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Suvarna Sahakari Bank

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Suvarna Sahakari Bank
Company typePrivate urban co-operative bank
IndustryBanking
Founded22 September 1969; 55 years ago (1969-09-22)
FounderDnyaneshwar Agashe
Defunct20 May 2009; 16 years ago (2009-05-20)
FateMerged with the Indian Overseas Bank
Headquarters
Shaniwar Peth, Pune, Maharashtra
,
India
Number of locations
12 (2009)
Area served
Key people
Revenue
 (2002)

Suvarna Sahakari Bank was an Indian private non-scheduled urban co-operative bank headquartered in Pune, Maharashtra, India, which operated from its incorporation on 22 September 1969 till its dissolution on 20 May 2009.

The bank rose to significant prominence in 2006, following a cricket administration voting scandal involving its founder Dnyaneshwar Agashe at the Board of Control for Cricket in India in 2004, which saw the bank fail between 2006 and 2008 amid allegations of scam against its board of directors; allegations which the media at the time speculated to be politically charged foul play against its board. The bank was finally dissolved and merged with the Indian Overseas Bank in 2009.

Founded to serve the banking needs of middle class Marathi people, the bank was initially known for its credit schemes in support of small-scale industries, which were supported by the Reserve Bank of India, and cited by B. R. Ambedkar in 1976 and by the Parliament of India in 1983. The bank's failure amidst an alleged scam case, along with its historical business administration practices, have been subsequently widely cited in academic research about the Indian banking sector.

History

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The bank was started by Dnyaneshwar Agashe on 22 September 1969,[1][2] with S. K. Wankhede inaugurating the opening of its first branch.[3] The bank was started to cater primarily to the banking needs of Pune's middle class Marathi population.[4][5] The bank was classified as an urban cooperative bank,[6] was designated as a non-scheduled bank,[7] and was an authorised credit guarantor for small-scale industries by February 1971.[8]

By 1972, the bank was headquartered in Shaniwar Peth, Pune,[9] with the Reserve Bank of India approving the bank's ability to loan credit schemes for small-scale industries that same year.[10] Panditrao Agashe also served as the bank's manager at the time.[11] In 1976, the bank's schemes featured in B. R. Ambedkar's articles on family planning.[12] In 1983, the bank was part of a report on co-operative banks issued by the Rajya Sabha of the Parliament of India.[13]

From 1990, the bank had nine branches in Pune, two in Mumbai, and one in Shreepur, until the time of its dissolution in 2009.[14] In 1994, Mandar Agashe was appointed as a director to the bank's board of directors.[15] In 1998, the bank organised an inter-bank cricket tournament in honour of Panditrao Agashe.[16] By 2002, the bank initiated online banking, and was reportedly worth ₹500 crore.[17] By 2003, the bank had installed Sarvatra Technologies' proprietary point of sale terminal.[18] In 2004, Ashutosh Agashe was elected the bank's chairman.[19]

Scam case of 2008–2009

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Background in cricket administration: 2004

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Main article: Dnyaneshwar Agashe § Maharashtra Cricket Association factionalism disputes: 2003–2006

In September 2004, amid factionalism disputes between Dnyaneshwar Agashe and Ajay Shirke at the Maharashtra Cricket Association, then incumbent president of the Board of Control for Cricket in India, Jagmohan Dalmiya, disallowed Agashe to attend its annual general meeting and denied him his right to vote in that year's presidential elections of the board.[20][21] The subsequent denial to Agashe to exercise his franchise saw Sharad Pawar losing the election for the post of the President of the Board of Control for Cricket in India by a single vote, that would have allegedly been Agashe's.[22][23]

Various sources claimed that Agashe's actions, in delaying to arrive at the elections in Kolkata or taking immediate objection against his voting ban, were perceived as a deliberate slight by Pawar and his supporters,[24] with the sources further alleging that Agashe's Pune-based businesses started to have trouble as a result of his failure to get Pawar elected as president of the board, in a then Nationalist Congress Party-controlled Maharashtra.[24]

Initial financial troubles: 2006–2008

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By September 2006, the bank was having financial troubles, with initial non performing assets totalling ₹125 crore, at 13% against the 7% maximum allowable under the norms that had been put forth by the Reserve Bank of India.[25] Within that same month, the bank was put under moratorium by the Reserve Bank of India,[26][27] and the board of directors for the bank was superseded soon after, and district deputy registrar Sanjay Bhosale was appointed as the bank's administrator.[28] Cosmos Bank initially announced plans to acquire the bank, and the subsequent announcement of the proposed merger led to large-scale panic withdrawals by Suvarna Sahakari Bank's customers within that same month.[29] The moratorium officially came into effect on 14 October 2006, with the media demanding that the Reserve Bank of India launch an investigation of the bank's auditors.[30]

In June 2007, following the order of moratorium, the State Department of Cooperation appointed Mukund Ghaisas as administrator at the bank,[31] and it was reported that the bank would resume regular operations by late 2007.[32] That same month, Hotel Ranjeet, a hotel owned by Agashe was auctioned off in order to recover dues owed to depositors,[33] followed by the sale of Agashe's majority stake in The Kolhapur Steel Ltd., a steel foundry in Kolhapur, to the Kirloskar Brothers in September 2007 for the same reasons.[34]

In February 2008, many of the bank's depositors held demonstrations at Agashe's Aundh residence and threatened criminal actions against the Agashe family.[4] In April 2008, after the non-performing assets of the bank grew to more than 43%, account holders and depositors held a day long fast to protest against the misinformation provided in regards to the alleged duped loans.[35] By May 2008, the Reserve Bank of India gave the bank permission to pay interest on deposits made from January to June 2008, while Agashe had mortgaged personal property worth ₹200 crore in lieu of the recovery of the deposits worth ₹725 crore.[36] In June 2008, Saraswat Co-operative Bank Ltd also showed an interest in acquiring the bank.[37]

Allegations and arrests: November–December 2008

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On 22 November 2008, Agashe, along with fourteen other board members, including his sons Mandar and Ashutosh,[38][39] was taken into judicial custody, and the bank business was charged with a ₹436.74 crore scam allegation.[40][41] The arrest warrant stated that the accused, along with six others, allegedly misused their rights and sanctioned loans mostly to firms owned by themselves and then defaulted the loans, thereby duping the bank's depositors.[42] The arrests were made after a complaint was filed by Rajesh Jadhavar, a special auditor with the Cooperatives Department under the Government of Maharashtra.[42] The complaint was filed with the Ministry of Home Affairs of Maharashtra.[43] The case was designated as an economic crime,[44] however depositors and the media were not satisfied with the arrests, with Agashe promising a speedy merger by the end of that year.[5]

The judicial magistrate remanded Agashe and the fourteen other suspects to police custody on 22 November 2008, with provisions of medical assistance if required, citing the senior citizenship of a majority of the accused.[45] The economic offences wing of the crime branch conducted a raid of all the homes of the accused, including Agashe's Aundh residence to recover ₹1.5 lakhs. The prosecution stated that upon discovery of the money, further interrogation of the accused was necessary and alleged that the accused had disbursed loans to people close to them, thereby flouting Reserve Bank of India regulations.[46]

Between 23 and 30 November 2008, Agashe's defence counsel claimed that Agashe and his family had sold off various properties for the repayment of the loan. The defence counsel also stated that the Agashe family had extended full cooperation with the police and submitted that the family would repay another ₹80 crore after the issue of the bank's merger was settled. The defence also raised the issue of foul play, when the first information reporting of the allegations was not produced before the court three days after registering the case, and further contended that the loans had been sanctioned by the bank's disbursement committee, a committee Agashe was not a member of.[46] The bail applications filed at the time for Agashe, his wife, and his sister were subsequently rejected.[47][48]

While in custody, Agashe's health deteriorated and he was admitted to Sassoon Hospital on 22 December 2008, suffering from severe diabetes and gangrene,[49] for which he had previously been denied medical assistance.[43] He later died of a heart attack from complications of diabetes at Sassoon Hospital on 2 January 2009.[50][51] Agashe's son Ashutosh was subsequently released on bail later that same month,[49] with his son Mandar being released in March 2009.[52]

Aftermath: January–May 2009

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Upon Agashe's death, the depositors of the bank approached the Indian Overseas Bank for help after the bank's accumulated losses were estimated at over ₹350 crore.[27][53] The bank, having been designated as a bad bank,[54] was allowed by the Reserve Bank of India to be acquired by the Indian Overseas Bank in January 2009,[55][56] with the agreed merger proceeding in March of that year.[57]

The merger was completed by 20 May 2009,[58] and the bank's branches reopened as branches of the Indian Overseas Bank in late May to much media attention.[59] The transition of operations resulted in ₹14 crore worth deposits being withdrawn that same month,[60] with the Indian Overseas bank reporting in August 2009 that 70 percent of Suvarna Sahakari's clientele has been retained after the merger.[61] In May 2010, the Indian Overseas Bank further reported that an estimated 80 percent recovery of the bank's debtors would be complete by the end of that year.[62]

Legacy

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The bank's alleged scam case, its failure amidst a political scandal, and subsequent merger have been widely cited in the Indian banking sector,[63] and in academic research about cooperative banking.[64] The bank's employee relationships, business management, and customer relationship management have also been the subject of subsequent studies in academia.[65]

References

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  1. ^ "Dnyaneshwar Agashe cremated". The Times of India. TNN. 5 January 2009. Archived from the original on 14 January 2025. Retrieved 15 September 2018.
  2. ^ "Ex-director of Suvarna bank dies". The Times of India. TNN. 4 January 2009. Archived from the original on 25 April 2019. Retrieved 15 September 2018.
  3. ^ Barve, Vartak & Belvalkar 2002, p. 72.
  4. ^ a b "Suvarna protestors halt traffic". The Times of India. Pune. 11 February 2008. Archived from the original on 22 December 2017. Retrieved 15 September 2018.
  5. ^ a b "Arrests will not solve problems: depositors". The Times of India. Pune. TNN. 23 November 2008. Archived from the original on 31 March 2025. Retrieved 25 August 2022.
  6. ^ Kumar, K. Ram (20 June 2021). "PMC Bank's resolution could become a template for rescuing other weak UCBs". Business Line. Mumbai. Archived from the original on 20 June 2021. Retrieved 25 August 2022.
  7. ^ Narula & Singh 2023, p. 9.
  8. ^ Reserve Bank of India 1971, p. 93.
  9. ^ Mahratta Chamber of Commerce, Industries and Agriculture 1972, p. 126.
  10. ^ Reserve Bank of India 1972, p. 140.
  11. ^ Mahratta Chamber of Commerce, Industries and Agriculture 1972, p. 307.
  12. ^ Mangudkar 1976, pp. 66–67.
  13. ^ Parliament of India 1983, p. 277.
  14. ^ Multiple sources:
  15. ^ Ministry of Commerce & Industry 1999, p. 14.
  16. ^ "Inter-bank cricket from Oct 28". The Indian Express. Express News Service. 26 October 1998. Archived from the original on 17 August 2022. Retrieved 17 August 2022.
  17. ^ Advani 2002, p. 24.
  18. ^ "New software boon for co-op. bank clients". The Times of India. Pune. TNN. 25 July 2003. Archived from the original on 3 March 2023. Retrieved 25 August 2022.
  19. ^ "Agashe heads Suvarna Sahakari". The Times of India. 3 September 2004. Archived from the original on 16 November 2017. Retrieved 25 August 2022.
  20. ^ "Agashe, Modi to move court". The Times of India. 1 October 2004. Archived from the original on 5 January 2019. Retrieved 8 October 2022.
  21. ^ "Factionalism in state scuttled Pawar's chances". The Times of India. Pune/Kolkata. TNN. 30 September 2004. Archived from the original on 27 April 2023. Retrieved 12 March 2017.
  22. ^ "BCCI to hold AGM on January 27". The Tribune. Chennai. Press Trust of India. 15 January 2005. Archived from the original on 15 January 2005. Retrieved 17 December 2017.
  23. ^ "Pawar out on Dalmiya googly: NCP leader not to move court". Business Standard. Kolkata. 30 September 2004. Archived from the original on 22 December 2017. Retrieved 17 December 2017.
  24. ^ a b Multiple sources:
  25. ^ "Suvarna may merge with Cosmos Co-operative". Business Standard. Mumbai/Pune. 12 September 2006. Archived from the original on 23 April 2019. Retrieved 25 August 2022.
  26. ^ "Suvarna Sahakari Bank placed under moratorium". The Financial Express. Pune. 16 September 2006. Archived from the original on 16 November 2017. Retrieved 15 September 2018.
  27. ^ a b Nambiar, Nisha (4 January 2009). "Agashe dead; depositors now pin hopes on IOB". The Indian Express. Archived from the original on 16 April 2023. Retrieved 18 August 2016.
  28. ^ "Suvarna bank board superseded". The Times of India. TNN. 16 September 2006. Archived from the original on 22 December 2017. Retrieved 25 August 2022.
  29. ^ Multiple sources:
  30. ^ "Role of RBI, auditors must be investigated". Pune Mirror. 4 December 2008. Archived from the original on 15 May 2025. Retrieved 16 August 2022.
  31. ^ "Ghaisas Suvarna bank administrator". The Times of India. TNN. 1 June 2007. Archived from the original on 22 December 2017. Retrieved 25 August 2022.
  32. ^ "Suvarna nearing normal functions". The Times of India. Pune. TNN. 4 June 2007. Archived from the original on 17 August 2022. Retrieved 17 August 2022.
  33. ^ "City hotel auctioned to recover dues". The Times of India. 21 June 2007. Archived from the original on 5 January 2019. Retrieved 25 August 2022.
  34. ^ "Kirloskars take over Kolhapur Steel". Business Standard. Pune. 20 September 2007. Archived from the original on 29 May 2025. Retrieved 15 May 2025.
  35. ^ "Token fast outside Suvarna bank today". The Times of India. Pune. TNN. 28 April 2008. Archived from the original on 31 March 2025. Retrieved 25 August 2022.
  36. ^ "Suvarna to pay interest on deposits from Jan". The Times of India. 19 May 2008. Archived from the original on 5 January 2019. Retrieved 25 August 2022.
  37. ^ "Saraswat wants to take over Suvarna". The Times of India. No. 23. Mumbai. Times News Network. 20 June 2008. ProQuest 1922678696. Retrieved 30 May 2025.
  38. ^ "Mandar Agashe in police custody". DNA. 2 May 2009. Retrieved 25 August 2022 – via National Library of Catalonia.
  39. ^ "Son's bail rejected". DNA. 1 April 2009. Retrieved 25 August 2022 – via National Library of Catalonia.
  40. ^ "Agashe, others sent to judicial custody". The Times of India. Pune. TNN. 25 November 2008. Archived from the original on 27 November 2017. Retrieved 12 March 2017.
  41. ^ "Cooperative bank fraud lands 21 in soup, 15 arrested". The Indian Express. Pune. Express News Service. 23 November 2008. Archived from the original on 12 April 2025. Retrieved 15 September 2018.
  42. ^ a b "Pune coop bank in Rs 436-cr scam". Business Standard. Pune. 23 November 2008. Archived from the original on 22 August 2016. Retrieved 17 August 2016.
  43. ^ a b Khanna 2010.
  44. ^ "Cops can't register case as co-operation dept probe still on'". The Times of India. Pune. TNN. 23 November 2008. Archived from the original on 17 August 2022. Retrieved 17 August 2022.
  45. ^ "Suvarna co-op bank case: 15 arrested". The Times of India. Pune. TNN. 23 November 2008. Archived from the original on 14 November 2017. Retrieved 25 August 2022.
  46. ^ a b "Agashe, others sent to judicial custody". The Times of India. Pune. TNN. 25 November 2008. Archived from the original on 14 November 2017. Retrieved 25 August 2022.
  47. ^ "Suvarna case: Court defers order on bail". The Times of India. 26 November 2008. Archived from the original on 16 November 2018. Retrieved 25 August 2022.
  48. ^ "Court rejects bail plea in Survarna case". The Times of India. 30 November 2008. Archived from the original on 16 November 2018. Retrieved 25 August 2022.
  49. ^ a b "Son attends funeral under police eye". The Indian Express. Pune. Express News Network. 4 January 2009. Archived from the original on 9 September 2018. Retrieved 25 August 2022.
  50. ^ "Former MCA chief Agashe dies". Web India 123. Pune. 3 January 2009. Archived from the original on 27 February 2017. Retrieved 25 August 2022.
  51. ^ Chavan, Vijay (4 January 2009). "Deadend!". Pune Mirror. Archived from the original on 9 September 2018. Retrieved 25 August 2022.
  52. ^ "Mandar will stay with cops". Pune Mirror. 7 March 2009. Archived from the original on 19 January 2022. Retrieved 29 January 2022.
  53. ^ "Hope for depositors as IOB bids for Suvarna". The Times of India. 8 April 2008. Archived from the original on 9 September 2018. Retrieved 25 August 2022.
  54. ^ Ray, Bandyopadhyay & Basu 2021, pp. 1994, 2002.
  55. ^ "Suvarna Sahakari Bank may merge with IOB". Business Standard. Mumbai. 26 November 2008. Archived from the original on 3 February 2016. Retrieved 15 September 2018.
  56. ^ "IOB gets nod to acquire Pune-based co-op bank". Business Standard. Chennai. 3 February 2009. Archived from the original on 16 November 2018. Retrieved 15 September 2018.
  57. ^ Multiple sources:
  58. ^ "IOB posts 17 per cent rise in business". The Hindu. Chennai. 30 October 2009. Archived from the original on 25 January 2021. Retrieved 25 August 2022.
  59. ^ Multiple sources:
  60. ^ Nambiar, Nisha (27 May 2009). "Week after Suvarna takeover, a Rs 14-cr deposit dip". The Indian Express. Pune. Archived from the original on 17 January 2022. Retrieved 25 August 2022.
  61. ^ "70 per cent of Suvarna Bank clientele retained, says IOB". Indian Express. Mumbai. 27 August 2009. ProQuest 238309785. Retrieved 30 May 2025.
  62. ^ Paranjpe, Shailendra (21 May 2010). "IOB: Suvarna Bank recovery on track". Daily News & Analysis. Mumbai. ProQuest 241885731. Retrieved 30 May 2025.
  63. ^ Multiple sources:
  64. ^ Talwar 2011, p. 42; Joseph & Emaldarani 2022, p. 1.
  65. ^ Srivastava & Srivastava 2012, p. 388; Srinivasan 2021, pp. 8–12, 18; Narula & Singh 2023.

Bibliography

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Academic articles

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