The Reserve Bank of India’s move to supersede the board of directors of Maharashtra State Cooperative Bank (MSCB), an apex one for agricultural credit co-operatives and agricultural processing co-operatives, is a body blow to Maharashtra strongman and Union minister Sharad Pawar and his nephew and state deputy chief minister, Ajit Pawar.
The Pawars had supremacy over MSCB’s functioning. The appointment of administrators and the subsequent constitution of a new board of directors would hit at Pawar’s say.
RBI’s action comes in the wake of bank’s decision with regard to loan disbursement in violation of banking norms in order to get political mileage. Of the 5,300 crore loans, about Rs 3,200 crore were given to cooperative sugar mills and about Rs 550 crore to cooperative cotton spinning mills.
Pawar senior played an active role during 1988 and 1998, when the bank released substantial funds to the cooperative sector, especially to sugar and cotton spinning mills. Thereafter, Pawar got his nephew, Ajit, elected to the bank as its chairman in 1998 and since then, the latter has been calling the shots. During his chairmanship and later as an influential minister in the state cabinet, Ajit went on to consolidate position and control over the bank’s functioning.
Sharad Pawar has criticised RBI’s decision to dissolve the board and appoint two administrators. He has also dismissed criticism of the bank committing several irregularities. “The bank released loans based on the state government guarantees. How can a bank simply bypass the government guarantee?” he asked, adding that he would be able to comment in detail only after carefully reading the RBI communication. Ajit Pawar was not available for comment.
Political analysts believe RBI’s move has political colour and its timing is also crucial, when Sharad Pawar has been involved in the controversy over his alleged nexus with Shahid Balwa in connection with the telecom spectrum scam. Similarly, Ajit Pawar has been under attack from opposition parties on charges of favouring a firm in land allocation during his tenure as the irrigation minister.
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Analysts said the Congress party would not leave any opportunity to expose NCP to gain political mileage. The former has been running a campaign against the NCP for neglecting it and its affiliates in the bank’s functioning. And, a section of the Congress was determined to teach the Pawars a lesson after Ajit Pawar’s Rs led to the takeover of the Mula Pravara Society, engaged over the years in the power distribution in certain pockets of sugarcane-rich Ahmadnagar district by the Maharashtra State Electricity Distribution Company. The move was strongly opposed by Congress bveteran Balasaheb Vikhe-Patil and his son and state agriculture minister, Radhakrishna Vikhe-Patil.
A senior Congress leader and former MP, who did not want to be named, was harsh in his comment. He said the bank had been converted into a lending machine controlled by Pawars. he said he’d stopped attending meetings of the bank’s board of directors.