The Bombay High Court on Thursday sought clarification from the state government regarding the recovery of loans given by two cooperative banks in the state to sugar factories. The two banks are Maharashtra State Co-operative Bank Ltd and Mumbai District Central Co-operative Bank, which disbursed loans to 38 new sugar factories in the state under the 7th five-year plan after receiving letters of credit from the central government.
The loans extended to 15 banks have turned bad and total arrears due to the banks is approximately 209 crore. Seven of them have closed down and the state was not fulfilling guarantees of repayments from the remaining. The court asked government to file an affidavit explaining why banks were not permitted to recover loans and also the outcome of the meeting to be held between bank directors and government officials. | 
