Coop bank invests employees’ PF money in mutual funds

After Shimoga District Co-operative Banks gold loan scam, now South Canara District Central Co-operative Bank is in the thick of a controversy over financial mismanagement and irregularities.

The SCDCC Bank Ltd, which was recently raided by the Income Tax department in connection with deposit accounts without Know-Your-Costumer (KYC), has been accused of diverting Provident Fund (PF) amount of Rs 55 crore to various financial firms.

An independent auditing conducted by a few employees also revealed that while salary allowances and PF amount for the year 2016-17 was Rs 27 crore, other expenses has been shown as Rs 34 crore. This includes placing huge advertisements wishing politicians, using the banks money.

The complaint filed with the Registrar of Co-operative Societies stated that the banks president Rajendra Kumar, whose house was also raided by the Income Tax department in February 2017, was responsible for the irregularities in the bank.

According to one of the employees (name withheld on request) who filed the complaint, the bank has more than 700 employees covered under the PF scheme.

“The banks president has set up a trust of which he is the managing trustee. The trust receives employees PF contribution. The PF amount is transferred to a separate account, opened at Axis Bank in Mangaluru bearing client ID number 12011119. The PF amount has been invested in various financial firms based in Gujarat, Tamil Nadu, Haryana and Maharashtra. These investments, as per the document, mature only in 2025, 2026 and 2027. This was revealed when retired employees did not get their PF returns.

This apart, the subsidy amount up to Rs 569 crore since 2005, released by the NABARD meant to be transferred to primary agricultural co-operative societies has been kept in suspense amount. The amount is being released to primary agricultural co-operative societies only after a period of two months to one year.

Rajendra Kumar, president, SCDCC Bank, said,: “Yes, we had invested certain amount in mutual funds and other investments. However, in the last six months we have withdrawn such amounts and the same has been transferred to the provident fund account. It has been restored.

Registrar of Co-operative Societies M K Aiyappa said he has not received any complaint. “I have not received any such complaint so far. However, if a complaint is made I will certainly take action.

After Shimoga District Co-operative Bank’s gold loan scam, now South Canara District Central Co-operative Bank is in the thick of a controversy over financial mismanagement and irregularities.

The SCDCC Bank Ltd, which was recently raided by the Income Tax department in connection with deposit accounts without Know-Your-Costumer (KYC), has been accused of diverting Provident Fund (PF) amount of Rs 55 crore to various financial firms.

An independent auditing conducted by a few employees also revealed that while salary allowances and PF amount for the year 2016-17 was Rs 27 crore, other expenses has been shown as Rs 34 crore. This includes placing huge advertisements wishing politicians, using the bank’s money.

The complaint filed with the Registrar of Co-operative Societies stated that the bank’s president Rajendra Kumar, whose house was also raided by the Income Tax department in February 2017, was responsible for the irregularities in the bank.

According to one of the employees (name withheld on request) who filed the complaint, the bank has more than 700 employees covered under the PF scheme.

“The bank’s president has set up a trust of which he is the managing trustee. The trust receives employees’ PF contribution. The PF amount is transferred to a separate account, opened at Axis Bank in Mangaluru bearing client ID number 12011119. The PF amount has been invested in various financial firms based in Gujarat, Tamil Nadu, Haryana and Maharashtra.” These investments, as per the document, mature only in 2025, 2026 and 2027. This was revealed when retired employees did not get their PF returns.

This apart, the subsidy amount up to Rs 569 crore since 2005, released by the NABARD meant to be transferred to primary agricultural co-operative societies has been kept in suspense amount. The amount is being released to primary agricultural co-operative societies only after a period of two months to one year.

Rajendra Kumar, president, SCDCC Bank, said,: “Yes, we had invested certain amount in mutual funds and other investments. However, in the last six months we have withdrawn such amounts and the same has been transferred to the provident fund account. It has been restored.”

Registrar of Co-operative Societies M K Aiyappa said he has not received any complaint. “I have not received any such complaint so far. However, if a complaint is made I will certainly take action.”

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