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Classic board superseded

BS Regional Bureau

The State Registrar of Cooperative Societies has superseded the board of directors of the bullion scam-tainted Classic Cooperative Bank. G S Patel, a retired joint registrar of co-operative societies, has taken charge as the administrator. The district registrar of co-operative societies had last week recommended to the state registrar to take action against the management of CCB, based on a probe into the bouncing of some high-amount pay orders issued by the bank.

The recommendation was made after finding prima-facie involvement of CCB, whose dealings with bullion trading firm KL Chokshi caused the recent payment crisis in the bullion market - which landed three nationalised banks including State Bank of India, Bank of India and Punjab National Bank in trouble. A team of Central Bureau of Investigation officials had specially come down from Bombay to investigate the case and conducted a series of search operations at many premises.

Meanwhile, the Gujarat Urban Cooperative Banks Federation vice-chairman Natvarlal R Patel has criticised the stand of the Gujarat government that Madhavpura Bank, being a multi-state co-operative bank, falls under the jurisdiction of the central government.

The crisis at MMCB is expected to adversely affect the health of 168 other co-operative banks having their funds/deposits parked at MMCB. It is also bound to shatter the confidence of the depositors in such banks.

This in turn would definitely harm the entire co-operative movement. It is therefore surprising that the state government has washed its hands of on the issue, he added. Patel felt that the state should at least have taken some steps to nab the culprits or initiate legal action against them. The Central Registrar of Cooperatives KS Bhoria has delegated all powers to the state registrar and specifically asked the state government to take legal action against the MMCB brass.

Revealing that MMCB was a multi-state bank, the minister maintained that state government does not have any power to take action against the bank under the Banking Regulation Act.

On the other hand, RBI says that the power of confiscating properties and many other punitive powers are vested with the registrar of co-operative societies and not with the central bank.

When Abhinav Shukla, convener of the Council of Concerned Citizens, approached the Gujarat vigilance commissioner V R S Cowlagi asking for disciplinary action against the state registrar, the latter stated that MMCB falls under the jurisdiction of the central government. So he was asked to approach the joint secretary in the Union Ministry of Agriculture is entrusted with such responsibility.

Nutan Nagrik Cooperative Bank chairman P H Adhyaru said, "Though technically the minister and the state vigilance commissioner may be right in arguing that MMCB being a multi-state bank it does not come under the jurisdiction of the state registrar, the fact however remains that the head office of MMCB is located in Ahmedabad and 26 of its 29 branches are in Gujarat. It is the second largest co-operative bank in Gujarat and bulk of its depositors are also from the state. So if the bank sinks, it would definitely jeopardise the future of the entire co-operative banking sector in Gujarat."

Speaking on condition of anonymity, a city-based chartered accountant said, "The state co-operation minister Ramanlal Vora should remember that it was the state registrar who has been appointing the statutory auditor in this bank, and this statutory auditor Manubhai Panchal has been giving a clean chit to the MMCB top brass".

He revealed that the central registrar had proposed the names of four reputed auditing firms for the audit of MMCB and some other major banks. Despite that the state registrar persisted with the name of Manubhai Panchal and the concerned banks also decided to have him as the auditor rather than opt for someone whom the central registrar had recommended. "So if the minister absolves the state registrar of his responsibility and blame in this situation, there is every reason for the common man to suspect corruption in the matter," he added.

The managing director of a city-based co-operative bank, who did not want to be named, admitted that if the state government adopts this kind of non-co-operative attitude, then the moment the current ban on premature withdrawal of deposits is lifted, there would definitely be a run on all the co-operative banks in the state. And that would spell the deathknell of co-operative banks in Gujarat, he emphasised.

Taking into account the above facts and based on the decision of the central registrar to delegate all the required powers to the state registrar, it would now be prudent for Vora to accept the responsibility and do something positive and concrete to expeditiously restore the depositors confidence in the co-operative banks rather than pass on the buck to the central government and RBI.

Otherwise by the time he realises his mistake, the entire co-operative sector in the state might have been wiped out and he would have no portfolio left to continue as a minister.

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