HC seeks details from MMCB administrator

The Gujarat High Court on Tuesday directed S Ramchandran, administrator of Madhavpura Mercantile Cooperative Bank (MMCB), to remain personally present in court on April 26 with a list of the bank’s depositors, borrowers and details of insurance coverage of Deposit Insurance and Credit Guarantee Corporation (DICGC).

The direction was issued by a Division Bench comprising Chief Justice D M Dharmadhikari and Justice PB Majmudar in a public interest litigation (PIL) seeking directions to authorities to take action against those involved in the Madhavpura Mercantile Cooperative Bank (MMCB) scam, frame a scheme to return the deposit-holders’ money, recover the bank’s dues, and revive the bank.

The PIL, filed by the Gujarat Chamber of Commerce and Industry (GCCI) and Nav-Gujarat Banks Customers Protection Council, was admitted by the Bench last week. Besides the State Government and Centre, the petitioners have joined as parties the Central Registrar of Cooperative Societies, State Registrar of Co-operatives, Deposit Insurance & Credit Guarantee Corporation of India, Central Bureau of investigation, MMCB and the Reserve Bank of India (RBI).

Senior advocate D D Vvas, counsel for the petitioners, also alleged that it was the duty of the Reserve Bank of India to ensure that the MMCB abided by banking rules. In-spite of finding out about the situation as early as 1998 through an audit report carried out by it, the RBI did not take any action. The PR even alleged that the RBI should not have put an embargo on the premature withdrawal of full deposits from the bank.

Besides, it was the duty of the State Government to take action in the crisis, but it failed to do so. The petitioner said that though the CBI is investigating the case, it is not probing the bank’s fraudulent activities in Ahmedabad and other areas. Besides, the petitioners also pointed out that both the State Government and RBI were passing the buck to each other. Also, no serious effort was being made by the authorities to recover the advances made by the bank, it was contended.

About the bank’s shady dealings, the petitioners alleged that the bank had given out advances without proper verification or security, and even issued pay-orders to other banks without verifying the balance in the account of the party concerned. The petitioners also wanted to know how the bank issued pay-orders to disgraced broker Ketan Parekh.

Republished from Indian Express