Naidu Seeks Jalan & #39;S Intervention Over Krushi Bank

Andhra Pradesh chief minister N Chandrababu Naidu Thursday requested the Reserve Bank of India (RBI) governor Bimal Jalan to personally intervene and ensure that the RBI officials take necessary steps to help the depositors of Krushi Urban Cooperative Bank to regain their money through deposit insurance scheme.

He has also pleaded the governor to mount a campaign in coordination with the cooperative and police department to inspect and take remedial measures in the case of other weak or defaulting urban cooperative banks in the state.

In a letter to the governor, Naidu has drawn the attention of Jalan that despite early warnings by the Registrar of the Cooperative Societies (RCS) from June onwards and the RBI's own inspection report of March 2001, the chairman and directors of Krushi Bank managed to systematically withdraw funds from the bank beyond prescribed limits leading to a run on the bank.

While the RCS is responsible for the cooperative aspects of these banks in terms of registration, conduct of meetings, eligibility of directors and sharing of surplus as per cooperative principles, the RBI has full control over the banking operations, Naidu pointed out in the letter.

There is a need for much greater coordination and closer cooperation between the two regulatory bodies. The issue may be addressed immediately to find a long lasting solution mutually acceptable.

Naidu has instructed the RCS and police authoritires to fully cooperate with the RBI officials and provide whatever support is required to enable them to restore public confidence in the urban cooperative banks.