Search the Internet          Tips  Sites: Finance, Investment

RBI moves court against Krushi Bank ex-directors

Syed Amin Jafri in Hyderabad

The Reserve Bank of India on Thursday filed a complaint in the court of a metropolitan magistrate in Hyderabad against the former directors, including chairman, of the Krushi Co-operative Urban Bank for alleged irregularities in the conduct of the affairs of the bank that plunged into a crisis last week.

Pleading for action against the bank and its 10 directors of the superceded board, including chairman K Venkateswara Rao, the RBI told the court in a complaint that the accused had flouted the apex bank rules while granting unsecured loans.

The RBI said that a scrutiny of the bank's accounts for a fortnight from March 15 to 29 this year had revealed serious irregularities and violations of the provisions of Banking Regulation Act and statutory directives of the apex bank.

Citing details of such irregularities, the RBI said that the Bank had granted unsecured loans to the extent of 67.6 per cent of the total outstandings and 52.8 percent of its net demand and time liabilities as against the permissible limit of net demand and time liabilities of 33.3 per cent.

Moreover, as against the maximum limit of Rs 5,000 for a period of 30 days permitted by the RBI, the bank had granted temporary overdrafts in current accounts for amounts up to Rs 9 million for one year.

The chairman and three other directors of the bank were granted unsecured advances in the form of temporary overdrafts in contravention of Section 20 (1) (B) of Banking Regulation Act.

The bank had also granted loans and advances exceeding maximum exposure ceiling in respect of individual and group categories fixed by the RBI at Rs 3.82 million and Rs 9.05 million, respectively.

Advances granted to the bank chairman and his concerns included Rs 3.85 million to Venkateswara Rao, Rs 517,000 and Rs five million to Halcyon Softech Limited and Rs 39 million to Goldcrest Power and Projects and these amounts were outstanding as on March 23.

These loans and advances were provided in violation of the directives of the RBI under section 35 (A) of Banking Regulation Act.

Proper procedure was not followed by the bank while granting loans and advances to its chairman and his concerns in which he was a director.

The Bank granted advances against shares beyond the limits prescribed by RBI in cases of Kerbs Biochemicals, Chaitanya, Nazir Sharif, Mohammed Iqbal Khasim and Sambamurthy. The limits sanctioned for these firms were Rs 22.5 million and the balance outstanding as on March 23 was Rs 2.19 million.

The RBI has named all the directors of the superceded board as accused. They are K Venkateswara Rao, K Venugopal Rao, VVA Prasad, K Sridhar, K Suneetha, Sri Ranga Sai, K Ramesh, R Ramamoorthy, P D Dina Chakravarthy and G Ram Babu. The complaint said that the accused had violated Section 21 of the Banking Regulation Act.

The accused also closed the office and stopped banking business with effect from August 12 without informing the RBI. Since then, the bank failed to maintain cash reserve ratio and statutory liquidity ratio.

YOU MAY ALSO WANT TO READ:
Cops file another case against Krushi officials
Administrator appointed for Krushi Bank

Money
Business News

Tell us what you think of this report