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Money > Business Headlines > Report May 8, 2002 | 1420 IST |
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Nabard report bares Nagpur bank messRenni Abraham The National Bank for Agriculture Rural Development inspection report on the Nagpur District Development Co-operative Bank said no internal investment policy and procedures were laid down by the board and half yearly review of banks investments was not forwarded to the apex bank. The board delegated power to chairman by resolution number 14 (6) on June 16, 1999, for purchase and sale of securities only through the Maharashtra State Cooperative Bank under the constituent subsidiary general ledger account with the Reserve Bank of India. Despite this, transactions were routed through five brokers in physical mode. No instances of reports of security certificates from brokers physically. Only book entries based on contract notes were received from brokers, the Nabard report said. Market quotes were not called for and rates provided by brokers in the contract note were not verified nor compared with the prices quoted in the market, it pointed out. "Though indicated in the contract note received from broker that brokerage had been charged at rates not exceeding the official scale of brokerage, the respective column was kept blank," it said. Even the counter-party involved in the purchase/sale of securities was not indicated in the contract note. This is tantamount to a direct purchase and sale of securities from brokers themselves, a violation of the RBI guidelines. Nabard found that the investment portfolio increased by a whopping 111 per cent from Rs 1.08 billion as on March 31, 2000, to Rs 2.27 billion as on March 31, 2001. The concentration of the investment was in securities at Rs 1.35 billion as on March 31, 2001, compared with Rs 105 million as on March 31, 2000. The reason for the increase in volumes has been attributed to the purchase and sale of securities through a broker since February 5, 2001, in addition to transactions under the SGL account with the RBI through MSCB, Mumbai. The bank had invested in Rs 400 million in Euro Discover India on September 15, 2000, against a mortgage of Home Trade shares. This is not a permitted avenue for investment in case of district central cooperative banks. Decision for such investment of Rs 400 million was taken as per resolution signed by 7 members of the board on September 14, 2000. The other features of the proposal received from Euro Discover:
Both the parties did not stick to any of the proposals. ALSO READ:
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