Arvind Shinde asks PMC chief to halt Rs 500 crore Cosmos Bank deposit and cleaning contract extension

Pune Municipal Corporation (PMC) member Arvind Shinde has asked Municipal Commissioner Naval Kishore Ram to withdraw two decisions of the standing committee. The first is a fixed deposit of Rs 500 crore in Cosmos Co-operative Bank and a loan against it. The second is a two-year extension of cleaning contracts, which will cost about Rs 100 crore. In letters dated Tuesday, Shinde wrote that a proper competitive process was not followed in either case and that both could hurt the corporation's finances. He also said he would go to court if the bank deposit is not reconsidered.

Shinde is a former Congress group leader, Leader of the Opposition and standing committee chairman. He wrote two separate letters to the commissioner. He says the proposals were pushed through the standing committee without proper scrutiny and without inviting bids.

Cosmos Bank wrote to the commissioner on September 29, asking that PMC keep a deposit of Rs 500 crore or more with it. The bank offered 7.40 per cent annual interest for 16 months, paid quarterly. It also offered an overdraft of up to 95 per cent of the deposit at 7.70 per cent interest. The bank reminded the commissioner that it has handled PMC's property tax collection for more than 15 years and asked for more collection work.

On October 30 the commissioner sent the proposal to the standing committee. The same day the committee gave it in-principle approval under proposal number 1451. It came up as an urgent item and was not on the regular agenda. The money is stated to be meant for land acquisition for the High Capacity Mass Transit Route (HCMTR) and the Inner Ring Road.

The commissioner's own letter says PMC deposits are generally kept only with nationalised banks, HDFC Bank and ICICI Bank, which the Reserve Bank of India treats as domestic systemically important banks. The letter calls Cosmos "a case of exception" and refers to a meeting at the Collector's office that discussed a land payment of Rs 500 crore. It relies on Section 92 of the Maharashtra Municipal Corporations Act, 1949, under which surplus corporation funds may be kept in an approved co-operative bank. The same section says the amount in such a bank cannot exceed a limit set by the state government.

Shinde raised several objections. According to him, Cosmos is a co-operative bank and does not fall in the categories listed in the commissioner's letter for PMC investment. No other bank was asked for its rates, although the Pune District Central Co-operative Bank could have been approached. PMC would earn 7.40 per cent on the deposit but pay 7.70 per cent on the overdraft, so the difference would add to costs. He asked why PMC needs a loan when the commissioner calls the money "surplus".

Shinde also listed other options. PMC raised Rs 200 crore through municipal bonds for the equitable water supply scheme and received about Rs 800 crore from the Centre for the JICA project. He said the corporation already pays about Rs 57 crore a year in interest on the bonds. He asked whether PMC's creditworthiness has weakened, since the bank asked for a deposit before lending. He said the bank's financial health, credit rating and risk should have been examined before so much public money was placed with it.

Shinde also suggested that the choice of bank may have been influenced by pressure from the Rashtriya Swayamsevak Sangh or some other political or private interest. He cited the troubles of Rupee Bank and Janata Bank. He offered no evidence for this, and there has been no response from the Sangh.

In the second letter, Shinde objected to the standing committee's decision to extend the existing cleaning contracts by two years at a cost of about Rs 100 crore. He alleged that the original work was awarded without a proper tender and that the administration chose an extension instead of inviting fresh bids. He also said contractors are recording their own workers' attendance and that supervision by PMC officials is inadequate. According to him, a fresh tender would let other agencies bid and rates could come down.

Shinde demanded an inquiry, cancellation of the extension and a fresh tender. He said the commissioner has the power to stop any standing committee decision that goes against the city's interest.

Cosmos Bank describes itself as the second largest Tier IV urban co-operative bank. It has 195 branches in seven states and, as of March 2026, business of Rs 44,000 crore. According to the bank, it has merged 19 weak co-operative banks into itself.