The other Parikh has gone underground

The other Parikh has gone underground
JANYALA SREENIVAS

AHMEDABAD, MARCH 30: Big bull Ketan Parekh and chairman of the Madhavpura Mercantile Cooperative Bank (MMCB) Ramesh Nandlal Parikh have more than a common sounding last name to share. If Ketan Parekh, who was arrested today, is heavily into shares and stocks, Ramesh Parikh is known to put his money to any mouth in the stockmarket. Today, Ramesh Parikh is credited with single-handedly bringing the bank to the brink of liquidation by giving indiscriminate bank guarantees to stockbrokers who lost heavily in recent Sensex crash.

Result: a bank which once had total deposits amounting to around Rs 1,220 crore in 22 branches today allows depositors to withdraw just Rs 1,000 at a time.While thousands of betrayed depositors daily line up outside the bank in the hope that they might get back their money, Parikh has locked his luxurious bungalow in the Bopal areain the suburbsand quietly gone underground.

‘‘Sir has left instructions not to give his mobile phone number to anyone. We do not know where he is at present,’’ Parikh’s secretary says. His office and residence phone are off the hook. His son and other family members have also gone underground.

The RBI has registered cases against Parikh and Devendra Pandya, Chief Executive Officer, MMCB, in the metropolitan court and is conducting an investigation. MMCB was started in 1968.

Although the Madhavpura bank is a cooperative, it is registered under Section 84 of the cooperatives act as a multi-state bank. ‘‘This means it’s under the supervision of the Central Registrar of Cooperatives, New Delhi, K S Bhoria while its day-to-day transactions are under the ‘‘supervision of the RBI,’’ says Minister of State for Cooperation Ramanlal Vora.

‘‘The state government has nothing to do with it. If it were in my hands I would have asked for police cases to be registered and arrest the directors immediately.’’

Now the ball is in the Central registrar’s court. Sources in RBI said that unless the investigation is complete no action can be taken.

Parikh, who jointly owns the MMCB alongwith 11 other directors including Pandya, burnt his fingers a few months ago when he gave bank guranteesclose to Rs 50 crore against shares to his son Vinit Parikh’s firm Guj Finstock Ltd.

Sources in MMCB say the firm lost heavily in the stock market upheavel and Ramesh Parikh again used depositors’ money in the bank to help his son pay his dues at the stock exchange.

But that did not deter him from sanctioning bank guarnatees and advances to big bull Ketan Parekh and half a dozen other brokers when they were desperately trying to keep the prices of their favourite scrips stable.

They had approached the bank for money through son Vinit Parekh. Highly placed sources in the RBI said that the MMCB gave indiscriminate hefty advances to various firms and individuals during the last two months and did not maintain the Statutory Liquidity Ratio (SLR).

In the last two months, the MMCB is believed to have extended more than Rs 800 crore of depositors’ money as advances against deposits of Rs 1,200 crore which violates the statutory requirement of maintaining 32 percent of the deposits as reserves.

Of this, more than Rs 600 crore has been advanced to big bull Ketan Parekh against collateral (shares he already owned). But by this time, Ketan Parekh and his cotorie of brokers were already in a mess trying to keep prices of their favourite shares stable. When the stock market crashed early this month, it took down the Rs 600 crore of depositors’ money with it leaving the MMCB in a liquidity crisis.

The role of CEO Devendra Pandya is also being questioned since he failed to object to the advances being made against shares.

This is not the first time that Parikh and Pandya are under a cloud. In 1980, the bank had given a Rs 40 lakh loan to its own director Rasiklal Vasa. Vasa never paid back the loan and by 1998, the amount payable with interest had risen to nearly Rs 1 crore. Vasa had mortgaged his bungalow in Navyug society to the bank but inexpicably both Parikh who was one of the directors and Pandya who was a manager failed to take any action. Till now the loan is shown as outstanding in the records.

Interestingly, nine other directors of the bank were kept in the dark about dealings of the MMCB in the last few months. The bubble burst when word spread like wildfire in Ahmedabad on March 11 that the MMCB had given advances to Ketan Parekh who lost heavily and panicky investors made a beeline at the bank to withdraw deposits.

In a single day more than Rs 65 crore were withdrawn triggering a liquidity crisis. When all 22 branches of Madhavpura bank did not open its shutters on March 12, incensed directors were the first to armtwist Parikh and Pandya to pay up their personal investments.

Ramesh Parikh initially denied he gave bank guarantees to defaulting brokers but went underground when the RBI conducted a preliminary investigation of its transactions and requested the Central Registrar of Cooperatives to supercede the board of directors and appoint an administrator.