The brass of the Madhavpura Mercantile Cooperative Bank have been rapped by the Joint Parliamentary Committee for not having done their homework to face the committee.
The JPC today asked the MMCB officials to appear again along with the ex-chairman of the bank, Ramesh Parikh, and former MD Devendra Pandya next month who are in jail now. Committee chairman SPM Tripathi told reporters that this was a setback as they had hoped to complete the MMCB testimony today.
The bank was supposed to testify before the committee on its role in giving substantial amount of pay orders to Ketan Parekh which bounced leading to a run on the bank and contributed to the scam.
According to Tripathi, the Bank of India officials, who also testified before the committee today, have admitted that the stock exchange branch of BoI had permitted discounts on the pay orders from MMCB which were much beyond the Reserve Bank of India limit for such discounts. Most of these pay orders were in favour of the KP group firms.
Bank of India chairman KV Krishnamurthy told the JPC that the bank had suffered a loss of Rs 137 crore as a result. Tripathi said the members felt the pay order problem was an important development that affected the markets and led to the unfolding of the scam in the share markets after the budget this year.
