Letter No

Shri. Avinash L.
Mhatre,
Director
The Naval Dockyard Cooperative Bank Ltd.,
Head office : Naval Dockyard, Mumbai 400023.
Mob No. 9773103753, Email : directorndcb@gmail.com

Letter No. NDCB/2016-05 Date : 20th June 2016
The Admiral Superintendent,

(Hon'ble President )
Naval Dockyard Co-operative Bank Ltd.
Naval Dockyard, Mumbai-400023.
REPORTING OF ALLEGED BREAKING IN AT THE BANK PREMISES

Sir,
It is intimated that there were two instances of probable breaking in as can be

construed by the act of dislodging/ damaging the roofing sheets at the Head Office/ Fort
Branch Bank premises in the recent past by unknown miscreants.
The issue needs to be addressed seriously as the said premises is a financial

institution and the possibility of theft, or any other act of felony cannot be ruled out
considering the alleged attempt at unlawful entry during silent hours.
In view of the above, it is requested that directives may be issued to investigate the
above incident on priority and also to file a cognizable complaint / FIR with civil police at
the earliest.
Thanking you,
yours faithfully,
(Shri. AL Mhatre)
I was the then Hon. Treasurer of the Naval Dockyard Co-operative Bank Ltd. and was
elected as Director during Sept. 2015 along with 02 more Directors belongs from our
Shri. Avinash L. Mhatre,
Director

recognised service Association of Ministry of Defence, i.e. AINTSSA. The election for the
Board of Directors (17 Posts) were contested in alliance with Naval Employees Union,
wherein 16 Directors (13 NEU & 03 AINTSSA) have won the election. Mr. PB Panigrahi
and myself were elected for the post of office bearers i.e Hon. Secretary & Hon.
Treasurer respectively.
There is foremost question still remained unanswered that, "What made me to resign from
the post of Hon. Treasurer of the Naval Dockyard Co-operative Bank Ltd.", and is really an
important issue as far as Naval Dockyard Co-operative Bank and probably your kind office
may concerned.
We have faced various critical issues from the begining of our tenure, specifically
regarding the operatons of the said Bank wherein it was managed by the abovesaid
elected Board of Directors in contravention / violation of the Rules/Acts of the state, model
byelaws of the bank, RBI regulations and the inhouse policies fraimed by the banks/ Board
of Directors.
Hereunder I am presenting some of the major issues to which we have not supported in
the Board meeting as well as in the Bank.
a) Operation of Bank and banking business in Karnataka state
The Naval Dockyard Co operative Bank Ltd, a "Co-operative bank" established

under the Maharashtra Co-operative Societies Act, 1960 [MCS Act, 1960] transacting the
business of banking, do not fall within the meaning of "banking company" as defined in
Section 5 (c) of the Banking Regulation Act, 1949 [BR Act].
The present Board of Directors have established a branch of the bank at Karwar
without necessary approval/permission of respective authorities which amounts to serious
violation of banking regulations framed by the RBI. The bank have spent some lakhs
rupees to erect the full fledged office in NSRY (Karwar), naval premises.
About 600 staff working at Naval Ship Repair Yard (Karwar/Karnataka) have been
enrolled fresh as members of the above stated bank and a majority of these members
have also been granted personal loans ranging from Rs. four lakhs to Rs. Eight Lakhs
depending upon their salaries, around 20-25 Crs were distributed amongest the fresh
members as loan violating the loan and other proceedings of the Bank. The data of
transactions between this bank and State Bank of India, Br. Arga & Br. Amdali (Karwar,
Karnataka State) branches can be viewed through Core banking(RTGS/NEFT ).
As per the section 2 (2) (a) regulations of Maharashtra co -operative societies Act
1960 which states,"the area of operation of which extends to the whole of the State of
Maharashtra", governing cooperative banks it is a clear violation of the geographical area
of operation as specified in the Act.
It is also evident to mention that the said bank is not a Multi state co operative bank
under MSCS Act 2002, which forbids operations outside the state of registration. Also this
bank have not undertaken any resolution at General Body meeting to convert the bank and
Director

banking business to Multi State Cooperative societies Act 2002.
The stamp duty charged and franking on the loan application / agreement is done
at Mumbai (Maharashtra) and the revenue of the same is deposited in the State
government treasury as per the provisions of Maharashtra Stamp Act 1958 hence the
conditions stated in the agreement are limited in the territory of state of Maharashtra.
Therefore, the provisions of the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 [RDB Act] by invoking the Doctrine of Incorporation are not
applicable to the recovery of dues by the co-operatives from their members in case
defaulters. The field of co-operative societies cannot be said to have been covered by the
Central Legislation by reference to Entry 45, List I of the Seventh Schedule of the
Constitution. Co- operative Banks constituted under the Co-operative Societies Acts
enacted by the respective States would be covered by cooperative societies by Entry 32
of List II of Seventh Schedule of the Constitution of India.
The RBI by its letter dated 25th April, 1994 inter alia stated as follows: "2. As you
are aware, the proposed bank requires to be got registered under the Multi State Co-
operative Societies Act, 1984 since its area of operation extends beyond the boundaries of
a State and as such it would not be a co-operative Bank as defined in the Banking
Regulation Act, 1949 (as applicable to Co-operative Societies), at present. Hence an
amendment to the Banking Regulation Act, 1949 is considered necessary.
In view of the above, it amply prooves that Hon. Secretary and others have
arbitrarily taken decisions of taking new membership out of Area of operation and
disbursing the loan in violation. Therefore it is requested that a high level committee may
be appointed to investigate the above matter and to avoid interference/ tampering of
evidence by board of directors and to conclude a fair inquiry proceedings an Administrator
to be appoint till completion of the inquiry.
b) Withdrawal of Court case pending at High Court Bombay against Shri. PB

Panigrahi
Shri. PB Panigrahi, who is accused in a case of granting fraudelent housing loan to
about 158 shareholders through the Naval Dockyard Co-op-Bank Ltd., and is pending
against Shri. PB Panigrahi and others at High Court Bombay and District Deputy Registrar
Co-operative Societies (Mumbai City) .
The said case at High Court Bombay was filed by the Naval Dockyard Co-operative
bank through its' then Hon. Secretary Shri. DG Kadam, and the hearing for the same was
scheduled during the period of the abovesaid election. Shri. PB Panigrahi and others have
files their defence petition in the case prior to the said elections. The favorable and interim
order was granted to Shri. PB Panigrahi and others in the case.
During the Board of Directors meeting held during 14 th Sept 2015 and Nov 2015, an
agenda at srl. no. 9(d) was brought for discussion regarding the court case pending at
High Court Bombay against Shri. PB Panigrahi. Wherein Hon. Secretary pleaded that Mr.
DG Kadam then Secretary had no authority of filing a petition on behalf of the Bank without
involving the Chief Executive officer or discussing the same before the Board.Also around
Director

Rs. 2,95000/- was spent to hire Advocates for the case. It was then proposed by Mr.
Panigrahi to bring the above wrong-doing of Mr. Kadam in front of the High court and
recover the 2,95000/- spent by the bank from Mr. Kadam.
The President advised all to reschedule the hearing of the court in the above matter
and same to be discussed before the Board in presence of CEO who was on leave.
During the subsequent meeting, the minutes of last Board meeting were placed for
confirmation wherein I have stated that the then Hon. Secretary may best knows the
reasons for filing the court case at High Court Bombay in pendancy of the same case
before Co-operative registrar. Then it was proposed by the Vice President, Hon. Secretary
and some of other Directors belongs to NEU to withdraw the court case from High Court
Bombay since it was filed without authority by Shri. DG Kadam, then Hon. Secretary. I
stated that the case was filed by an individual who was Hon. Secretary at that time and
who has misused the powers to do so, therefore he opined that instead of withdrawing the
case by the bank, let the case go and bank shall take out its' name from case and let Ex-
Secretary Shri. DG Kadam fight the case at his own, at the same time the illegal payments
(Almost Rs. 2,95,000/-) made to the Advocate by the Ex-Secretary to fight the case should
be recovered from the applicant (Ex-Secretary Shri. DG Kadam) of the case or from CEO
who has issued the payments without approval of Board of Directors including Hon'ble
President. Further I have raised dissent note that the present Board of Directors had won
the elections with thumping majority and we 16 out of 17, were belongs from a single panel
and now we are seating at ruling side. Therefore it is incorrect to withdraw the said case
on wish of the majority and it will definitely send the wrong message amongst the
shareholders and will set a wrong precedent. So first we shall recover all the money
illegally spent in the said case by the Ex-Secretary Shri. DG Kadam or the CEO, because
its' money of each shareholder including me. The Hon. Secretary said that the 30 persons
including Ex-Board members, Ex-staff, Ex-CEO and staff members of the Bank framed into
the case. The above said activity was done prior to the elections only to defame his party
during elections. Also, 12 valid housing loan cases were filed as irregular cases. The entire
activity was politically motivated. Despite of an approval of Rs 2.5 lakhs only a payment of
Rs. 4.25 lakhs was made to the advocate. CEO made a payment as per instructions of the
Board of Directors. However he should have judged the legality of the action and should
not have acted upon the same.
Finally it was decided to ask Advocate Anshuman Ozha to withdraw the case filed
by the Bank and with the resolution “Resolved that the same should be validated in the
light of MCS Act and mistakes if any should be rectified by taking corrective actions”.
Merely on the basis of Majority it was decided to withdraw the case, wherein no any legal
opinion sought for the same.
c) Contract Employement to Shri. Gavkar as Accountant
It is a case of Shri. AS Gavkar, then the Deputy Chief Executice Officer during 2015,
had completed 25 years of his tenure in the Naval Dockuard Cooperative Bank Ltd. was
dissmissed from the service of the Bank w.e.f. 14.09.2015.
The charges were levelled and proved against him-

Director

i. His involvement in alleged fraud and misconduct, wherein he had availed housing
loan from Naval Dockyard Cooperative Bank, without consent of the Bank he had retained
all his original Title deeds of his flat at Dhiraj Hill view Tower, Borivali (E) Mumbai-66 for
over 15 months. Further he have fraudelently applied for issue of a certificate stating that
Bank is holding original Title Deeds of his flat, so as to obtain some other loan from other
Bank.
ii. He as Deputy CEO of the Bank, have found prima facie guilty of alleged fraud under
section 83 of Maharashtra Co-operative Societies Act 1960, wherein as Deputy Ceo of the
Bank he was involved in sanction of 26 fraudelent loans and he has been served show
cause under section 88 of MCS Act 1960 by the Deputy District Registrar.
Iii. Moreover, a criminal complaint has been filed against him u/s 420, 465, 467, 471
r/w 34 of IPC as well as Magistrate Criminal complaint No. 0800134/SW/2015 with Addl.
Chief Metropolitain Magistrate, 8th Court Esplande Mumbai.
Shri. AS Gavkar, then the Deputy Chief Executice Officer
In response to your queries regarding resignations from all the posts and sub-committees
of Naval Dockyard Co-op-Bank Ltd, by AINTSSA's all 03 Directors, I would like to inform u
all as under.
It will be appreciated that Co_Op banks r run by the elected Board of Directors in
adherance with Rules/Acts of the state, Bylaws of the bank, guidelines from RBI and the
inhouse fraimed policies by the banks.
Our bank is suffering from lack of professionalization and effective co-operative

governance.
Its sad that the Board of Directors r reluctant in framing formed policies and our bank has
no policies even in critical subjects like purchase, appointment, transfer, discipline etc till
to date. In absence of these policies some major irregularities have been taken place in
our bank. Though we dont claim that all these irregularities were deliberately done, we
Director

sense more serious irregularities like financial mismanagement, scam, diversion of
funds to inappropriate institutions etc in future. The most unfortunate part is, decision
making power is more concentrated in few hands of the board. Even none of the
expense related financial documents r being placed before Treasurer for perusal or
approval.
We r planning to put all these issues in detail before the forth coming General Body, so
that all share holders will be aware.
Its not feasible to describe each issues in detail in this forum for which we will plan a date
and venue in near future in which our directors will inform about the above with
documentary evidences.
Dear friends,
In response to your queries regarding resignations from all the posts and sub-committees
of Naval Dockyard Co-op-Bank Ltd, by AINTSSA's all 03 Directors, I would like to inform u
all as under.
Our bank is suffering from lack of professionalization and effective co-operative

governance.
It will be appreciated that Co_op banks r run by the elected Board of Directors in
adherance with Rules/Acts of the state, Bylaws of the bank, guidelines from RBI and the
inhouse fraimed policies by the banks. Its sad that the Board of Directors r reluctant in
framing formed policies and our bank has no policies even in critical subjects like
purchase, appointment, transfer, discipline etc till to date. In absence of these policies
some major irregularities have been taken place in our bank. Though we dont claim that all
these irregularities were deliberately done, we sense more serious irregularities like
financial mismanagement, scam, diversion of funds to inappropriate institutions etc in
future. The most unfortunate part is, decision making power is more concentrated in
few hands of the board. Even none of the expense related financial documents are
being placed before Treasurer for perusal or approval.
We r planning to put all these issues in detail before the forth coming General Body, so
that all share holders will be awared.
Its not feasible to describe each issues in detail in this forum for which we will plan a date
and venue in near future in which our directors will inform about the above with
documentary evidences.
Compulsory deposit
Please present the current Govt. Of India, Govt of Maharashtra and RBI approved
provisions in Act, Rules and even in our Bye Laws that every shareholder should keep
20% of LTL as Compulsory Deposit.
A local policy merely prepared by the Directors could not supersedes the statutes.
Also it is observed that a shareholder keeping CD at 20% for eligibility of certain Loans
Director

and we are giving them 10% intrest at present.
Normally on an average, a person after becoming member, he is eligible for any loan after
membership of 1 year. As per our Bye Laws maximum monthly CD subscription is Rs.
400/- only, means we having only Rs. 5000/- in his CD then our bank allow him a LTL of
amount 4,5,6,7 or 8 lacs against ROI 12% PA.
But none of the shareholders are depositing CD from their sources, normally it is being
paid from their loan amount which has ROI 12%. Means we are charging 12% intrest on
20% CD which is kept in our bank (means individual not utilizing the money, it is only a
burden or compulsive to the individual)
ADOPTION OF AMENDED BYE-LAWS OF NAVAL DOCKYARD CO-OPERATIVE BANK

LTD. DULY APPROVED BY THE CO-OPERATIVE COMMISSIONER, PUNE ON .............
The Co-operative Commissioner, Pune has approved our ammendment to the Bye-
Laws w.e.f. ............. with a clear note that henceforth the earlier ..........section of the Bye-
Laws stands inhibited. With reference to the Maharashtra Co-operative Societies Act
Hon'ble President,
Naval Dockyard Co-Operative Bank Ltd.,
Sir,
COMPULSORY DEPOSITS
(1) Please refer to our Bank's Bye Laws No. 15, wherein the minimum level of
services for becoming Active member has been prescribed as shown in the table below:-
Sr. Size of Bank (Deposits in Cr.) on Minimum And Minimum Or Loan
No. the date of preparation of share capital Deposits
provisional list holding required
2 Rs. 100.00 Cr. To Rs. 500.00 Cr 1000 5000 50000
It clearly meant that the above-said is the only eligibility criteria to remain member of
the Bank.
Director

(2) Please refer Bye Laws No. 51 (e) , wherein at para (i) it has mentioned that-
'Every member of the Bank shall subscribe to the Compulsory Deposit Account every
month. A sum according to the following scales based on the amount of basic pay earned
by him.
S.No. Basic Pay CD Contribution per month
1 Rs. 4750/- to Rs. 7499/- Rs. 200/-
2 Rs. 7500/- to Rs. 11499/- Rs. 300/-
3 Rs. 11500/- & above Rs. 400/-
And at para (ii) it has mentioned that, “ The rate of interest of Compulsory Deposit
shall be determined by the Managing Committee, but such not is less than 7.20% per
annum at any time. The interest payable shall be credited to members SB/CD/Loan etc.
accounts, before 30th April of every year. A member shall not be permitted to withdraw
money from such deposits account or any part of his shares as long as he remains as the
member of the Bank.
(3) Whereas to obtain the membership of our Bank every individual has to pay
Share capital upto Rs. 7500/- and compulsory deposit by means of monthly installment
against his basic pay as mentioned in the table at (2). Once individual completes his said
contribution for ONE year he becomes eligible for obtaining Long Term and subsequently
Short Term Loan, Housing & other types of Loan from our Bank.
Further from the below elaboration it will understand how the whole business takes
place -
Contd...2
-2-
Say a new eligible member with consolidated contributions of Rs. 12,300/- i.e.
Share capital Rs. 7500/- and Compulsory Deposit (CD) @ Rs. 400/- PM, will obtain Long
Term Loan (LTL) of Rs. 800,000/- @ 12% rate of interest (ROI).
As per the Loan policy, which was hardly prepared by the Board of Directors a
borrower shall have 20% amount of his requisite LTL in his CD account i.e. Rs.160,000/- in
above case. So either borrower shall deposit the said 20% through his own contributions
or the same will be managed at the time of sanction of Loan by deducting it from the
requisite LTL amount.
Normally none of the shareholders are depositing CD from their sources therefore
every member opt the second option wherein CD amount of 20% managed by deducting
from the requisite LTL amount. Since it is part of LTL amount the borrower has to pay ROI
12 % on 20% amount deducted as CD contributions.
Therefore it is crystal clear that individual has to pay loan interest i.e. 12% PA on the
complete loan amount including the deposit compulsorily made for LTL eligibility. Further
the compulsory deposit is remain with Bank and unused by the borrower, for which at the
end of every Financial year borrower used to get interest @ 9 % on the said deposits. It
means merely 03% difference interest has to bear by the borrower. The same is justified
until a member is Loanee.
Director

Meanwhile in maximum cases members used to take Loan against Compulsory
Deposits i.e. Short Term Loan (STL), 90% amount of CD given as STL on 11% rate of
interest (ROI).
In view of the above, it is evident that a member depositing CD @ 20% of LTL
amount, which was deducted from his LTL @ 12% ROI and further avails STL @ 11% ROI
on the same CD, means he is paying about 23% ROI on CD in case of availing both the
loan at a time. Whereas he only gets 9% PA generated on the CD, at the end of Financial
Year. So in this case the actually 14% difference interest has to bear by the borrower.
(4) The member has to complete his Loan tenure i.e. 120 months, through payment
of EMIs. Even though his loan repayment gets over his deposit i.e. CD @ 20% amount of
LTL forcibly kept with Bank in the name of CD. Further withdrawal from CD amount is
denied stating the provisions of the Bye-Laws 51 (e) (ii), as elaborated at para (2) above.
But actually it is complete misinterpretation of the said Bye laws which clearly states
that, “ A member shall not be permitted to withdraw money from such deposits account or
any part of his shares as long as he remains as the member of the Bank”.
Nowhere it has mentioned that all amount of CD accumulated shall be restricted to
withdraw because the member has to maintain his membership eligibility as per the factors
as mentioned at para (1) above.
Furthermore as soon as the loan is repaid by the member, bank cannot bind him by
any loan policy framed by the Committee because the loan agreement signed by both
parties becomes void automatically on repayment.
Contd...3
-3-
Therefore all members who do not possess LTL or STL ( Because no other Loan like
Housing Loan upto 45L, Mortgage Loan upto 25L & Education Loan upto 10L needs any amount of CD )
against their account shall be allowed to withdraw the amount of Compulsory Deposit
keeping minimum as required by the Bye Laws No. 15 for membership. Since no other
provisions of act like Compulsory deposit Scheme act, MCS Act, Banking Regulation Act
have any binding on the member for keeping the more amount than Rs. 5000/- as
compulsory deposit.
Finally it is proposed to allow the withdrawal of CD amount from individual
member's account in absence of any LTL or STL pending against individual.
Thanking you, yours faithfully,
(A L Mhatre)
Director

Chief Vigilance Officer,

Central Vigilance Cell,
Reserve Bank of India,
16th floor, Central Office Building,
Shahid Bhagat Singh Road,
Mumbai-400001
Sir,
CORRUPTION IN NAVAL DOCKYARD CO-OPERATIVE BANK LTD.
I have resigned as Hon. Treasurer of the Naval Dockyard Co-operative Bank

Limited on 16th May 2016.
I continue to be on the Board of Directors of the Naval Dockyard Co-operative Bank

Limited as an elected Director / representative of All India Naval Technical Supervisory
Staff Association which had contested elections to the board of the Naval Dockyard Co-
operative Bank Limited (Profile of the bank is enclosed at Annex-A) along with the Naval
Employees Union. Based on the assurances made to the electorate of Naval Dockyard
Co-operative Bank Limited that illegalities committed during the tenures of the previous
Boards would be investigated into and corrective steps taken, representative of All India
Naval Technical Supervisors Association and Naval Employees Union were elected by
majority to the board in the elections held in September 2015.
Not only has the new board failed (1) in its statutory responsibilities to investigate
into concerns raised as to corruption and siphoning of monies from the Naval Dockyard
Director

Co-operative Bank Limited, (2) failed to conduct its proceedings in a transparent and
honest manner (3) Appoint independent professionals to the Board, but also that the Board
has perpetuated many of the concerns with the erstwhile board and further taken up
further measures that will determinately take the bank to ruin.
Shockingly, attempts by some board members to correct course including that of the
Hon. President (Admiral Superintendent, Naval Dockyard Mumbai) are neither recorded in
the minutes of the proceedings and in an attempt to quell their dissent, malicious
campaigns are launched against them.
This is a request to your good office to investigate into the functioning of the Naval
Dockyard Co-operative Bank Limited, forthwith particularly that;
1. Though registered as a Co-operative bank under the Maharashtra Co-operative

Societies Act, 1960 [MCS Act, 1960] A branch has been set up in Karwar, Karnataka
and over 11 crores disbursed to fresh members.
2. Furthermore the board seeks to withdraw cases against the current Secretary Mr. P
B Panigrahi which has been instituted by the bank for having fraudulently released
158 housing loans. This is sought to be done in a surreptitious manner.
Contd...2
-2-
3. Employees including the bank manager who were terminated for corrupt practices
are sought to be brought back through the back door.
4. Without orders to the contrary, the Board has un-frozen the accounts of 25
shareholders. This has been done unilaterally and without even informing the SROs
under whose directions these accounts were frozen.
5. Similarly colossal amounts of money have been spent on wasteful projects, again
without procedure to benefit certain parties.
These actions of the Board are in contravention to the MCS Act 1960, Banking
Regulation Act 1949, Banking Regulation(Co-operative Societies ) Rules 1966, RBI
Regulations etc.
In anticipation of your prompt response, we assure you of our full cooperation;
Sincerely,
(Avinash L. Mhatre)
Encl : Annex -A
Copy to :-

Director

Commissioner for Cooperation,

Registrar of Cooperative Societies,
2nd Floor, New Central Building,
Ambedkar Wellesly Rd,
Pune, Maharashtra-411001
Sir,
CORRUPTION IN NAVAL DOCKYARD CO-OPERATIVE BANK LTD.
I have resigned as Hon. Treasurer of the Naval Dockyard Co-operative Bank

Limited on 16th May 2016.
I continue to be on the Board of Directors of the Naval Dockyard Co-operative Bank

Limited as an elected Director / representative of All India Naval Technical Supervisory
Staff Association which had contested elections to the board of the Naval Dockyard Co-
operative Bank Limited (Profile of the bank is enclosed at Annex-A) along with the Naval
Employees Union. Based on the assurances made to the electorate of Naval Dockyard
Co-operative Bank Limited that illegalities committed during the tenures of the previous
Boards would be investigated into and corrective steps taken, representative of India
Naval Technical Supervisors Association and Naval Employees Union were elected by
majority to the board in the elections held in September 2015.
Not only has the new board failed (1) in its statutory responsibilities to investigate
into concerns raised as to corruption and siphoning of monies from the Naval Dockyard
Co-operative Bank Limited, (2) failed to conduct its proceedings in a transparent and
honest manner (3) Appoint independent professionals to the Board, but also that the Board
has perpetuated many of the concerns with the erstwhile board and further taken up
further measures that will determinately take the bank to ruin.
Director

Shockingly, attempts by some board members to correct course including that of the
Hon. President (Admiral Superintendent, Naval Dockyard Mumbai) are neither recorded in
the minutes of the proceedings and in an attempt to quell their dissent, malicious
campaigns are launched against them.
This is a request to your good office to investigate into the functioning of the Naval
Dockyard Co-operative Bank Limited, forthwith particularly that;
6. Though registered as a Co-operative bank under the Maharashtra Co-operative

Societies Act, 1960 [MCS Act, 1960] A branch has been set up in Karwar, Karnataka
and over 11 crores disbursed to fresh members.
7. Furthermore the board seeks to withdraw cases against the current Secretary Mr. P
B Panigrahi which has been instituted by the bank for having fraudulently released
158 housing loans. This is sought to be done in a surreptitious manner.
8. Employees including the bank manager who were terminated for corrupt practices
are sought to be bought back through the back door.
9. Without orders to the contrary, the Board has un-frozen the accounts of 25
shareholders. This has been done unilaterally and without even informing the SROs
under whose directions these accounts were frozen.
10.Similarly colossal amounts of money have been spent on wasteful projects, again
without procedure to benefit certain parties.
These actions of the Board are in contravention to the MCS Act 1960, Banking
Regulation Act 1949, Banking Regulation(Co-operative Societies ) Rules 1966, RBI
Regulations etc.
In anticipation of your prompt response, we assure you of our full cooperation;
Sincerely,
(Avinash L. Mhatre)
Encl : Annex -A
Justice Gulab Rao Patil,

Lokayukta Govt of Maharashtra,
New Administrative Building 1st floor,
Madam Cama Road Mumbai-400032
Director

Letter No. NDCB/2016-13 Date : 11th July 2016

Sir,
SUB : ADJOURNMENT OF THE BOARD MEETING SCHEDULED TO BE HELD ON 12 th
JULY 2016.
Ref : Circular regarding Meeting of the Board of Directors Of NDCB Ltd. vide
NDCB/ADMIN/ /456/16-17 dated 05.07.2016
With reference to the above circular, which has been received physically by me
today on 11th Jul 2016 at 1052Hrs, I want to submit as under.
The Bye law no.(48) of the Bank specifically states, "Seven days prior notice shall
ordinarily be necessary for the meeting of the Board ", which was not adhered in the
referred circular.
It is pertinent to mention here that the delay in serving notices and the minutes of
the Board meeting prior to the meeting was brought to your notice in the last board
meeting and you had specifically directed to strictly adhere the 'Rules in vogue' regarding
this issue.
You will certainly appreciate that the above recurring act of the concerned authority
deprives the other Directors from preparing themselves for the said meetings as they are
not provided ample time and opportunity to read and vet the documents, supplied prior to
the meetings.
It will further be appreciated that the enclosed minutes of the last board
meeting(24th May 2016) to the above circular was not appropriately drafted and I had
submitted some necessary corrections as per the actual proceedings of the last meeting
vide my letter dated 13th June 2016 (Copy enclosed for ready reference), which has not
been put before the Board in the said forthcoming meeting.
Director

In view of the above, it is requested to adjourn the said Board meeting which is
scheduled to be held on 12th Jul 2016 for at least 7 days from today as per the Bye-Laws
of the Bank, so that the directors will get sufficient time for preparation and can represent
properly to the share holders by which they have been elected.
(A L Mhatre)
Letter No. NDCB/2016-13 Date : 11th July 2016
The Chief Executive Officer,

The Naval Dockyard Co-operative Bank Ltd.,
Naval Dockyard, Lion Gate,
Mumbai-400023.
Sir,
SUB: ADOPTION OF AMENDED BYE LAWS OF NAVAL DOCKYARD BANK LTD. DULY
APPROVED BY THE COOPERATIVE COMMISSIONER, PUNE
Director

Letter No. NDCB/2016-18 Date : 5th Aug 2016

Sir,
AMEMNDMENT OF BYE LAWS : COMPULSORY DEPOSITS
(1) Please refer to our Bank's Bye Laws No. 15, wherein the minimum level of
services for becoming Active member has been prescribed as shown in the table below:-
Sr. Size of Bank (Deposits in Cr.) on Minimum And Minimum Or Loan
No. the date of preparation of share capital Deposits
provisional list holding required
2 Rs. 100.00 Cr. To Rs. 500.00 Cr 1000 5000 50000
It is clearly meant that the above-said is the only eligibility criteria to remain member
of the Bank.
(2) Please refer Bye Laws No. 51 (e) , wherein at para (i) it is mentioned that-
'every member of the Bank shall subscribe to the Compulsory Deposit Account every
month. A sum according to the following scales based on the amount of basic pay earned
by him.
S.No. Basic Pay CD Contribution per month
1 Rs. 4750/- to Rs. 7499/- Rs. 200/-
2 Rs. 7500/- to Rs. 11499/- Rs. 300/-
3 Rs. 11500/- & above Rs. 400/-
And at Bye Laws No. 51 (e) para (ii) it is mentioned that, “ The rate of interest of
Compulsory Deposit shall be determined by the Managing Committee, but such not is less
than 7.20% per annum at any time. The interest payable shall be credited to members
SB/CD/Loan etc. accounts, before 30 th April of every year. A member shall not be
permitted to withdraw money from such deposits account or any part of his shares as long
as he remains as the member of the Bank.
(3) Whereas to obtain the membership of our Bank every individual has to pay
Director

Share capital upto Rs. 7500/- and compulsory deposit by means of monthly installment
against his basic pay as mentioned in the table at (2). Once individual completes his said
contribution for ONE year he becomes eligible for obtaining Long Term and subsequently
Short Term Loan, Housing & other types of Loan from our Bank.
Contd...2
-2-
Further from the below elaboration it will understand how the whole business takes place -
Say a new eligible member with consolidated contributions of Rs. 12,300/- i.e.
Share capital Rs. 7500/- and Compulsory Deposit (CD) @ Rs. 400/- PM, will obtain Long
Term Loan (LTL) of Rs. 800,000/- @ 12% rate of interest (ROI).
As per the Loan policy, which was hardly prepared by the Board of Directors a
borrower shall have 20% amount of his requisite LTL in his CD account i.e. Rs.160,000/- in
above case. So either borrower shall deposit the said 20% through his own contributions
or the same will be managed at the time of sanction of Loan by deducting it from the
requisite LTL amount.
Normally none of the shareholders are depositing CD from their sources therefore
every member opt the second option wherein CD amount of 20% managed by deducting
from the requisite LTL amount. Since it is part of LTL amount the borrower has to pay ROI
12 % on 20% amount deducted as CD contributions.
Therefore it is crystal clear that individual has to pay loan interest i.e. 12% PA on the
complete loan amount including the deposit compulsorily made for LTL eligibility. Further
the compulsory deposit remains with Bank and unused by the borrower, for which at the
end of every Financial year borrower gets an interest @ 9 % on the said deposits. It
means merely 03% difference of interest is borne by the borrower. The same is justified till
the member is availing loan.
Meanwhile in maximum cases members used to take Loan against Compulsory
Deposits i.e. Short Term Loan (STL), 90% amount of CD given as STL on 11% rate of
interest (ROI).
In view of the above, it is evident that a member depositing CD @ 20% of LTL
amount, while availing LTL i.e @ 12% (ROI) and if he further avails STL i.e @ 11% (ROI)
on the same CD which he had deducted at the time of availing LTL, means he is paying
nearly 23% ROI on CD, if a member is availing both the loans at a time. Whereas in return
he gets only 9%,on his CD, at the end of Financial Year. So in such cases the borrower
has to borne 14% interest in excess which is not appropriate.
(4) Even though the member has repayed his loan the CD @ 20% amount of LTL is
forcibly kept with Bank. Moreover TDS is been deducted on the interest paid on CD, which
again an extra burden on the borrower. Further withdrawal from CD amount is denied
under the pretext of the Bye-Laws 51 (e) (ii), as elaborated at para (2) above.
But actually it is complete misinterpretation of the said Bye laws which clearly states
that, “ A member shall not be permitted to withdraw money from such deposits account or
any part of his shares as long as he remains as the member of the Bank”.
Nowhere it has mentioned that all amount of CD accumulated shall be restricted to
Director

withdraw because the member has to maintain his membership eligibility as per the factors
as mentioned at para (1) above.
Contd...3
-3-
Furthermore as soon as the loan is repaid by the member, bank cannot bind him by
any loan policy framed by the Committee because the loan agreement signed by both
parties becomes void automatically on repayment.
Therefore all members who do not possess LTL or STL ( Because no other Loan like
Housing Loan upto 45L, Mortgage Loan upto 25L & Education Loan upto 10L needs any amount of CD )
against their account shall be allowed to withdraw the amount of Compulsory Deposit
keeping minimum as required by the Bye Laws No. 15 for membership. Since no other
provisions of act like Compulsory deposit Scheme act, MCS Act, Banking Regulation Act
have any binding on the member for keeping amount more than Rs. 5000/- as compulsory
deposit.
Finally it is proposed to allow the withdrawal of CD amount from individual
member's account in absence of any LTL or STL pending against individual by amending
the Bye-Laws 51 (e) (ii) in the forthcoming Annual General Body Meeting.
(A L Mhatre)
Copy to-
Director

Letter no. NDCB/2016-22 12 th Aug 2016
The Chief Executive Officer,

The Naval Dockyard Co-operative bank Ltd.
Head Office-Mumbai.
Sir,
Please refer Hon. President's directives issued during last Board of Director's meeting,
wherein it has mentioned to submit the questionnaire for discussion on the subject.
Herewith I am submitting the questionnaire for the discussion during the meeting.
Questionnaire
(For implementing withdrawal of Compulsory Deposit to the share holders not possessing
any Loan)
a.
What is the average number of share holders availing loans from our bank at
any given time.
b.
What is the average number of depositors (excluding compulsory deposit) of
our bank at any given time.
c.
Accordingly what will be the ratio between lending and deposits of our bank
at any given time.
d.
What is the amount of compulsory deposits of present Loanee share holders
held by the bank.
e.
What is present status of funds not been used for lending as on 16.08.2016 ?
What is the actual fund used for lending to new members (January 2016 onwards)
at Karwar @ Karnataka State which is unlawful? Such affairs of the bank were
being conducted in a manner detrimental to the interest of its present and future
depositors
f.
What is the amount of compulsory deposits of present Non-Loanee share
holders held by the bank.
g.
What will be the effect on fund management system if, compulsory deposits
allowed to be withdrawn particularly for non-loanee shareholders.
h.
What will be the effect on fund management system if, compulsory deposits
allowed to be retained @ 10% of Long Term Loan amount for all shareholders.
i.
What will be the effect on fund management system if, 20% amount of LTL
held as compulsory deposit may replaced by the same amount of term end fixed
deposits with locking period upto his/her Loan tenure for all shareholders.
j.
What will be the effect on the Net profit if the interest paid on Compulsory
deposits hiked by 0.5 to 1 %, which may compensate the TDS payment on the
interest income generated thereby.
Director

k.
What will be the effect on the fund management of our bank, in case the
Compulsory deposits are diluted and such eligibility deposits may be generated and
kept in the name of individual's spouse account at our bank. Could it help to
maintain the required /necessary deposits and will help in burden sharing of the
TDS.
l.
If compulsory deposits are statutory requirements (as per Bye-Laws of our
Bank), then how it could be used by the Bank in case of any defaulters.
Thanking you,
yours truly,
Sd/-
(Shri. Avinash Mhatre)
Letter No. NDCB/2016-22 22nd Aug 2016

Director

Sir,
MEETING OF BOARD OF DIRECTORS
Ref.: NDCB/ADMIN/678/16-17, dated 19th Aug 2016.
Please refer the intimation of the Board of Directors meeting scheduled to be held on 26 th
Aug 2016. At the outset I would like to inform your kind office that I am proceeding to New
Delhi to attend Annual General Body Meeting of the Confederation of Defence Recognized
Service Associations (CDRA). Therefore I will not be able to attend the above said board
meeting of our Bank.
You will appreciate that during the last board meeting held on 5 th Aug 2016, Hon.
Secretary had requested you to provide a date to conduct the Board Meeting to approve
the answers for the questions received from the shareholders with respect to 85 th Annual
General Body Meeting. And you have asked CEO to place a tentative date for the same
which has been recorded in the minutes of the same meeting. Shockingly I want to state
that there is no agenda mentioned in the intimation of the meeting i.r.t. approval of
questions and answers, which is a necessary requirement for 85 th AGM and for which the
said consecutive Board meeting was asked.
As you are aware, in the business of last Board meeting there was a resolution to
decide the date of 85th AGM, which was further scheduled to be held on 29 th Aug 2016.
Now we are left with only few days to conduct the 85 th AGM and we are completely
focused on the same.
Therefore, sincerely, I am not at all convinced as to why Hon. Secretary has put all
the businesses for discussion like confirmation of minutes of previous meeting (i.e. 19 th Jul
2016) which he failed to place without giving any appropriate reasons, finalization of
policies particularly "Procurement / Purchase policy" and renovation plans of the bank in
hurry. There are a lot of other businesses held in the sub-committee meeting which
required detailed deliberations before the Board. There were huge amounts of
expenditures as shown against the month of June2016 & July 2016 particularly for Sundry
Expenses (Rs. 8,73,923/- & Rs. 2,36,412/-), Repair & Maint. (Rs. 6,41,524/- & Rs.
38,652/-), Conveyance Charge (Rs. 19,420/- & 14,371/-), Telephone Charge (Rs.45,597/-
& Rs. 13,841/-), Printing & Stationary (1,42,012/- & Rs. -29,040/-) itemized details for the
same was not been provided and in fact approval for such big amounts were also not
sought from the Board.
I appreciate the fact that there should be a Board meeting only on the subject as
requested by the Hon. Secretary in the last meeting of Board of Directors.
It is therefore requested your kind self not to entertain any points other than the
answers to the questions as raised by the shareholders since the date of AGM which is the
Supreme Body of the Bank has been decided and announced in the last meeting.

Director

(A L Mhatre)
N.B.: The statements which have been published to be produced in the 85 th AGM and the
replies which would be approved in the board during the forthcoming Board meeting as
sought by the Board should be considered as non-consent of mine and the other 02
directors from AINTSSA since nobody was consulted and deliberately kept aside by the
present Board from reaching to the conclusion regarding the issues. It may also be
brought to your notice that the recent activities of the Bank are in clouds and the
CVO(RBI) has been approached on various functions of the Bank by us against the set of
Directors who claim their decisions as appropriate on the shadow behind the majority.
DO No. NDCB/2016-03 Sept 2016

(Hon'ble President),
Naval Dockyard Co-operative Bank Ltd.,
Sir,
At the outset, I want to appreciate your concerns pertaining to introduction of optimum
transparency in the functioning and business activities of our bank and I, being a teammate
assure you to provide necessary assistance for the same.
Director

I sincerely feel that the concept of “need to know” has undergone a significant shift in
recent years. This expectation for transparency has been extended beyond personal
interactions and is now a reality in any business. Across all industries, transparency has never
been more important to a successful business model. Withholding or cleverly reshaping
information is no longer a viable option for this new era of consumers who are savvier than
any generation before them and for whom skepticism seems to be a default setting. In order to
build brand loyalty, we need to first build trust. Instead of being scared by transparency, we
should embrace it as way to improve service and increase shareholder's loyalty. A recent study
from Harvard Business School took a look at the concept of transparency in a restaurant
setting where the cooks and customers could literally see each other during the food
preparation and dining experience. The results showed a striking improvement of 17% in
customer satisfaction and 13% faster service when customers and cooks can see each other.
This is a fascinating look at the power of transparency, and it indicates that customers are
happier when they feel they've been made part of the process. Plus, I have a feeling that if we
all knew our shareholders could able to see our every move, we’d be more thoughtful and
precise in the decisions we make.
Also, I strongly believe in following the statutory norms, provisions of the Rules and
Acts framed for functioning in the cooperative banks/ societies.
You are aware of the fact that presently there are 13 directors out of 17 elected
directors, who are in majority and ruling the management of our bank, the rest 04 directors
including me are not members in any sub-committees. The decision making and other
activities concerned to the different sub-committees are done in isolation/ with members of the
committees only. Factually I am not aware of any procedures adhered for undertaking any
decision by the concerned committees.
With reference to the discussions held in the BoD meeting, which was held on 13 th Sept
2016, I want to state following few lines for your kind consideration and necessary action.
During discussions, it was seen that you were annoyed with the proceedings of the 85 th
AGM and it was absolutely correct on your part. It will be remembered that during the AGM,
certain critical issues like membership and disbursement of loan at Karwar,
Contd...2
-2-
Mr. Gavkar's appointment, illegal grant of housing loan (Rs 45L), distribution/displaying of
policies to the shareholders etc., which were raised by the shareholders of the bank, were
answered irrelevantly with incomplete informations.
During BoD meeting, I raised my concerns over the decisions taken by the purchase
sub-committees over the procurement policy, purchase of ATMs, lease lines, repair and
maintenance of air-conditioners etc. since there was no proper tendering / procurement
procedures followed. They were appreciated as well as misinterpreted at your end. At one
place you specifically mentioned that I was creating unnecessary obstructions in sub-
committee's decisions during final moments after every things were finalized, but truly, I would
like to clarify that I did not intend to obstruct any final proposal by the concerned committee but
put forth my apprehensions being a responsible elected member of the Board of Directors. I
felt myself responsible to check certain irregular activities of the concerned committees by not
Director

adhering prescribed norms and against the wrong decisions taken on the basis of mere
majority.
In absence of a transparent tendering process, maximum works like Computer

hardware/software purchase, their repair and maintenance, comprehensive AMC, rental
computers/thin client -IT accessories and now ATMs & internet lease lines have been given to
a selected firm (M/s NetTech) which can not be a coincidence. It looks more hazy when the
meeting of 16th Apr 2016 is recollected where, after due contracting process the purchase
committee had already finalized to award the AMC to M/S pineapple. Surprisingly the decision
was turned down in the next meeting dated 10 th May 2016 by the Hon. Secretary stating the
decision was to be reviewed by awarding the AMC to M/s NetTech. For the reasons best
known to him. The issue was minuted and can be verified at your end.
On the issue of procurement of ATM machine, on my apprehensions, you instructed

me to forward competitive quotes if any within 03 working days which was not practically
feasible. You could have granted equal opportunity by granting similar period for market
survey. Notwithstanding the same I am placing a competitive quote for necessary action at
your end in respect to procurement of ATM machine and allied services which has been
obtained from the vendor by personal interaction (All though it is not a correct practice, it has
been obtained on your directive), and can be compared with the last decision taken by the
majority of directors.
Finally, I appreciate the fact that you are highest authority in our organization [ND(Mbi)]
and being a subordinate officer I want to extend my due respect, faithfulness and sincerity
towards you in my official capacity but at the same time, I have been elected as a director by
the entire civilians of the WNC, who are member of our bank and have different roles and
responsibilities to play in accordance with the provisions of MCS Act 1960 and BR Act 1949 in
the Board of Directors meeting at our bank, which is expected to be appreciated at your end.
Thanking you, Yours truly,

(AL Mhatre)
Letter No. NDCB/2016-25 23rd Sept 2016
The General Manager (Refit),

(Hon'ble Vice-President),
Naval Dockyard Co-operative Bank Ltd.,
Sir,
INCORPORATION OF CENTRAL VIGILANCE COMISSION'S GUIDELINS I THE

PROCUREMENT POLICY
Please refer the discussions held during the Board of Directors meeting on 13 th Sept
2016, wherein I have specifically raised concerns about procurement policy approved by the
the directors and other members presents during the Board of Directors meeting dated 25 th
Aug 2016 and Hon. President and Your good self have directed, Hon. Scretary seconded your
directives to incorporate necessary amendments to the procurment policy of Naval Dockyard
Co-Op-Bank Ltd.
Director

With reference to your directives, I hereby submitting CTE'sO, Central Vigilance
Commission's guidelines, Government of India 2006 (Copy enclosed) for your ready reference
which can be utilised for our Bank.
It is requested to direct the CEO to supply the copy of Final procurement policy after
incorporation of CVC guidelines to me for my records and reference.
Thanking you, yours faithfully
(A L Mhatre)
Encls:
CVC Guidelines 2006

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Shri. Avinash L.

The Admiral Superintendent,

REPORTING OF ALLEGED BREAKING IN AT THE BANK PREMISES

It is intimated that there were two instances of probable breaking in as can be

The issue needs to be addressed seriously as the said premises is a financial

a) Operation of Bank and banking business in Karnataka state

The Naval Dockyard Co operative Bank Ltd, a "Co-operative bank" established

b) Withdrawal of Court case pending at High Court Bombay against Shri. PB

c) Contract Employement to Shri. Gavkar as Accountant

The charges were levelled and proved against him-

Shri. AS Gavkar, then the Deputy Chief Executice Officer

Our bank is suffering from lack of professionalization and effective co-operative

Our bank is suffering from lack of professionalization and effective co-operative

ADOPTION OF AMENDED BYE-LAWS OF NAVAL DOCKYARD CO-OPERATIVE BANK

Letter No. NDCB/2016-10 Date : 30th June 2016

Chief Vigilance Officer,

I have resigned as Hon. Treasurer of the Naval Dockyard Co-operative Bank

I continue to be on the Board of Directors of the Naval Dockyard Co-operative Bank

1. Though registered as a Co-operative bank under the Maharashtra Co-operative

In anticipation of your prompt response, we assure you of our full cooperation;

The Admiral Superintendent,

Letter No. NDCB/2016-11 Date : 30th June 2016

Commissioner for Cooperation,

I have resigned as Hon. Treasurer of the Naval Dockyard Co-operative Bank

I continue to be on the Board of Directors of the Naval Dockyard Co-operative Bank

6. Though registered as a Co-operative bank under the Maharashtra Co-operative

In anticipation of your prompt response, we assure you of our full cooperation;

Justice Gulab Rao Patil,

Letter No. NDCB/2016-13 Date : 11th July 2016

The Admiral Superintendent,

Thanking you, yours faithfully,

The Chief Executive Officer,

Letter No. NDCB/2016-18 Date : 5th Aug 2016

The Admiral Superintendent,

Letter no. NDCB/2016-22 12 th Aug 2016

The Chief Executive Officer,

Letter No. NDCB/2016-22 22nd Aug 2016

The Admiral Superintendent,

Thanking you, yours faithfully,

DO No. NDCB/2016-03 Sept 2016

The Admiral Superintendent,

In absence of a transparent tendering process, maximum works like Computer

On the issue of procurement of ATM machine, on my apprehensions, you instructed

Thanking you, Yours truly,

The General Manager (Refit),

INCORPORATION OF CENTRAL VIGILANCE COMISSION'S GUIDELINS I THE

Thanking you, yours faithfully

CVC Guidelines 2006

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