A close look at last year’s annual report of
Maharashtra State Co-Operative Bank (MSCB) reveals that important pages are
missing from the auditor’s report—namely the Audit Memorandum and annexure (Part
A, B and C). This is how companies hide crucial information from the
stakeholders and keeps them in the dark. Obtaining even a single piece of
information, the stakeholder is made to run from pillar to post, as always.
According to Page 54 of the 2011 MSCB Annual
Report, the auditors, Batliboi & Purohit had mentioned;
“In our opinion and to the best of our information and according to
explanations given to us, the said accounts, read together with the Significant
Accounting Policies in schedule No XI and Notes forming part of accounts in
schedule No XII and our Comments and Observations in the Audit Memorandum (Part
A, B and C) of the even date, gives the information required by the Maharashtra
Co-operative Societies Act, 1960 the Rules 1961 made there under and Banking
Regulation Act, 1949 (as applicable to Co-operative Bank), in the manner so
required, give a true and fair view.”
Moneylife’s attempt to locate
the Audit Memorandum or its comments and observations, especially Part A, B and
C (the annexure) of the memorandum, which is material and important for
stakeholders and depositors, drew a blank.
We sent an email was sent to
Batliboi & Purohit’s partner, Raman Hangekar, who signed off the Audit
Report, requesting copies of the same. However, he sent a terse reply that said,
“Please refer to Maharashtra State Cooperative Bank”. That’s right—a
one liner. Thereafter, a mail
and letter was sent to MSCB requesting the same. No email reply has been
received so far.
We are now in
the process of writing to the Institute of Chartered
Accountants of India (ICAI), the body that regulates the
accounting profession, to take action and ensure
that MSCB’s Audit Memorandum and its annexures are duly disclosed.
Moneylife had earlier written a piece on
Maharashtra State
Co-Operative Bank and cited that it was in deep financial trouble due to
its suspicious loan distribution to some of its favoured co-operative banks as
well as some loss-making sugar co-operative factories. The very next year, a
press note was issued, from its administrators, stating, “The liquidity position
of the bank is adequate to meet its demands towards deposits.” This is despite
its negative net worth of Rs144.22 crore for the 2009-10 fiscal.
In the
2010-11 fiscal, according to the annual report, it is
pertinent to note that the company was imposed a penalty of Rs5 lakh, for
non-compliance of Reserve Bank of India (RBI) directions issued u/s 35A of the
Banking Regulation Act, 1949 (The Act). According to Section 35A of the Act, it
gives RBI the powers to give directions to a bank, in the interest of depositors
and to safeguard their interests.
