Sucheta Dalal :Pratibha Patil True Story R11; by Arun Shourie
Sucheta Dalal

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Pratibha Patil, True Story – by Arun Shourie  

July 3, 2007

'A big step for women… This shows India has a lot of respect for women… My nomination will inspire other women and help their empowerment…' – that is how Pratibha Patil described her selection as the UPA candidate for being our President. Loyalists, of course, went one better. 'A firm believer in women's causes and a tireless champion of spreading education among girls… One who always stands for a better deal for women… active role in checking such evils as female foeticide and dowry...' 'Working women of Mumbai hail…' 'Yes, Ma'am Commander' – Armymen look forward to reporting to first woman Supreme Commander of Armed Forces…

And all this within two days of her selection.

Her bio-data lists her 'special interests' as 'development of rural economy and welfare of women', and lists as evidence, 'Establishment of Pratibha Mahila Sahakari Bank at Jalgaon, Maharashtra… of Mahila Vikas Mahamandal…' It records her being Managing Trustee, Shram Sadhana Trust, as her being the 'Chief Promoter and Chairperson of Sugar Factory in Jalgaon District'. It records her having set up the Engineering College 'for the benefit of rural youth'…  

We start with the 'cooperative bank' she set up in her own name to help other women – the Pratibha Mahila Sahakari Bank.

Although this is listed in her bio-data, and although it has been referred to again and again by newspapers, how is it that neither the bio-data nor the newspapers mention that the bank has actually been liquidated? Under orders of the Reserve Bank of India, no less. And that too on the telling ground that its continuance would be prejudicial to the interests of depositors.

 

Brief history

Pratibha Patil established the bank in 1973 with herself as the chairperson, and with many members of her own family as its directors. She herself became a director for several terms. As for members of her family, they inter-changed, among themselves, the chairs of the Board of Directors in one 'election' after another. But while others changed places, Pratibha Patil continued as Founder Chairperson right till the demise of the bank.

 

Since the bank was not being managed properly, the Reserve Bank of India, in 1995, included it in its list of 'weak banks' and placed it under rehabilitation 'due to heavy erosion in its assets as observed in the inspection in March 1994.'

 

The RBI conducted an in-depth inspection of the bank's functioning again in 2002. In his order dated 25 February 2003, P.B . Mathur, Executive Director of the RBI, stated that the inspection revealed the following irregularities:

 

1: 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…

 

2: 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…

 

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

 

4: The Board has not made any concerted effort to improve the bank's financial position and bring it out of the weak status…

 

As a consequence, the RBI in its order stated: 'Having regard to all the facts, the Reserve Bank of India is satisfied that allowing the bank to carry on banking business any further would be detrimental to the interest of the present and future depositors and hence the license granted to the PRATIBHA MAHILA SAHAKARI BANK LTD. is hereby cancelled.'

 

Who got the loans?

But how did the assets of the bank get eroded? Why did this 'cooperative bank' – functioning as it must have been in the interests of its members – not take any action to retrieve the loans and instead endanger its very existence? Remember that the order of the RBI to liquidate the bank was not a sudden bolt. The RBI had put the bank on its list of 'weak banks' in 1995, that is a full eight years before the RBI had to decide that it just must be liquidated, and cancelled its license. Throughout these eight years why did Board not make any "concerted effort to improve the bank's financial position"?


-- Sucheta Dalal