Together they account for more than half of bank’s total ₹129 crore NPA
Sourabh Sood
Shimla
The deeper this investigation goes, the clearer it becomes that the Baghat Urban Cooperative Bank in Himachal Pradesh did not collapse because of hundreds of small borrowers. The real damage was done by a small group of just 20 big borrowers who together hold more than half of the bank’s total NPA of ₹129 crore.
Their names cannot be revealed yet due to legal limitations, but the pattern seen in their files tells a clear story of misuse, inflated valuations, political influence and almost zero accountability.
A large portion of these top defaulters belongs to the real estate and construction sector. They took loans to build hotels, commercial buildings and housing projects. Many of these constructions never actually started or were left incomplete.
Inflated property evaluation does maximum damage
The most shocking discovery is that the value of their properties was shown far higher than the true market price. A property worth around ₹1.5 crore was marked as ₹3 to ₹4 crore on papers and the bank approved huge loans on these inflated evaluations. This created a false sense of security, but the truth came out only when recovery efforts began and buyers refused to participate in auctions.
Another significant section of the top defaulters includes people from the transport and contract business. They took loans for trucks, machines and road construction equipment, but many of these vehicles and machines were later sold off or shifted without informing the bank.
This means the bank has no real assets left to recover the dues. Similarly, loans issued to small hotels, cafés and homestays have also turned into major NPAs. While COVID affected many of these businesses, several of them were already weak and running losses long before the pandemic.
Political connections appear clearly in several loan files
Political connections appear clearly in several loan files. There are cases where loans were passed despite objections from branch officials. Sanction notes show that some applications were approved simply because of the borrower’s influence.
These accounts were later restructured multiple times to prevent them from being declared NPAs, which helped the bank hide the real situation for years. One former insider described the situation bluntly, saying that some borrowers behaved as if the bank’s money belonged personally to them.
Possibility of recovery is very low
The possibility of recovering money from these top 20 borrowers is very low. The properties attached by the bank are not selling because their valuations were highly unrealistic. Buyers immediately notice the gap between the declared value and the actual market rate and refuse to participate.
Many legal cases related to these accounts are stuck in courts for years due to missing documents, repeated delays and stay orders. In some shocking instances, the same property has been used to obtain two different loans, creating serious legal complications. A few properties are located in disputed areas or places where construction is not allowed, making them practically worthless in the market.
Who took the responsibility?
The responsibility for such a massive failure lies not just with the borrowers. A complete chain of people contributed to this collapse — evaluators who exaggerated property prices, bank officials who processed weak loan files, board members who approved loans under pressure, auditors who failed to report inconsistencies and oversight bodies that did not take strict action even when early warning signs were visible. This crisis did not happen overnight; it was built slowly through years of misreporting, manipulation and negligence.
