Ghaziabad Bank Depositors Seek Merger A La GTB

Ghaziabad (UP), July 30 | Updated: Jul 31 2004, 06:34am hrs
Crores of rupees in loans to associated entities of senior management. Unauthorised extension counters operating across the district. Irregularities in issuance of bank guarantees and false pay orders for allotment of liquor shops. These are just a few of the routine transactions that used to take place at Ghaziabad Urban Co-operative Bank. Till RBI struck.

But hapless depositors who were praying for the well being of the bank, now also have to contend with an RBI-imposed freeze on withdrawals in excess of Rs 1,000 per account, till further orders.

The case brings into sharp focus once again the plight of co-operative bank depositors, who do not receive the kind of attention that depositors in a larger bank like Global Trust Bank do.

Depositors here have lost hope and have stopped visiting the branch. The FE team which visited the head office of the bank found the air inside uncomfortably quiet.

The Bank's HQThe banks new secretary Shailendra Bahadur Singh blames his predecessor for the current plight of depositors: On the basis of complaints and departmental enquiry into mismanagement of funds and running of unauthorised extension counters, former secretary RD Sharma, deputy secretary (and secretarys brother) JD Sharma, loan officer Manoj Sharma, and two managers KG Singhal and Sudhir Jain have already been suspended. We are trying our best to recover the loans extended to various clients and pay back the depositors.

Adds Singh, Loans worth Rs 7.7 crore are due from entities of former secretary RD Sharma and his relatives while about Rs 3.6 crore is due from entities where ex-chairman Ashok Rawal and his relatives have an interest. If the money from such accounts comes back to us all the problems of the bank would be solved.

Rich Promoters, Bankrupt Bank
He points out that over the past four months the bank has been able to recover Rs 23 crore from debtors and repay customers. The RBI order received on June 16, however, prohibits the bank from paying any depositor more than Rs 1,000. The bank has total deposits of Rs 45 crore.

All kinds of bunglings were taking place here. I had given the documents of my property for a loan, but the papers were attached as guarantee for someone elses loan. Now, since this person has not paid back I have received a decree from the court attaching my property, said Subodh Chowdhury, a bank customer.

Employees at the bank point out that most of the loans disbursed here were unsecured, including housing and vehicle loans.

We would like to appeal to RBI that our bank should also be merged with some stronger bank as in the case of Global Trust Bank so that the depositors, who are mostly farmers, can get their money back, said Vikas Sharma, another depositor.

Our non-performing assets as a percentage of net assets have been high and had reached 54 per cent in 2003. While the bank was stopped from taking fresh fixed deposits by RBI way back in May 2002, it was accepting deposits under the garb of a different scheme called Saving Home Deposits with interest rates ranging between 5-7 per cent, says Singh. The June 16 order of RBI says that acceptance of fresh deposits in whatever name called is strictly prohibited.

Depositors only hope today is that the bank recovers its Rs 47 crore in advances (as on March 31, 2004) of which as much as 83 per cent have been extended as unsecured short-term loans.