In response to a public interest litigation alleging irregularities to the tune of Rs 1,500 crore in Mumbai District Central Cooperative Bank, the Bombay High Court has issued notices to its directors and the co-operative department of Maharashtra.

A division bench headed by Justice S F Vajifdar, which heard the PIL yesterday, sought replies in two weeks.

Petitioners Ravindra Sawant and Chandraprakash Singh have alleged irregularities in the bank which is the apex bank of all cooperative societies in Mumbai.

They want appointment of an administrator and an inquiry. MDCCB gave loans to cooperative societies in violation of rules and in most cases borrowers defaulted, the petition says.

In some cases loans were advanced despite adverse reports by loan inspectors of MDCCB or they were sanctioned without any inspection report whatsoever, the petitioners allege.

Before sanctioning the loans to workers cooperative credit societies and women’s cooperative bodies, the bank did not verify whether the borrower institutes were actually functioning.

Another allegation is that MDCCB kept Rs 1,000 crore with Madhya Pradesh State Industrial Corporation as fixed deposits but it failed to get the principal amount back and waived Rs 150 crore in interest without the permission of Reserve Bank and National Bank for Rural Development (NABARD).

Representations to RBI and NABARD did not get any response and reports of probe conducted by NABARD and state cooperation department were not made public, the PIL says.

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