May 9, 2002 | 0825 IST
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Nagpur bank flouted rules on non-SLR bond deals tooRennie Abraham The Nagpur District Co-operative Bank flouted Reserve Bank of India norms not just through transactions in government securities, but also in the purchase of non-statutory liquidity ratio bonds. According to the investigation report of the National Bank for Agriculture and Rural Development (Nabard), the bank paid a premium of Rs 23.5 million for purchasing non-SLR bonds worth Rs 500 million even though it is not allowed to do so, and is required to buy corporate bonds at face value from the primary market. On January 5, NDDCB bought Rs 100 million of Maharashtra Jeevan Pradhikaran bonds maturing in 2010 and Rs 150 million of Power Grid Corporation of India paper maturing in 2015 for Rs 103 million and Rs 156.9 million, respectively. On January 9, the bank once again purchased Rs 100 million of Maharashtra Krishna Valley Corporation bonds maturing in 2004 and Rs 150 million of Maharashtra Jeevan Pradhikaran bonds for Rs 112.9 million and Rs 150.7 million, respectively. The bank, however, did not hold the securities for long and sold them on January 25. The papers were sold to four brokers: Indramani Merchant, Syndicate Management Services, Century and Giltedge Management Services against fresh purchase of government securities with lower coupon rate and for further payment of Rs 31.6 million to the brokers. The bank had purchased from Home Trade government securities of face value Rs 1.70 billion at Rs 1.758 billion between February 5, 2001 and March 31, 2001. The bank, however, did not have any receipts of the transaction. The Nabard report added that as on March 31, 2001, the book value of securities purchased from Home Trade was at Rs 1.25 billion. On March 31, 2001, the bank had Xerox copies of securities endorsed in favour of Home Trade on different dates. The bank had purchased from Home Trade, government securities between January 4, 2001 and February 26, 2002 of face value Rs 2.905 billion at Rs 3.253 billion and sold securities of face value Rs 3.355 billion at Rs 3.756 billion. Powered by ALSO READ:
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