RBI, coop. officials blamed for Krushi Bank mess

By Our Staff Reporter

VISAKHAPATNAM, AUG. 18. The Reserve Bank of India and the State Cooperation Department, along with the management of Krushi Bank, are responsible for the present mess, Mr. M. Anjaneyulu, president, A.P. Urban and Town Cooperative Banks Association and vice-president of the National Federation of Urban Cooperative Banks, has said.

Addressing a press conference here today, he said that instead of officials determining how and why the bank had collapsed causing a lot of heart-burn among depositors and fixing accountability, several others were making irresponsible statements. Mr. Anjaneyulu, who is also chairman of the Visakhapatnam Cooperative Bank Ltd and a former CPI legislator, alleged that the Krushi Bank affair was a result of the liberalisation process.

"A systematic campaign is being launched against cooperative banks, the only institutions which are able to fight the MNCs. But, efforts to dismantle these banks will not succeed," he asserted. Mr. Anjaneyulu said the criticism against cooperative banks after the Krushi Bank episode was motivated towards helping private financial institutions and private banks.

People deposited their money in the Krushi Bank since the RBI had given its licence but the apex bank had not bothered to check if the Hyderabad-based bank was regularly paying the premium for the deposit insurance. "Now the RBI is saying that it doesn't know if the premium is paid by the bank." Instead of making short-sighted statements, the RBI should have checked the antecedents of the bank's shareholders before granting the permission, he felt.

The departments concerned would never implement the Acts due to a variety of reasons and Governments, too, did not bother to ensure that officials implemented the rules, Mr. Anjaneyulu commented. Also the main accused persons behind various scams always went scot-free and their personal assets were not seized.

He took exception to the statement on the rates of interest made by Mr. P. Ramulu, Hyderabad Police Commissioner, and said that fixing the rate of interest was RBI's duty. "Instead of investigating the case and bringing the culprits to book and protecting depositors by taking action against such institutions, the police and those who have not bothered to check the mismanagement of public deposits by the financial institutions are now advising people to check the credentials of the institutions in which they wish to deposit the money."

Action was taken in the cases of the Chodavaram Bank, the Mahalakshmi Bank in Nacharam, the Bhagyanagar Bank in Hyderabad or the Nizamabad Cooperative Bank, Mr. Anjaneyulu pointed out. He agreed that there would be some impact of the Krushi Bank affair on cooperative banks but it was likely to be confined to Hyderabad. He reiterated the Cooperative Banks Association's support to any measure to correct malpractices.

The cooperative banks were paying premia on deposit insurance but not the nationalised banks, he said and added that there was no truth in the argument that deposits in cooperative banks were not safe. Mr. Anjaneyulu also sees a situation in the coming four or five years when the Government would not support the nationalised banks, asking them to fend for themselves.

He said the national federation meeting, to be held in Bangalore on August 26, would discuss the Krushi Bank affair. The meeting would also discuss where the RBI was failing and present a plan for the revival of Madhopur Bank. Mr. M.R.K. Raju, Chairman of the Maharaja Cooperative Bank, and Mr. Y.S.R.K. Brahmananda Rao, president of the Hindustan Shipyard Staff Cooperative Bank, were also present.

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