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Co-op banks seek CBI probe into Krushi fiasco

Syed Amin Jafri in Hyderabad

The Andhra Pradesh Urban and Town Co-operative Banks Association has demanded a Central Bureau of Investigation probe into the Krushi Co-operative Urban Bank scam.

Addressing a media conference in Hyderabad on Monday, the Association president M Anjaneyulu blamed the Reserve Bank of India and the co-operative department for turning a blind eye to the affairs of the Krushi Bank. They failed to look into the antecedents of the promoter of the bank and to monitor its functioning. This ultimately led to the collapse of the bank.

"Who are responsible and accountable for the Krushi Bank mess? None other than the co-operative department and RBI officials? They did not properly scrutinise the functioning of the Bank.

First of all, how was K Venkateswara Rao given permission to float the bank despite a criminal record?" Anjaneyulu, who is the chairman of Visakhapatnam Urban Cooperative Bank, questioned.

Venkateswara Rao was involved in share business in Visakhapatnam and later shifted his base to Hyderabad.

"He thought he was a big man. His bank, however, is not a member of our Association. He not only failed to protect the interests of the depositors but diverted the money to himself. The collapse of Krushi Bank is having a negative fall-out on the other co-operative urban banks. We are ashamed about the Krushi Bank episode," the Association president said.

"The police officials do not know the 'abc' of co-operative banks' functioning. We don't think anything substantial will come out of the investigations by the CID. There are reports that the son of a top police official worked for a company of Venkateswara Rao. Without remuneration, how can anyone work for four months? The police officer's son had also worked with Venkateswara Rao when he was in stockbroking business in Visakhapatnam," Anjaneyulu remarked.

"The truth will come out only if a CBI inquiry is ordered into the Krushi Bank scam," he said and demanded that the central government, too, must come to the rescue of Krushi Bank depositors by coming out with a revival package as in the case of Madhavpura Mercantile Co-operative Urban Bank in Gujarat.

The Association would submit a memorandum to Chief Minister N Chandrababu Naidu on the Krushi Bank mess, he added.

He said that there were 176 co-operative urban banks in Andhra Pradesh with deposits aggregating Rs 40 billion. The RBI claimed that 32 of these banks were "weak" but the Association found that only six or seven of them were in bad shape.

The Association had 87 member-banks. There was scope for having 350 co-operative urban banks in Andhra Pradesh but the vested interests were seeking to scuttle the cooperative movement in the state, Anjaneyulu alleged.

Reeling out statistics, he said that Maharashtra was number one in the country with 600 co-operative urban banks, followed by Gujarat with 380 and Karnataka with 330. Andhra Pradesh had slipped from the fourth position 15 years ago to the 15th place now. In the country as a whole, there were 2,080 co-operative urban banks with deposits amounting to Rs 800 billion.

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