Apex Bank's loan to society comes under scanner

BANGALORE: At the time when house building co-operative societies (HBCSs) are under the scanner, a bank fraud involving the Karnataka State Co-operative Apex Bank Ltd has come to light.
Documents available with TOI show that the bank had, on March 15, 2013, sanctioned a loan of Rs 30 crore in favour of Karnataka State Co-operators and Co-operative Institutional Employees HBCSs.
The society had no sital deposits collected from members which means no member had applied for a site and the society did not own land when the loan was sanctioned.
The president of Apex Bank -- R M Manjunath Gowda -- was a director of the HBCS when the loan was sanctioned after the bank mortgaged land belonging to KNS Infrastructure Private Ltd owned by K N Surendra.
Surendra's name features in the list of people released by the CID, whose companies were allegedly involved in illegal mining. His company KNS Overseas Limited figures in the list.
Sources pointed out that Manjunath Gowda had a conflict of interest and also provided documents to show that the land mortgaged by Surendra was already in agreement with a few other societies.
Manjunath Gowda, whose residence and farm house were raided by Lokayukta last week, told TOI: "I will need more time to discuss this as I'm not in Bangalore now."
The documents show the bank had sanctioned another loan of Rs 20 crore to KNS Overseas Private Ltd on December 20, 2010. It was sanctioned on an equitable mortgage, which means the original documents were to be pledged. KNS Overseas, which claimed to have submitted the original documents, executed a rectification deed stating the documents pledged were not original but only a certified/notarised copy two years after it availed the loan.
The status of the loan was still that of equitable mortgage, which cannot be advanced without the original documents.
Documents reveal that Surendra had availed another overdraft facility from the bank, which sources say establishes the connection between Gowda and him.