Krushi Cooperative Bank Board Superceded

The elected board of Krushi Cooperative Urban Bank was superceded today. V Nageswara Rao, special grade deputy registrar of cooperative societies, was appointed special officer with directions to assume charge immediately.

The Reserve Bank of India (RBI) has been requested by the registrar of coopereative societies, D Srinivasulu, to spare the services of an expert to aid and advise the special officer in managing the bank's affairs.

The swift action by the registrar follows the preliminary report of an inspecting officer that "a grave situation" arose warranting an immediate supercession of the elected managing committee.

A notification by the registrar in this regard said a showcause notice was issued and no explanation was received within the stipulated time, thus creating a stalemate causing much hardship and mounting tension.

 

The RBI, earlier this week, had suggested to the cooperative societies' registrar to supercede the board and appoint an administrator and make recommendations for merger of the bank with another cooperative bank or liquidate it.

The apex bank had found fault with the bank on the asset-liability mismatch, large unsecured advances provided to four of the bank's directors and a disproportionate credit-deposit ratio. According to RBI report, the non-performing assets of the bank were estimated at about Rs 33 crore, constituting about 63 per cent of its total loans and advances.

D Srinivasulu said he had suggested to the RBI to conduct a joint quick survey of the urban co-operative banks as per pre-set norms.

"We requested the RBI to immediately cancel the banking licenses of the banks that do not satisfy the norms. This, we hope will prevent occurrence of more such mishaps like Krushi," said Srinivasulu.

The mushrooming of cooperative banks in the twin cities of Hyderabad and Secunderabad, after the liberalisation of the licensing under the new Cooperative Societies Act, 1995, brought scrupulous players into the picture, Srinivasulu said.

Meanwhile, acting on complaints filed by some of the aggrieved depositors, the city police have registered a case against the Krushi Cooperative Bank and took into custody general manager Mohan Doss, who surfaced yesterday.