talks . 11 September 2006 . . . 15 September 2018.
  36. News: Mandar Agashe in police custody. . . subscription . 25 August 2022 . 2 May 2009 . National Library of Catalonia.
  37. News: Son's bail rejected . . subscription . 25 August 2022 . 1 April 2009 . National Library of Catalonia.
  38. News: Agashe, others sent to judicial custody . 25 November 2008 . . . . 12 March 2017.
  39. News: Cooperative bank fraud lands 21 in soup, 15 arrested . 23 November 2008 . . . . en-gb . 15 September 2018.
  40. News: Pune coop bank in Rs 436-cr scam . . 23 November 2008 . . 17 August 2016.
  41. News: Cops can't register case as co-operation dept probe still on' . 17 August 2022 . . . 23 November 2008 . . en.
  42. News: Suvarna co-op bank case: 15 arrested . subscription . 25 August 2022 . https://web.archive.org/web/20171114202748/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/11/23/1/Ar00102.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=484463&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . 14 November 2017 . . . 23 November 2008 . Pune.
  43. News: Agashe, others sent to judicial custody . subscription. 25 August 2022 . https://web.archive.org/web/20171114202816/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/11/25/4/Ar00404.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=485330&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . 14 November 2017 . . . 25 November 2008 . Pune.
  44. News: Suvarna case: Court defers order on bail . https://web.archive.org/web/20181116001337/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/11/26/5/Ar00506.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=485723&Keyword=(%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe)&skin=pastissues2&AppName=2&ViewMode=GIF . dead . 16 November 2018 . subscription . 25 August 2022 . . 26 November 2008.
  45. News: Court rejects bail plea in Survarna case. https://web.archive.org/web/20181116001018/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/11/30/4/Ar00408.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=487226&Keyword=(%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe)&skin=pastissues2&AppName=2&ViewMode=GIF . dead . 16 November 2018 . subscription . 25 August 2022 . . 30 November 2008.
  46. News: Son attends funeral under police eye . 25 August 2022 . . . 4 January 2009 . Pune.
  47. News: INDIAN POLITICIANS' LEAGUE: The gentlemen's game . Khanna . Ruchika . 27 April 2010 . . 17 December 2017.
  48. News: Former MCA chief Agashe dies . 25 August 2022 . Web India 123 . 3 January 2009 . Pune.
  49. News: Deadend! . Chavan . Vijay . 25 August 2022 . . 4 January 2009.
  50. News: Mandar will stay with cops . 29 January 2022 . . 7 March 2009 . en-IN.
  51. News: Hope for depositors as IOB bids for Suvarna . subscription . 25 August 2022 . https://web.archive.org/web/20180909185358/http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=TOIPU/2008/04/01/1/Ar00104.xml&CollName=TOI_PUNE_ARCHIVE_2006&DOCID=372693&Keyword=%28%3Cmany%3E%3Cstem%3EDnyaneshwar%3Cand%3E%3Cmany%3E%3Cstem%3EAgashe%29&skin=pastissues2&AppName=2&ViewMode=GIF . 9 September 2018 . The Times of India. 8 April 2008.
  52. News: Suvarna Sahakari Bank may merge with IOB . 26 November 2008 . . 15 September 2018 . Mumbai.
  53. News: IOB gets nod to acquire Pune-based co-op bank . 3 February 2009 . . 15 September 2018 . Chennai.
  54. News: RBI okays Suvarna, IOB merger . . . 3 April 2009 . en . . 25 August 2022.
  55. News: IOB posts 17 per cent rise in business . . 25 August 2022 . 30 October 2009 . en-IN . Chennai.
  56. News: Week after Suvarna takeover, a Rs 14-cr deposit dip . Nambiar . Nisha . . 25 August 2022 . 27 May 2009 . en . Pune.
  57. News: Devendra Fadnavis seeks RBI directive on cooperative bank merger issues . Kasabe . Nanda . 1 June 2018 . . 15 September 2018 . en-US.
  58. News: CM calls high-level meet to resolve Rupee Bank merger . 1 June 2018 . Indian Cooperative . 15 September 2018 . en-US.

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