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MSC Bank given clean chit in gilts trade

BS Banking Bureau

The state commissioner of co-operatives has given a clean chit to the Maharashtra State Co-operative Bank pertaining to its investments in government securities.

"The office of the Pune-based commissioner of co-operatives has completed the scrutiny of MSC Bank's books. It has found our investments in government securities in order and in accordance with the Reserve Bank of India guidelines," H R Shinde, officiating managing director, MSC Bank, said.

The commissioner's office is investigating investments in government securities by 658 urban co-operative banks and 31 district central co-operative banks in the state.

The probe comes in the wake of three DCCBs and four UCBs being caught in a cleft stick due to their dealings with brokers, who failed to deliver gilts for which they received payments from the banks. These banks have collectively lost Rs 2.62 billion due to non-delivery of securities.

Currently, the MSC Bank meets the gilts requirements (buying/selling) of 325 co-operative banks, including that of apex co-operative banks from other states and Maharashtra-based DCCBs and UCBs.

In 2001-02, MSC Bank logged a turnover (buying/selling gilts) of Rs 327.49 billion in the market and made a trading profit of Rs 1.22 billion. In the previous financial year, turnover of the bank in the gilts market was Rs 210.35 billion and it earned a trading profit of Rs 533 million.

"A few tainted banks are giving a bad name to the whole co-operative banking system. Now the public confidence in the co-operative banking system should be reinforced in view of the fact that the apex co-operative bank of the state has been cleared of any wrong-doing in investments in gilts," Shinde averred.

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