The Madhavpura Mercantile Co-op Bank, which was in the centre of the controversy of the Rs 137 crore pay-order scam involving Ketan Parekh and Bank of India, has been found to have violated all norms in disbursing loans worth Rs 1,082.22 crore when it had sanctioned only Rs 299.95 crore, the Reserve Bank of India (RBI) has documented before the Joint Parliamentary Committee (JPC).
RBI said that an inspection of the Madhavpura's books revealed that out of the total amount advanced, Rs 843.57 crore pertained to companies in which Parekh or his close relatives were directors.
Madhavpura is also said to have given loans to at least 18 entities between 1999 and 2000 which were found either to be linked to Ketan Parekh or were major share brokers in their own right, the RBI investigations showed.
Among the more prominent names in the brokers list are - Triumph International Finance, Mukesh Babu Securities, V N Parekh Securities Pvt Ltd, KNP Securities Pvt Ltd, Sai Mangal Investrade Ltd, N H Securities Ltd, Panther Investrade Ltd, Panther Fincap, Luminate Investment Pvt Ltd, SBM Investment, Maniar Financial Services, Mukesh Babu Financial Services, Mukesh Babu Management Consultancy, Mukesh Babu Stock Broking, Sagar Leasing, Nakshatra Software, Goldfish Computer and Chitrakut Computer.
According to RBI, while the books of accounts of the bank did not reveal any gross violation during 1998-99, two years later, the inspections revealed blatant violation of the lending norms as well as directives on granting loans and advances to share brokers.
On March 13, RBI directed the bank not to accept fresh deposits or give fresh loans and also not to repay more than Rs 1,000 to any single depositor. The Ahmedabad regional office of the RBI is also conducting a full-fledged inspection of the bank's books and a report is expected to be submitted shortly, RBI told the JPC.
