Baghat bank gets partial relief as auction of properties allowed

In a much-awaited relief, the Reserve Bank of India (RBI) today permitted the financially-crippled Baghat Urban Cooperative Bank here to conduct e-auction of its pledged properties.

Facing severe restrictions by the RBI, including a Rs 10,000 cap on withdrawal per customer since October 6, the bank management had sought certain relief from the apex bank to tide over its grim financial scenario. The over 80,000 customers were distressed with the cap as they failed to get back their own money.

Bank’s Managing Director (MD) Rajkumar confirmed that the RBI has permitted e-auction following which a two storey mortgaged 33 sq m property located at bypass fetched Rs 43.50 lakh today as against its reserve price of about 31 lakh. The said defaulter owned Rs 1.20 crore to the bank and his other properties would be put to auction soon. He said this was a major gain and they will soon auction properties valued at Rs 4 crore in the next fortnight.

He also informed that more funds would be received as the management will finalise the cases of 31 defaulters who have applied for one-time settlement (OTS) till September 30.

While the bank will fail to recover its 100 per cent pending dues as at least 40 per cent loan is waived off but the OTS scheme will help recover stuck up funds of around Rs 5 crore to boost the bank’s finances, opined the official.

Pertinently, the loaning facility to the bank was put on hold in April 2021 after the apex bank imposed a penalty owing to financial inadequacies.

The assistant registrar cooperative societies issued 23 arrest warrants against loan defaulters following which three were arrested by the Solan police, another three surrendered before the court and search was on to trace another three in Solan. At least six warrants have been forwarded to Shimla police for execution pertaining to Theog, Nerwa and Shimla. It remains to be seen how much money can be recovered from them once all are arrested.

The bank has made cash recovery of Rs 2.06 crore since October 8, thus marginally reducing the NPA which now stood at Rs 132.50 crore, informed the MD.

As many as 499 people have availed of Rs 290 crore loans. As many as 50 individuals have to repay a whopping Rs 72 crore. A majority of these cases are fraught with procedural inadequacies where officials have cared little to adhere to the banking norms.