The National Bank for Agriculture and Rural Development (NABARD) has called in for a show cause notice to the Sangli District Central Cooperative Bank (SDCCB). The cooperative bank has been questioned in terms of wrong loans which have led to a negative net worth in the bank's books.
The books of the bank showed excess credit than deposits for both 2008-09 and 2009-10. Loans worth Rs 168 crore were given out to three cooperative sugar factories even when their accounts were nearing defaults.
Also, NABARD has said that the bank has wrongly allotted 5% worth dividend to member credit societies.
According to SDCCB chairman Dilip Vagyani, the action from NABARD is "politically motivated."
"Accounts of the latest year show that our bank has recorded profit worth Rs 18 crore. NABARD's hasty action only suggests it was done on other grounds," Vagyani said.