Depositors lose Rs 200 cr in Gujarat

Depositors lose Rs 200 cr in Gujarat
ENS ECONOMIC BUREAU

MUMBAI, MAR 21: An action forum of co-operative banks depositors formed in Ahmedabad has said that depositors in these bank have lost nearly Rs 200 crore as a result of the interest lost on pre-mature withdrawal of deposits.

Said the Cooperative Bank’s Depositors Action Forum: “The loss of principal amount of deposits is certain in the wake of the payment crises occurred due to reckless price manipulation of select K-10 scrip in the share markets, and as extended to the Madhavpura Mercantile Cooperative Bank (MMCB)... the top management of MMCB along with BSE share broker, Ketan Parekh, has been involved in the price manipulation of select scrips. As the prices of these shares nose dived, the chairman of MMCB and his accomplices have illegally applied the funds of the bank to the detriment of its own depositors”.

It said that for the past one week or so, MMCB had failed its obligation to repay depositors and has closed its shutter for more than three days in contravention of various provisions of banking laws and Reserve Bank Of India Act (1934).

“The management of MMCB went underground, shaking the confidence of depositors of all co-operative banks in Ahemedabad leaving the anxious depositors queueing up at almost every co-operative bank in the city”, said the Forum. The Forum is of the view that the failure of MMCB will certainly cause a payment crisis on the Ahmedabad Stock Exchange (ASE) very soon even as it cited a relationship between broker, Ketan Parekh, and the chairman of the MMCB, Ramesh Nandlal Parikh.

It said that Madhur Capitol and Finstock Ltd, (MCFL) owned controlled by Ramesh Parikh’s son has a membership of the NSE and ASE. “They have a business relationship with Ketan Parekh... Ramesh Parikh has facilitated Ketan Parekh with a bank guarantee of Rs 200 crore, and as Ketan Parekh has been affected by the payment crises in the stock market, MMCB is required to pay up for the said guarantees and may thus have to go into liquidation”, claimed the Forum.

RBI probe into Gujarat gold scam
MUMBAI:The Reserve Bank of India (RBI) is on the trail of a few state-run and co-operative banks who have reportedly accommodated importers of gold with pay-orders despite not having sufficient cash balances. It has been gathered that with margins falling in this line of business, desperate banks were accommodating bullion trades to retain business. “The entire trade is controlled by bullion traders who call the shots. Banks meekly accommodate for business and relationship reasons... foreign banks in this business seem to have better systems, but we are not sure whether the same can be said of state-run and cooperative banks,” sources said.

Margins in the bullion finance business, sources say, have crashed to 10 basis points of the value imported. Quite a few banks who got into this business saw it as a lucrative one for making fee-based incomes. As margins crashed, pressure soared on banks to retain clients.

The net result was that pay orders were honoured despite there not being sufficient funds. “It is basically a clearing house issue with cheques bouncing,” a senior banker said. Among foreign banks, Standard Chartered Bank and HSBC are the main players. ABN Amro Bank quit this line a year ago.