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Advances:

Through Resolution No.3/860 Dt.25-3-2010- It was brought to the


notice of the Board that the Banks repeated appeal to RBI and CC& RCS
to grant compromise settlement Scheme is not granted.

1) M/s Sai Chem Pharma, BL A/c No.16/2000 of King Kothi Branch for Rs.70
lakhs – Balance as on 31-3-2009 Rs.70,42,862/-

The party was sanctioned an amount of Rs.25 lakhs as business loan on


07.07.2000 and the proceeds were credited to their current account
No.296 maintained with the Branch. Subsequently on 27.11.2000
another amount of Rs.45 lakhs was sanctioned under the same loan
number and the proceeds were credited to Current Account No.296 and
the amounts were drawn through a self cheque.

As the party failed to repay the loan a case was filed before Joint
Registrar under Multistate Cooperative Societies Act and an award was
issued in favour of the Bank asking the borrower to pay Rs.91,27,100/-
with interest @ 22% p.a. As the borrower failed to pay the amounts as
per the award, the Bank attached the property under SARFESI Act.

The Borrower approached the Honorable Co-Operative Tribunal


contesting that they availed a loan of Rs.25 lakhs only. The Honorable
Cooperative Tribunal by their judgment Dt. 27.3.2008 set aside
the award of the Joint Registrar and held that only Rs.25 lakhs with
interest is recoverable from the party as the Bank could not produce
any documentary/supportive evidence like loan application, copy of
Board Resolution sanctioning the loan, Borrower’s acceptance, Transfer
entry vouchers to current account, current account ledger sheet, loan
sanction particulars etc., substantiating the release of Rs.45 lakhs as
additional loan. The Bank informed the Tribunal that the concerned
documents were in possession of CBCID. CBCID informed the Tribunal
through their representative that the relevant documents were handed
over to the Bank on 28-2-2003

Further the Tribunal also suggested the Bank to take steps to


investigate appropriate measures to recovery second loan amount of
Rs.45 lakhs from the persons responsible for causing loss to the Bank.
From March, 2008 to April, 2009, The bank did not preferred
any appeal or initiated action as to the suggestion of the
Tribunal or tried to locate the necessary documents that were
missing for preferring an appeal in High court.

The records as to the details of documents that were received back


from CB CID and to whom the documents were handed over are not on
record.

After receiving the award from Honorable Cooperative Tribunal , the


borrower had paid an amount of Rs.25 lakhs on______

The Bank obtained legal opinion on the judgment of the Hon’ble


Cooperative Tribunal, on 9-4-2009 in which the lawyer opined that
as the Bank could not produce any supportive documents and as
Tribunal passed the strictures against the Bank while disposing the
petition, however suggested to explore possibility of an out of court
settlement subject to extent guidelines applicable to the Bank. He also
suggested there is no certainty of winning the case even if the Bank
prefers an appeal.

As per office note Dt. Of the Recovery section, that the Borrower
came forward with a proposal for additional payment of Rs.19 lakhs as
full and final settlement totaling to Rs.62.98 lakhs.

The board by its resolution 3/709 dated 30.04.2009 resolved to accept


the proposal submitted by the borrower as full and final settlement
basing on the problems involved in the recovery of dues to the Bank,
Judgment of the Hon’ble Tribunal and the legal opinion obtained.

The Bank closed the account by adjusting the amounts received,


debiting to Share capital Account Rs.1,12,500/- and the balance of
Rs.50,31,362/- was debited to Reserve for Bad & Doubtful debts
account and delivered the property documents held as security.

There is no Board Resolution to write off the Balance in the account


settled in the compromise settlement. The Bank on 31-3-2010 reversed
the closing entries from Reserve for Bad & Doubtful Debts and opened
the Loan account.

As per reconstruction scheme of the Bank, loan accounts should


be closed as per GO.MS 4 or under MOTS(amendment to as
per GOMS-4). There is no compromise settlement scheme. The
permission obtained from RCS or RBI to close the loan accounts
as such is not on record.
2) . M/s Sree Mohan Distributors Private Ltd. BL A/c No.160/99 of Purani Haveli
Branch . Original advance Rs.99.00 lacs. –Outstanding as on 31-3-2009 was
Rs.1,24,28,222/- with interest from the date of NPA.

• The party availed the above loan against mortgage of property


admeasuring 900 Sq Yards near Cross Roads of Road No. 2 & 3 of
Banjara Hills. (shaikpet Mandal, Golconda Revenue Division) Hyderabad.
The account became NPA on 20.12.200.

• The party proposed for substitution of property of a residential


flat in 1st floor with 127.33 Sq Yards undivided share (out of
900 Sq.) Yards in 8-2-270/ A. with a built-up area of 1850 Sq
Feet which is reported to be in the adjoining site of another
900 sq yds.

• The Bank obtained legal opinion as to the title of the property


offered proposed to be offered as security and valuation
through approved valuer. The property (as per Board
Resolution) was valued at Rs.1,00,40,000/-.

• The Board by its resolution No.12/704 dt 9.4.09 resolved to


permit the party for substitution of property.

• While taking decision for substitution, the Valuation report from


approved valuer(Market value) for the property that was
returned (900 Sq Yards site near Cross Roads of Road No. 2 & 3
of Banjara Hills .(shaikpet Mandal,) was not obtained and
compared.

• The valuation of the property that was substituted is very less


compared to the original security.

3) M/s. Crown Builders: Mehidipatnam Branch BL 73/200 and CC-1


The Loan account was closed under GO.MS-4 on . The party
approached high court requesting that the loan account closed by them
should be considered under MOTS as the scheme was in vogue on the
date of closure. The Honorable High court directed the bank to refund
the difference of interest that was collected between MOTS and GOMS.4

By resolution No.5/722 Dt.30.4.09 the board reviewed the case .

Further by resolution No. 6/737 Dt.12.6.2009 resolved to refund the


difference of interest of Rs.83,32,975/- in BL no.73/2000 and
Rs.7,09,949/- in CC a/c. No.1 .

A total amount of Rs.90,42,924/- was refunded by the Bank in five


installments by debiting to Interest written Off under OTS scheme
account.

4. New Deccan Travels – Mahaboob Chowk Branch A/c No. CC-2

The account was closed by debiting an amount of Rs. to Share


capital account and Rs.1,73,234/- to Interest written off under MOTS
scheme. This account was not closed under MOTS. The permission from,
the Board to write off the account or permission from CC& RCS/RBI is
not on record for such one time settlement.

5. M/s Biz Links International : at Purani Haveli Branch- BL A/c No.131/98_


for Rs.7.00LACS : outstanding Balance Rs. Rs. 32,13,533/- with interest
from the date of NPA.

During the year the property held as mortgage to the Bank was
auctioned for Rs.25,60,000/- under Securitization Act .

The sale confirmation was given and the documents were delivered.

The valuation for selling the property taken was as per the valuation
obtained from the Registrar office of Assurances. and the market value
was shown as Rs.23,58,300/-.

6) Salma Sultana- HL a/c No.33/00 DOA: 14.9.00

Original Advance Rs.7.00 lacs .Balance as on 31-3-2009 Rs.9,01,059/-


at James street Branch- EP No.215/03 for Rs.8,86,062/-

a. During the year the property held as mortgage to the Bank was
auctioned for Rs.5,00,000/-.
b. The sale confirmation was given and the documents were delivered

c. The valuation for selling the property taken was as per the valuation
obtained from the Registrar office of Assurances. And the market value
was shownas Rsd.23,58,300/-

The Branch Manager Purani Haveli Branch recommended for closure of the
following loans.

Name of the Name of Loan Amount Total Security Amount


Borrower the Branch A/c Sanctioned Amount Held/Value outstanding
No./ Rs. repaid Rs. As on
Date Rs. 31-3-2009
Rs.
Shamsunissa Nizamabad PL 39 50,000/- 68,600/- Nil 33444
Begum
Ghousia Banu Barkas HL 11 98,000/- 1,07,900/- 59,380/- 99669
Mirza ABul Purani HL 1,00,000/- 1,83,000/- Nil 93132
Hassan Khan Haveli 26/97
Sajjad Ali Purani VL 51,597/- 73,553/- Nil 29064
Razvi Haveli 109/99

The Board in its meeting held on 24.07.2009 by Resolution No.05/754 directed


the Recoveries Department to prepare a profile of all the personal loans
indicating the amount advanced, amount recovered provision outstanding etc.
to enable the PIC to take a policy decision regarding the outstanding Personal
Loans Accounts.

The Purani Haveli Branch closed all the above loans on 07.10.2009 by
debiting Reserve for Bad and Doubtful debts and to Interest written Off under
OTS scheme account and returned the security documents of HL 11 without
any authority or resolution by the Board.

During the course of Audit only PL 39 and HL 11 accounts were reopened by


re-crediting to Reserve for Bad and Doubtful debts, at Administrative Office
only on as at 31-3-2010 and not affected at the Branch Records (for which
also there is no authority from any competent authority).
The loan accounts that were closed HL.26/97 and VL 109/99,and Personal No.
No.2691 debited to Interest written Off under OTS scheme account was not
reversed and the accounts stands closed, for which there is no resolution for
writing off the loans There is no compromise settlement scheme. The
permission obtained from RCS or RBI to close the loan accounts as such is not
on record.

Further

a) By resolution No.8/700 –-Dt.9-4-2009 --Aga Md. Mehdi- Personal Loan


No.2755 - outstanding balance Rs.17,359: The board resolved to accept the
proposal of the Branch Manager and to treat account as settled for total
compromise of Rs.12749/-.

b) Resolution No.9/701–-Dt.9-4-2009 -- Saif Ul- islam- Personal Loan No.


No.3041- the board resolved to accept the proposal of the Branch Manager
and to treat account as settled as Rs.19113/- was received from the
beginning of the loan.

c) A/c. No.10 Ms/. Cosmo Electricals – Purani Haveli Rs.9.0 lacs – By


resolution No.5/722 resolved to settle the account under compromise -–
Balance as on 31-3-2009 Rs. 12,52,620/-- loan account was closed and
documents were delivered-

d) M/s. Sushmani Plastic- Original advance Rs.4,50,000/- party got stay on


;auction in co-operative tribunal –total repayment up to 31-3-09
wasRs.475256/- ---offered to pay additional Rs.1,00,000/- in full and final
payment. By resolution No. 4/735 the board resolved to accept the
proposal and the MD is authorized to release the documents.

e) CC a/c. No.5- Mahaboob Nagar Branch – Ahmed Mia balance amount of


Rs.152874/- was closed by debiting to Interest written off under OTS on
7-10-09 and ws re-opened on 31-3-2010 – the account which under settled
during 2008-09 under One time settlement as per Board resolution

Was re-opened on 31-3-2010.


There is no compromise settlement scheme. The permission obtained
from RCS or RBI to close the loan accounts as such is not on record.

Interest written off under MOTS:

The Persons Incharge Committee by resolution No.11/868 dated 25.03.2010


resolved to write off an amount Rs.49,54,912/- (Rupees Forty Nine Lakhs
Fifty Four Thousand Nine Hundred and Twelve Only) being the balance
outstanding in six loan accounts that are closed under Modified One Time
Settlement Scheme during the year 2009 – 2010, as 100% provision was
already made under Reserve for Bad & Doubtful Debts.

Postal charges & Conveyance Expenses


During the year the Bank debited charges towards postage and
conveyance expenses to 416 Loan accounts amounting to Rs.21775/-
( mostly Personal Loans and loss asset). All the amounts that were
debited to loan accounts as conveyance charges were paid by Cash.

(Petrol expenses reimbursement to the staff). As per Banking Rules If


the conveyance expenses incurred on behalf of a Loan account the
amount should be debited to expenditure account and the amount
recovered if any be credited to the particular head of account and cash
should not be drawn.

Further, While debiting so, the branch debited the amounts even for
the loan accounts that were closed in the earlier years and was
accounted in the GL head for tallying purpose and not debited in the
Ledger account. But while preparing the NPA sheets those amounts
were shown as outstanding.

Purani Haveli- Srtaff Loan- Sd. Jaffer Abidi Zaidi- rs.50/-

Jasmes street A/c. no.47 Dholpur stones – Rs.200/-

Jahanuma a/c. No.1 Rs.25/-

Jahanuma A/c. No.37 Rs.125/-

Share Capital:
• As per modification to G.O. Ms.4 through G.O. Ms.306 the interest
payable on frozen deposits of individuals was converted to share capital
during the year 2008 – 2009 which is repayable after 6 years.

During the year an amount of Rs12,65,000/- was refunded by the Bank


to Sri M.T.K. Prakasa Reddy & to Sri P. Yadagiri Rao (depositors)
basing on the permission received from the Principal Secretary to
Government and RCS and was paid

The recommendation to RCS does not mention the details of the total
deposit held by the depositor, amounts paid by the Bank, amount held
in Frozen Deposit and in Share Capital a/c.

. Cumulative Frozen Deposits

• During the year the Bank made representation to Directorate of


Enforcement, Govt of India, Bangalore Zonal Office for repayment of
installment under G.O. Ms.4 and G.O. Ms.306 to Sri Sarsanwala and
Family Members (NRI depositors), whose cases are being dealt by them
under FEMA rules.

After repeated follow up by the Bank, they permitted ( Lt. dt.13-5-09)


to refund only those deposits that were received directly in to
Charminar Co-op Urban Bank Ltd., under Foreign Inward Remittances.

Accordingly bank paid Rs.8.00 Crores(received directly in to


Charminar Co-op Urban Bank Ltd) with proportionate interest thereon

Actually when the matter is with the Directorate of Enforcement, Government


of India, on the Foreign Inward Remittances, it is for the depositor to
approach them for clearance and produce the permission/ authorization to
the Bank for effecting the payment. The Board has permitted the MD to make
Official trips to all the connected places to contact Banks/ Govt Officlas in
regard to Foreign Inward Remittances.

Investments: Government Securities:

• During the year the Bank sold the investments held under Government
Securities in the name of the Bank with Book Value of

Rs. 18,12,07,000/- as on 31-3-2009 at a loss of Rs.2,73,46,665/- for


repayment of installments to DICGC and to Depositors

• During the year an amount of Rs.15.00 Crores was repaid to DICGC and
the outstanding Liability as on 31-3-2010 was Rs.64,81,39,823/-
• The investments held under Joint Account with DICGC are in the nature
of Fixed Deposits with SBI and are held to maturity.

• By resolution No.3/752 Dt.23.7.09 t he Board resolved to surrender the


Branch Licenses to RBI. But were not surrendered

There certain round amounts debited to Trevelling expenses like


6,000/- 10,000/-, 25000/- which does not bear the supportive vouchers

Many of the debit vouchers pertaining to debits to Advances accounts or


to expenditure accounts does not bear the signature of the Branch
Manager.

ZULFIKAR GROUP

During the year the Bank auctioned the properties mortgaged and held as security
for all the loans sanctioned to the above group as follows.

In respect of accounts under 6, 7, 8 the sale confirmation was given and the
Property documents were delivered. In respect of account shown below as 1,2 and
3 auctions were conducted,( for total consideration of Rs.33,00,000/- lacs) 15% of
sale value was received on and was kept in Sundry Creditors.
The latest valuation report (Market value) obtained from the approved valuer during
the year before conducting the auction is not available for verification. Whether any
other property available as security is not known.

7) Atlas Builders vide BL A/c No.207/97 at Purani Haveli branch dt.28.3.98


Original advance R.1,76,00,000/- balance outstanding as on 31-3-2009 was
Rs.1,75,88,360/- (E.P. amount was Rs.2,21,31,409/)

 Property was auctioned for Rs.14.00 lakhs. The sale confirmation was
given and documents were delivered.

 It is observed that the market value of the property shown for the
auction was Rs.14.94 lakhs. For the remaining outstanding Loan
amount, whether any other property available as security is not
known.

 The security value that was shown in the NPA statement as at 31-3-
2009 was Rs.1,02,74,500/-

 The latest valuation report(Market Value) from the approved valuer


was not obtained and was not compared. The matter was not referred
to Board for selling the property below the outstanding amount.

8) M/s Tarapoorwala Agencies vide BL A/c No.11/98 for Rs.2,16,00,000/- at


Purani Haveli Branch_Branch Date of advance 20.8.98 outstanding

as on 31-3-2009 Rs.2,00,27,280/- ( EP for Rs.2,83,66,471/-)

 Property mortgaged to the Bank was auctioned for Rs.64.00 lakhs. The
sale confirmation was given and documents were delivered. It is
observed that the E.P. amount was Rs.2,83,66,471/- and the market
value shown was Rs.79.92 lakhs.

 The latest valuation report obtained if any from the approved valuer
during the year before conducting the auction is not available for
verification.

 For the remaining outstanding Loan amount, whether any other


property available as security is not known.

 The matter was not referred to Board for selling the property par below
the outstanding amount.
 The security value that was shown in the NPA statement as at 31-3-
2009 was Rs.1,31,02,000/-/-

9) M/s Narasimha Printers vide CC A/c No.104 at Purani Haveli Branch for
Rs.2,50,00,000/-

 During the year the property mortgaged to the Bank was auctioned for
Rs.28.00 lakhs. The sale confirmation was given.

 It is observed that the E.P. amount was Rs.3,16,01,322 /- and the market
value shown was Rs.28.93 lacs. Whether any other property available as
security is not known

 The latest valuation report obtained if any from the approved valuer during
the year before conducting the auction is not available for verification

 The matter was not referred to Board for selling the property par below
the outstanding amount.

 The security value that was shown in the NPA statement as at 31-3-
2009 was Rs.2,96,09,000/-

The other three accounts

1.cc-103 M/s. Ram Software, Purani Haveli Branch :

2.cc 12 M/s. Jaloo Exhibitors Bholakpur branch

3. BL No.663/00 M/s. Jaloo Exhibitors Purani Havali branch.

The property held as security to the above 3 loan accounts was Agl. Land of
6.25 acres at Kthireddy palli Village, Moinabad Mandal, R.R. District