Mumbai: The Comptroller and Auditor General
(CAG) has passed strictures against former Maharashtra Chief
Minister Ashok Chavan-led government which it said extended
"injudicious" assistance of Rs 118.50 crore to the Nanded
District Central Cooperative Bank, located in his home
The financial assistance has been wasted, CAG said. The
Chavan government had approved the financial assistance in
August 2009, with retrospective effect from March 2008.
Last year, Chavan was forced to quit as Chief Minister
after being linked to the Adarsh housing scam and is among
those named in the Central Bureau of Investigation`s First
Information Report in the scam.
The CAG report, for the state government`s accounts for
the year ended March 31, 2010, was tabled in the state
The report said the loan was sanctioned despite the
Nanded bank`s poor financial condition. An inspection report
by the National Bank for Agriculture and Rural Development
(Nabard) in September 2009 revealed the bank`s net worth was
negative at the end of 2008-09 and its crop loan disbursements
were on a decline during 2004-09, it said.
The bank did not comply with the Reserve Bank of India`s
directions regarding acceptance and payment of deposits, and
also defaulted on repayment to the Maharashtra State
Cooperative Bank (MSCB).
The Nanded bank`s borrowing power under the Banking
Regulation Act`s rules remained nil and non-performing assets
(bad loans) as a percentage to loans outstanding had increased
to 70.7 per cent as on March 31, 2009, from 58.5 per cent as
on March 31, 2008, it said, adding the net worth remained
negative during 2009-10.
The government`s assistance of Rs 118.50 crore came in
useful to the Nanded cooperative bank only to discharge its
liabilities, which were around Rs 310.67 crore. However, the
real objectives for sanctioning of the grant, especially for
the improvement of net worth and increasing crop loan
disbursements, were not achieved, it said.