THE UTOPIAN VILLAGE

The Nagpur Times brought another news item in 1986 regarding corrupt practices. In an industrial village 20 KM away from Nagpur the branch disbursed loans for self employment indiscriminately under a Govt. sponsored program for 3 years and no Industrial unit was existing. The Manager was summoned and he produced all relevant loan records which were found in tact .The borrowers deserted the place and closed their business after availing loans and the subsidy was the version.The Bank wanted to sue the press.The paper stated that about 300 loans were sanctioned and the loss would be in lakhs and the bank was involved. The branch was rewarded earlier and was identified by the Dt.Admn Authorities as the best one. I was asked to give a report on these basis to send to H O treating the press report as a baseless one. My stand was that the report would be furnished after a visit to the branch and perusal of records. During my visit the Zonal Manager and the Head of the dept accompanied me. I spent nearly 2 hours in the branch going through the loan files neatly arranged . All the required procedures were found followed and documents collected by the branch. Regular Inspections were carried out and observations recorded truly by them. .The rented premises where the business started were inspected by the branch and the owners declarations etc found filed. The drafts or pay orders were given to the dealers towards purchase of materials and machinery. The branch financed for different units that manufacture pins to projectors and trade in salt to camphor. But all vanished and no units existed. Only 10 or 15 units were running. Apparently no irregularities were found .I found a whimsical smile in the corner of the lips of my boss. But I was thinking in a different way. Why so much care was taken by the branch to follow the procedures meticulously which a normal branch with so much business can not accomplish. Why the branch had gone one step ahead to get the inspection reports printed with all required and additional information incorporated? Why the signatures of the borrowers were obtained during inspections which was not a practice at all.Why this additional safety measure was taken? How inspection could be carried out on a single day in 30 to 40 units? Could it be the fact that the signatures in inspection reports were obtained before disbursement ,during processing of loan papers itself? I told my boss that further investigation is required to find out the truth. The result: Four middle men were traced out who opened accounts in various Co operative Banks in the name of fictitious trader and manufacturing companies to whom the branch was issuing pay orders in the loan accounts. They were returning the loan amount minus subsidy amount to the borrowers keeping the govt. subsidy amount (25 % of the loan amount) and need not to tell how they share the subsidy amount.The middle men admitted everything in writing and many borrowers also. 90% of borrowers did not start any business. Funds were misused. Suspension followed.

CBI then came in picture. ended in conviction. An additional precautionary measure ie obtaining signature of borrowers in the Inspection report resorted by the Manager raised eyebrow here.

This time I kept a smile in the corner of my lips