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Scam-tainted Krushi Bank to be liquidated

Syed Amin Jafri, in Hyderabad

The Andhra Pradesh government has decided to initiate proceedings for the liquidation of scam-tainted Krushi Co-operative Urban Bank.

A decision to this effect was taken at a high-level meeting chaired by Chief Minister N Chandrababu Naidu in Hyderabad on Monday night, according to an official statement from the Chief Minister's Office.

The chief minister asked the executive director of the Reserve Bank of India and the Registrar of Cooperative Societies to initiate the process of liquidation and approach the Deposit Insurance Credit Guarantee Corporation to claim the money.

Chandrababu Naidu felt that the liquidation of the Bank was the best solution possible under the circumstances so that the small depositors who invested upto Rs 100,000 would be able to get back their money within four to six weeks from the DICGC, though the present process of repayment takes quite longer.

According to estimates, Rs 220 million out of the Rs 315 million deposits mobilised by the Bank belonged to small depositors with Rs 100,000 or less, Rs 20 million to depositors with deposits between Rs 100,000 and Rs 200,000 while the remaining amount belonged to depositors above Rs 200,000. While small depositors would get repayment from DICGC, other depositors would get their amounts in a proportionate ratio after the liquidation of the Bank.

The principal secretary, co-operation and marketing department would act as the coordinating officer to liaise with the RBI and other departments for pursuing the liquidation proceedings against Krushi Bank.

The chief minister wanted the RBI to closely monitor the functioning of cooperative urban banks and suggested that a foolproof system should be evolved to avoid the recurrence of Krushi Bank-type scams. He also expressed his displeasure that the RBI had not acted in time with regard to the Krushi Bank scam, which surfaced on August 11 this year.

Chandrababu Naidu said that a coordination committee would also be set up with the principal secretary, cooperation and marketing, as nodal officer for monitoring the performance of cooperative urban banks in the state to minimise the problems of depositors. The committee would also ensure that such cooperative banks managed their activities in accordance with the prescribed rules and regulations.

He directed Home Minister T Devender Goud to expedite the criminal investigation into the Krushi Bank scam. Though six former directors and three officials of the Bank have been arrested by the CID in connection with the scam so far, the former chairman and three ex-directors of the Bank are still at large, though a manhunt was launched against them in mid-August. Five officials in co-operative department have been suspended for negligence with regard to monitoring the affairs of Krushi Bank.

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