Special officer for Krushi Bank

By P. Vikram Reddy

HYDERABAD, AUG. 16. In accordance with the suggestion made by the Reserve Bank of India, the Andhra Pradesh Registrar of Cooperative Societies (RCS) on Thursday appointed a `Person-in- charge' (equivalent to an administrator), to take charge of the affairs of the crisis stricken Hyderabad based Krushi Cooperative Urban Bank.

In keeping with the seriousness of the situation and the promptness with which the RBI reacted, the person-in-charge - Mr. V. Nageswara Rao (Special Cadre Deputy Registrar), swiftly attempted to take charge of the bank's affairs today, that is, just a day after the show-cause notice was served on the Krushi Bank superseding its board of directors.

However, the special officer of the bank, as he is called, could not do so, as the police said they were waiting for instructions from the City Police Commissioner. Accordingly Mr. Nageswara Rao, it seems, will be taking charge tomorrow.

The person in charge has been given the task of assessing the situation in Krushi Bank, in consultation with RBI officials and give suggestions based on his findings. This includes views on merger/ liquidation. This is expected to take some time, given the nature of the financial mess the bank would have created.

Uncomfirmed reports suggest the Chairman, Mr. K. Venkateswara, was a big player in the stock market in his individual capacity and that there was large scale erosion of his investments. The bank's direct exposure in the market is however put at a modest Rs. 2-2.50 crores, which, on the face of it, does not appear to be unmanageable.

However, what is more concerning and of serious consequence to the bank are reports that several of the directors have taken large unsecured loans, which are yet to be recovered or secured. This appears to be a problem of much bigger dimension than the direct exposure to stock market.

As things stand, the entire board of ten directors are untraceable, though it is said that Mr. Venkateswara is in the U.S. Meanwhile, the city police have filed cases against the chairman and nine directors under Section 406 (punishment for criminal breach of trust) and Section 420 (cheating and dishonestly inducing delivery of property) of the Indian Penal Code, on Independence Day.

It is learnt that the ten directors are: Mr. K. Venkateswara Rao (Chairman), Mr. K. V. Gopal (chairman's brother), Ms. K. Sunitha (sister), Mr. V. V. A. Prasad, Mr. K. Sridhar, Ch. Sriranga Sai, Mr. K. Ramesh, Mr. P. Rammurthy, Mr. P. Dina Chakravathy, and Mr. V. Rambabu.

Following a run on the bank and depositors complaints, the RBI, on Tuesday, had asked the RCS to take steps to supersede the board of directors, debar them from other cooperatives bodies, initiative action to recover advances made to them, and consider merger/liquidation of the bank.

Confusion prevailed on some issues such as whether the bank has paid premium for coverage by the Deposit and Investments Credit Gurarantee Corporation of India.

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Section  : Business
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