Truck loan scam: Bank of Maharashtra suspends three officials
The bank has issued an order of suspension against three senior officials who were involved in sanctioning a loan worth Rs 600-700 crore to SVLL, violating banking guidelines.
After a series of exclusive stories published by Indiatoday.in in the month of February 2015 against the Bank of Maharashtra and Surat-based fleet operator Siddhi Vinayak Logistics Ltd (SVLL), the nationalised bank decided to take action.
The bank has issued an order of suspension against three senior officials who were involved in sanctioning a loan worth Rs 600-700 crore to SVLL, violating banking guidelines.
These three suspended bank officials are:
1) P N Deshpande, General Manager with present portfolio of Resource Planning, Government Business, Marketing & Publicity, ABC, CPIO and SLBC.
2) Rajesh M Jain, Assistant General Manager, Asset Recovery Branch, Kolkata.
3) A M Menon, Assistant General Manager at Amravati Branch, Maharashtra.
The order issued to Rajesh Jain by the HR Dept of the Bank of Maharashtra says, "Mr Rajesh Jain (PF No. 14250), AGM, Asset Recovery Branch, Kolkata is reported to have committed certain acts, as stated below, which prima facie are in violation of procedure and guidelines and are also detrimental to the interest of the Bank."
"His above alleged irregularities if proved, are acts of misconducts as per Bank of Maharashtra Officer Employees' (Conduct) Regulations , 1976. Pending detailed enquiry in all the accounts, Rajesh Jain is placed under suspension with immediate effect, " the Bank's order says.
However, Jain is entitled to a subsistence allowance as per guidelines. The subsistence allowance shall, however, be paid on production of requisite certification that he is not engaged in any other employment, business, professional or vocation.
The Bank has passed similar suspension orders against two other officials: General Manager P N Deshpande and Assistant General Manager Mr Menon. All three officials would remain under suspension till the Bank concludes its internal investigation in the Rs 600-700 crore loan-turning-NAP case.
On February 2, 2015, Indiatoday.in had published an exclusive online story "Bank of Maharashtra's major defaulter is a Surat fleet operator", exposing how one of the India's leading fleet operator SVLL, which claims to be one of the fastest growing road transportation company with branches all over India and fleet strength of 5,875 pre-owned vehicles - has turned into the Bank of Maharashtra's biggest defaulter.
The article exposed how the senior officials and the management of the bank were quite aware of the present status of the SVLL portfolio.
On February 13, 2015, Bank of Maharashtra had its board meeting to discuss its financial position for year 2014-15, in which a major agenda was to take a crucial decision on SVLL portfolio.
A forensic audit and legal action was also proposed by the bank officials in the board meeting against SVLL. Moreover, "staff accountability is also being examined separately and necessary action will be taken against the staff concerned" was proposed.
Background
In 2012, SVLL launched its corporate responsibility scheme called "Chalak Se Malak" to help drivers (by making them equity shareholders). In the same year, SVLL captured headlines by placing its largest order to Tata Motors of 1,314 M and HCV trucks. The value of the order was estimated to be around Rs 225 crore. Under the Chalak Se Malak scheme, SVLL took crores of rupees as loan from the Bank of Maharashtra.
The portfolio documents with the Bank of Maharashtra dated December 31, 2012 points out "to reward the loyalty of hundreds of truck drivers employed with SVLL under this scheme, the company would sell its used trucks to the drivers at mutually agreed fair prices based on valuation. Later, the driver will operate the truck as his own, but continues to have it deployed with SVLL as a subcontractor. Out of the bills payable to the driver-cum-owner, SVLL will deduct the installments on account of price of the truck. On full payment, the truck would be transferred in the name of the driver. During the period of such payment, the loans availed by the company (SVLL) from various lenders would continue."
After due discussion, the bank formulated a pattern on the lines of the scheme for financing Small Road Transport Operator (SRTOs) and issued loans worth crores of rupees with various concessions, such as a concession of 0.5 per cent in the processing fee, deviation in age limit of the truck to be considered on a case-to-case basis and the margin to be kept as under 30 per cent for trucks aged less than four years, 35 per cent for trucks aged four years and 40 per cent for trucks aged five years.
The bank officials assured it's management that all advances will be classified under priority sector (about Rs 100 crore), all advances will be covered under CGTMSE, and around 20 per cent of the advances may be classified under weaker sector and assured repayment through SVLL linkage. But nothing as such happened. In 2015, bank officials are still struggling to get their money back from SVLL.
The Pune branches of the Bank of Maharashtra played a major role. Specifically, one indirect term loan to drivers was given from Model Colony Branch, Pune, to 500 accounts of Rs.100 crore, and another indirect term loan to various drivers was given from Deccan Gymkhana, Pune, to 2,375 accounts of Rs 652 crore.
Documents available with Indiatoday.in shows that by May 2014, Bank of Maharashtra had direct exposure to the group companies of SVLL of Rs 259 crore, and its indirect exposure to the group by way of above SRTO finances were Rs 645 crore.
The complete investigation report would be handed over to the Reserve Bank of India and a few other agencies after a few months.
But the question remains, how would Bank of Maharashtra recover the loan amount from a willful defaulter SVLL - which claims to have a strong political backup in Gujarat.