Pratibha Patil was the founding chairperson of the Bank and later, along with a number of her relatives, was one of its Directors. She is currently one of the 34 respondents in an ongoing case in the Aurangabad bench of the Bombay High Court on the subject of mismanagement of the bank and misappropriation of funds by its Managing Directors.

Evidently, it was after receiving a sheaf of complaints from the Cooperative Bank Employees Union and its small depositors that the Finance Ministry (in a letter dated April 26, 2002) asked the RBI to inquire into allegations of irregularities.

In its 28-page inspection report, the RBI noted that the bank had been declared “weak” since 1995 and after the 2002 inspection was being classified as “sick.” The report noted:

• The real or exchangeable value of the bank’s paid-up share capital and reserves stands at minus Rs 197.67 lakh. Thus, the bank is not having adequate assets to meet its liabilities. The bank does not comply with the RBI’s requirement of minimum share capital.

• The ratio of the net erosion to net owned funds of the bank is as high as 312.4% and the erosion in the value of the bank’s assets has not only wiped out its owned funds but has also affected the deposits to the extent of Rs 197.67 lakh, forming 26% of total deposits.

• The gross NPAs of the bank, that is loans that have gone bad, amount to 65.8% of the total loans and advances.

... contd.