Our Banking & Political Bureaus

Mumbai, April 16: THE Mumbai-based Kapol Co-operative Bank has admitted that it has given an advance of Rs 8 crore to Madhavpura Mercantile Co-operative Bank (MMCB) on March 9, 2001.

Kapol bank’s former directors Ashwin Bhuva and Himatbhai Goradia, along with BJP legislator Hemendra Mehta, have alleged that “the bank management’s decision, particularly by the chairman and vice chairman—Avinash Parekh, speaks volumes about the collusion, conspiracy and fradaulent acts on the part of the bank’s management.”

However, bank chairman KD Vora justified the bank’s decision to give call money of Rs 8 crore to Madhavpura bank according to stipulated guidelines of the Reserve Bank of India (RBI). He said that these advances were given before the outbreak of the Madhavpura controversy. Mr Vora was optimistic about the recovery of Rs 8 crore from the crisis-ridden bank whose assets stood at Rs 650 crore. However, if the bank fails to recover this amount, it will treat it as a non-performing asset (NPA).

Mr Vora refuted the allegations made by Mr Bhuva, Mr Goradia and Mr Mehta and said that these charges would be fought legally. He, however, admitted that after the Madhavpura bank scam, the bank’s depositors withdrew a total of Rs 70 crore in a record five days. But during the same period, the bank received deposits of Rs 9 crore. Curiously, the bank’s deposits stood at Rs 350 crore before the scam. Mr Bhuva, Mr Goradia and Mr Mehta have demanded that the board of the bank be immediately dissolved and an administrator appointed.

They have also called for a thorough probe to be conducted by the RBI in a serious bid to “protect the interest of small depositors and shareholders.” Mr Mehta, also a bank shareholder said that the bank had also lent Rs 63 crore without following norms.