Southern States - Andhra Pradesh

Dhana Bank chief diverts funds?

By Our Staff Reporter

ELURU MAY 16 . The Chairman of the Dhana Cooperative Urban Bank Limited, RS Sagar, who is now in police custody following the charges of running the bank in violation of the Reserve Bank of India (RBI) guidelines and deceiving the customers by swindling the bank funds, is alleged to have reinvested huge amounts of bank funds in his still-born Sagar International & S Square Software Solutions.

The police, who are pursuing the case for the past one week after seizing the bank following the complaints of `breach of trust' by the Chairman with respect to realisation of the Demand Drafts issued on Housing Development Finance Corporation (HDFC) Bank, are understood to have got prima facie evidence which lend credence to the charges of misappropriation of funds.

Sagar, the prime accused in the case, is also suspected to have diverted funds from the bank and reinvested in Lordvyn Fruitwell India Limited located at Razia Cottage in Hyderabad, which is suspected to be his another benami firm. Besides, the Chairman and a host of members on the board of directors of the bank, have also indulged in diverting funds for investment in fish trade. The district Superintendent of Police, Kripananda Tripathi Ujela, under whose direct supervision the case is being investigated, told The Hindu that large-scale diversion of funds raised by the bank in the form of deposits from the gullible people could obviously have a devastating effect on the financial health of the bank, which came into operation a couple of years ago with a share capital of Rs 50 lakhs. The diversion of funds led to exhaustion of the overdraft limits in the HDC bank and the subsequent dishonouring of the DDs by the same HDFC bank and a resultant panic situation among the depositors, the SP added. The preliminary inquiries by the police revealed that Dhana Bank had issued Demand Drafts on HDFC Bank, Vijayawada, for Rs 38.48 lakhs without maintaining sufficient fund reserves with the latter. Scores of customers who took DDs from the private bank on HDFC bank kept running from the pillar to the post to get their moneys back.

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