Rajasthan CM Ashok Gehlot urges Prime Minister Modi to annul amendments in BR Act

In a letter to the Prime Minister Rajasthan Chief Minister Ashok Gehlot has urged the Centre to repeal the amendments made in the Banking Regulations Act in September. The amendments passed by Parliament vested the control of multi-state cooperative banks to the Reserve Bank of India.

The state governments have effectively lost control over the cooperative banks in the state and can no longer take punitive measures in case financial irregularities are detected. Describing the amendments as impractical, Gehlot said that they are against the principles and spirit of cooperative banks and fly against the principle of ‘one shareholder, one vote’.

The amendments will render state cooperative laws like the Rajasthan State Cooperative Societies Act irrelevant. The amendments will affect 35 urban cooperative banks,29 Kendriya Sahkari banks and apex cooperative banks in the state, the Rajasthan CM mentioned. The previous structure and provisions must be restored in the interest of cooperatives, he urged the PM.

In his letter the chief minister is believed to have pointed out the various cases of fraud and cheating in which several multi-state cooperative banks were found to have been engaged. In some cases the state government has already initiated action and inquiry while in some cases arrests have been made.

Claiming that 73,000 investors, mostly peasants and farmers, were defrauded to the tune of Rs 1420 crores by the multi-state cooperative societies, the chief minister expressed his doubts if the duped would ever get their money now with the state losing the power to investigate and take punitive action.

Sanjeevani Society, a Jodhpur based company, in which Union minister Gajendra Singh Shekhawat was a director, is said to be one of the principal offenders. The state government has ordered a probe against Sanjeevani. Apart from Sanjeevani Society, another credit society, Adarsh Credit has also duped a large number of investors of Rs 4000 crores fraudulently.

"As multi-state cooperative societies are under the administrative control of the Government of India, Prime Minister Narendra Modiji should take remedial measures by directing the Central Registrar to authorise states’ cooperative departments to take action in the matter in order to save the interests of common people," the letter reads.

Earlier this year the district court of Jaipur ordered the Special Operation Group (SOG) to investigate Shekhawat and his family’s complicity in a chit-fund scam.

Sanjivani Credit Cooperative Society was registered under the Rajasthan Cooperative Society Act in February 2008. In May 2010, it was recognised as a multi-state cooperative society by the Union government under the then existing rules. The first Managing Director Vikram Singh, said to be close to the union minister, was arrested.

By June 2019, the society that had 211 branches in Rajasthan and 26 in Gujarat is accused to have duped 2,14,472 investors who had put in an estimated Rs 883.88 Crore expecting higher returns.

The society forged documents to show fake loan disbursements (in cash). “Several loan applications had details in the same handwriting and the bank seal was missing on them. No interest was charged on the loans, still they have been shown as income of the society,” states the complaint petition.

The investors’ money was utilised by society members and shell companies to take over 10 real estate and pharma companies, purchase land in Ethiopia and set up a hotel in New Zealand.