…as State Government orders its liquidation
THE FIVE-YEAR-LONG struggle of the City Cooperative Bank (CCB) depositors for its revival came to a naught here after the State Government officially sounded the death knell for the scam-hit bank on Thursday.
The decision for the bank’s liquidation was taken at a recently held high-level meeting, presided over by agriculture production commissioner Anees Ansari. A formal order announcing the bank’s liquidation was issued by Lucknow joint registrar (Cooperatives) Jairam Prajapati. Additional registrar Kuldeep Srivastava has been appointed the official liquidator of the bank. Confirming this, additional registrar, Cooperatives (banking), Devendra Dubey said with no hope or scope for the bank’s possible revival in sight, the authorities were left with no choice but to announce its liquidation. “The decision has been taken in the interest of the small depositors, who would be compensated maximum to the tune of Rs 1 lakh after the liquidation proceedings are complete. Though the liquidator has been given six months’ time, the winding-up may take slightly longer,” said Dubey.
Since only individual depositors are compensated in the event of a bank’s closure, the biggest losers in the process would be more than a dozen odd institutional depositors, who would forfeit their combined deposit of around Rs 30 crore with the bank.
According to CCB Depositors Welfare Association, the bank with 12,000 individual account holders still has a deposit of Rs 26 crore. “Enough, probably, to settle their claims, but in case of a shortfall, the Deposit Insurance and Credit Guarantee Corporation (DICGC) would be asked to meet the shortage,” said the additional registrar.
A baby of the now infamous stockbrokers Johari brothers, the bank collapsed on March 21, 2001 after the Joharis allegedly siphoned off Rs 32 crore of its money to fund their other business ventures.
From approaching the then prime minister and city’s member of Parliament Atal Bihari Vajpayee to the UP Chief Minister, the depositors petitioned several VVIPs ever since to get the bank back on the rails but their efforts proved futile. So what took the authorities so long to arrive at the decision considering that the Reserve Bank of India had cancelled CCB’s banking licence on October 23, 2004?
“The decision was kept pending because the Supreme Court was seized with the matter,” says Dubey. The SC had granted bail to the Joharis on November 3, 2004, after the latter had given an affidavit saying they were willing to pay back depositors their money by selling off their movable and immovable assets worth Rs 50 crore.
The apex court had then drawn up a payback scheme authorising the Chief Justice of Allahabad High Court to appoint a Company Judge for supervising the whole process related to auctioning of Joharis assets and settling the claims of the depositors. But on December 9, 2005, the SC recalled its earlier order after Joharis claim was found bogus. The stockbrokers were promptly sent back to the jail again.