Gujarat Co-Op Banks Play With Depositors Money

Start a bank, indulge in irregularities for personal interest and then dump the depositors and flee with their hard-earned money, while the police keep searching for you. Later, you're forgiven, with the government taking care of the rest of the complications. It seems these are some of the mantras for many directors of Gujarat state co-operative banks.

The latest in the list is the Visnagar Nagarik Sahakari Bank Ltd, which has recently plunged into an acute liquidity crisis and now its operators, including chairman Bholabhai Patel and other directors, are being hunted by the police. The bank, having a deposit of more than Rs 350 crore, now has a government-nominated administrator, P P Harsh, who has started a recovery drive with teams of officials.

"It was Ketan Parekh who showed the way and the rest have been following it wisely--be it the Classic Co-operative Bank, the General Co-operative Bank, the Lakshmi Co-operative Bank or now the Visnagar Nagarik," said a member of the Maha Gujarat Banks Investors' and Depositors' Association. So far, no punishment has been awarded to the eight banks in south Gujarat, which invested crores of rupees with Home Trade.

"As the state government remains inactive without keeping a watch on the activities of co-operative banks, almost similar is the role of the Reserve Bank of India. Some miscreants, who luckily managed to start a bank, enjoy all privileges," said an official.

When the state minister for co-operatives, Vadibhai Patel, was asked about the role of the government and activities of the banks in the recent past, he replied: "It is a criminal offence and breach of trust by the directors of the concerned banks. We will assure exemplary punishment for the culprits."

"But nothing has happened to them so far and nothing will happen, too. People will be losing their money while the directors of such banks enjoy all privileges," said Chunibhai Patel, an activist for the interest of depositors and investors. The Visnagar bank not only landed itself into a problem, but caused problems for other banks, which had their money with Visnagar.

"Mehsana District Co-operative Bank had given Rs 11 crore to the Visnagar bank, Ahmedabad District Co-operative Bank had given Rs 11 crore. This money went down the drain. Now the recovery drive by the administrator might help, but most of the investors will have to wait," said Patel.

"Maybe it is true that the chairman and others have fled, but a strict action will be taken against the bankers, if they fail to clear their obligations," said Harsh. He was also optimistic that the recovery drive will help the investors.

However, till Sunday, Mehsana district police officers denied knowledge of the whereabouts of the bank's chairman and other directors, saying, "we are on the job."