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Krushi Bank muddle leaves 10,912 depositors in the lurch

Syed Amin Jafri in Hyderabad

The Andhra Pradesh Home Minister T Devender Goud has directed the Hyderabad police to confiscate the movable and immovable properties of the chairman and other directors of the superceded board of Krushi Co-operative Urban Bank which cheated the public to the tune of Rs 317 million.

The home minister also asked the police to make efforts for extradition of the former chairman of the bank K Venkateswara Rao, who is currently away in the United States.

He asked the police to nab all the accused directors responsible for the large-scale scam that affected the fortunes of 10,912 depositors of the bank.

He said that the Reserve Bank of India and co-operative department officials have been asked to audit the accounts of Krushi Bank thoroughly within a week and submit a detailed report to the state government.

The Hyderabad city police commissioner, district collector, registrar of co-operative societies and registrars of the registration department have been instructed to ensure

that none of the properties belonging to the former chairman and directors of Krushi Bank are sold away or registered or transferred. They are also instructed to keep an eye on the properties of the accused.

"The RBI and co-operative department officials will conduct a thorough probe into the affairs of Krushi Bank and go deep into the loaning procedures followed by the bank.

"Preliminary enquiry revealed that the bank totally violated the norms, rules and regulations while sanctioning loans. Verification of documents seized from the bank showed that huge loans were sanctioned without proper securities and scrutiny. Advances were given in benami names to individuals, firms, organisations and institutions," Devender Goud told newsmen after a high-level review meeting.

Preliminary investigation by the police revealed that there were 10,912 depositors who had put in their money to the tune of Rs 316.8 million in the Krushi Bank. On the other hand, the Bank had sanctioned loans and advances to the extent of Rs 317.6 million.

The bank had a cash balance of just around Rs 615,000.

The government has appointed V Nageshwar Rao, deputy registrar of co-operative department, as special officer of the Krushi Bank and he has been assigned the task of recovery of loans given by the bank.

The home minister said that the depositors of Krushi Bank would be covered under the AP Protection of Depositors of Financial Establishments Act enacted by the government in 1999. "This will bring solace to the depositors to some extent in the instant case," he added.

Devender Goud termed the Krushi Bank episode as "really a shocking one" and said that the government would also consider amendments to the existing laws in the interest of the investors and depositors. He said that out of 12 directors of Krushi Bank board, two had resigned earlier.

The police officials would inspect the documents and unearth the irregularities committed by the directors and bank officials.

"Strict action will be taken against the culprits. The law will take its own course and all efforts will be made to bring back the bank chairman K Venkateswara Rao to the city, " he added.

He said that the RBI and co-operative department officials have been asked to regulate the transactions of other co-operative urban banks immediately in the wake of Krushi Bank episode. Procedures to be followed for regulating the activities of the co-operative urban banks would be drafted soon.

The home minister said that it would not be possible at the present juncture to probe into the financial transactions of other financial institutions other than the co-operative urban banks as the procedures and circumstances were different.

Saturday's high-level review meeting was attended by officials from RBI, state finance, co-operative, police and other departments. The meeting was convened after a delegation of hapless depositors of the Krushi Bank called on Chief Minister N Chandrababu Naidu.

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