RBI averts crisis at Krushi bank

Our Banking Bureau

Hyderabad, Aug 14: With the timely intervention of the regulatory authorities, the possible crisis has been averted in the Hyderabad-based Krushi Urban Cooperative Bank, where the depositors demanded pre-closure of deposits under presumption that the promoters had runaway.

RBI and the police officials have jointly averted the major crisis, which was erupted during last week-end due to a increased demand for withdrawals under fixed deposit account and later resulted in manhandling the bank staff. All the 10 directors of the bank had to go underground to avoid backlash from the depositors.

Speaking to The Financial Express, Srinivasa Murthy, assistant general manager said that RBI has been informed of the incidents and was advised to open the bank to do normal transaction. The bank also has been advised by the RBI to call for a immediate board meeting to find out ways and means to clear the air.

When contacted RBI officials said that they have instructed the bank officials to submit the ‘position report’ and only then “we can take a view on the issue”. However, the official said that the apex bank is closely monitoring the issue and it will take a week for us to come to conclusion.

According to the RBI official, the bank has net deposits of Rs 35 crore as against Rs 42 crore advances.

Further, the state government has initiated an enquiry into the entire episode by registrar of cooperatives. The officials are investigating into the records to find out the outflow of the cash through advances. “We will take appropriate action based on the enquiry report”, said the cooperative official. The bank has till date paid the premium for the deposits up to Rs 1 lakh under Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, which constitute 90 per cent of total deposits of the bank, the Krushi bank officials claimed.

The bank has also sought time from RBI to arrive at a final conclusion as all the directors have gone underground since the chaos took place on last Saturday. The bank’s chairman, K Venkateswara Rao, who is now in the US on a private trip, is also expected to arrive soon to sort the issue, Murthy said.

The first issue to be taken at a board meeting would be to convince the depositors who seek to pre-close the accounts and request for a scheduled repayment of the deposits, Murthy said. The bank would also insist the customers who have taken loan to return the maximum possible amount immediately.