Coop banks blame the media

By Our Special Correspondent

HYDERABAD, AUG. 29.The media has been squarely blamed by the Greater Hyderabad Cooperative Urban Banks Forum representing 69 banks in and around the capital for the unabated run on their deposits.

The Forum has attributed the current rush among depositors to withdraw their moneys from urban cooperative banks (UCBs) to publication of `overzealous stories' in the wake of the Krushi Bank scam. By making generalised allegations, these reports had created an impression that no cooperative urban bank was safe for depositing money.

The Chairmen and CEOs of almost all leading cooperative urban banks turned up at a press conference here on Wednesday to assert that they were in no way inferior to other commercial and district cooperative central banks, many of which had been categorised as ``weak.'' A high-power committee appointed by the RBI had found that UCBs provided faster and personalised service and performed better than commercial banks in priority sector lendings.

Speaking on their behalf, Mr. G. Rama Moorthy, president, and Mr. N. Seetha Rama Rao, general secretary, said a bank considered strong today might be categorised as weak tomorrow and vice versa after it fulfilled the RBI's norms. The Forum had removed from its rolls six banks which were under liquidation and would soon formulate a code of conduct for its members who accounted for deposits totalling Rs 2,400 crores.

Answering a volley of questions, they admitted that there were several `weak' cooperative urban banks but it was not the Forum's responsibility to certify them as such. Condemning the `fraud' committed by the Krushi Bank, they urged the RBI and the Deposit Insurance and Credit Guarantee Corporation of India to enhance the deposit insurance cover to Rs. 2 lakhs and pay the insured amount immediately to the hapless depositors.

Among those present at the press conference were Messrs V. K. Taori, MD of Mahesh Cooperative Urban Bank, Boorgu Muralidhar and D. Pullaiah, Chairman and MD respectively of Prudential Cooperative Urban Bank, S. Agha, Chairman, Chairman of Charminar Bank, R. V. Rayudu and D. N. Somayajulu, Chairman and MD respectively of Bharat Mercantile Cooperative Urban Bank, B. Venkataiah, Chairman, Chaitanya Cooperative Urban Bank, and Nazeer Ahmed of Milli Cooperative Urban Bank.

Depositors' meet

Meanwhile, a thousand depositors attended a meeting convened by the Vasavi Cooperative Urban Bank at Dilsukhnagar to allay their fears. The Vasavi Bank has suffered the most having disbursed Rs. 40 crores in cash and Rs. 27 crores in demand drafts to depositors out of its total deposits of Rs. 300 crores till Tuesday.

According to its Director, Mr. G. Rajamouli Gupta, there was a slight let-up in the trend and the bank had disbursed a further amount of Rs. 12 crores on Wednesday. Some depositors complained that the directors had taken huge loans. However, it was explained said that no loan had been sanctioned without proper security. Moreover, a director stood to lose his position if he defaulted on payment of two instalments.

RBI's advisory

In a separate development, the RBI sent an advisory to the A. P. Urban and Town Cooperative Banks Association in response to a memorandum submitted by a delegation led by the Association president, Mr. M. Anjaneyulu, seeking a direction to stop payment of deposits which had not matured.

The RBI Executive Director, Mr. R. B. Mathur, said in the letter that ``financial prudence demands that banks do not take up repayment of fixed deposits which are not due for repayment unless the banks are in a position to do so after ensuring discharge of all their current obligations.'' The Association has since sent a circular to all the banks to prevail upon depositors not to insist on premature withdrawal of their deposits.

Speaking to The Hindu, Mr. Anjaneyulu said there was a slight let-up in the run on deposits since this afternoon and hoped that the situation would improve in the next few days.

Send this article to Friends by E-Mail

Section  : Southern States
Previous : Transco opposes free power supply to ryots
Next     : Top naxal couple surrender