HYDERABAD, 18 August — The Reserve Bank of India (RBI) has moved a court here to take action against a local cooperative bank for committing irregularities. The RBI has filed a complaint in the court of a metropolitan magistrate seeking action against the Krushi Urban Cooperative Bank, its chairman, K. Venkateswara Rao and nine of its directors for flouting RBI norms in granting unsecured loans in excess of its deposits.
Police have registered cases of cheating against Rao and the nine directors. While Rao is believed to be in the US, police have not been able to trace the other directors. The police action came on individual complaints by 30 depositors that they had been duped of their money.
The cases have been registered under sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code (IPC). The case has been handed over to the central crime station (CCS), City Police Commissioner P. Ramulu told media persons. The bank, located in Secunderabad, has been sealed and police are questioning its officials, including General Manager Mohan Das and Manager Srinivas Murthy.
Police allege that the bank had made unsecured advances of 50 million rupees to several of its directors. The bank is also accused of granting advances against shares beyond the limits prescribed by RBI and of stopping its operations without informing the apex bank.
More than 500 investors have deposited 350 million rupees in the bank since it was formed in 1998. Police say the bank ran into problems as its loans and advances had touched 530 million rupees, 180 million rupees more than its deposits.
There was a run on the bank on Saturday when depositors rushed to withdraw their funds. The bank, however, failed to honor their checks, saying that it did not have the money to do so. The depositors, some of whom had managed to retrieve their valuables stored in the bank’s lockers, then lodged separate complaints with the police.
