E-Paper
Purvanchal Cooperative Bank ‘misappropriated funds’, ‘failed to maintain SLR’
The Purvanchal Cooperative Bank, based in Ghazipur, is one of 59 urban cooperative banks operating in various districts of the state under a license from the Reserve Bank of India.
LUCKNOW The Purvanchal Cooperative Bank in Ghazipur, which has been barred by the Reserve Bank of India (RBI) from accepting any deposits or granting fresh loans and advances for six months due to alleged gross irregularities and misappropriation of funds, is now facing additional accusations of failing to maintain the statutory liquidity ratio (SLR) and violating the provisions of the Money Laundering Act.
The Purvanchal Cooperative Bank, based in Ghazipur, is one of 59 urban cooperative banks operating in various districts of the state under a license from the Reserve Bank of India. It operates six branches and serves approximately 19,000 depositors with total deposits of about ₹40 crore. The bank is now subject to a criminal investigation following the registration of an FIR indicating violations of anti-money laundering guidelines and the provisions of the Prevention of Money Laundering Act.
Individuals aware of the situation say that the irregularities came to the attention of the RBI recently, and an inquiry conducted last month revealed that all branch managers and senior managers have provided statements against the bank’s top management.
The bank’s former promoter, Ram Babu Shandilya, and former CEO, Vivek Pandey, are accused of carrying out various serious irregularities. Allegations against the former CEO include the sale of government securities that were deposited to meet the SLR.
An FIR filed in Ghazipur names the bank’s former promoter, former chief executive officer, and the management for these violations, stating, “There are gross irregularities in the Purvanchal Cooperative Bank, Ghazipur, which now has a negative net worth of ₹6,61.70 lakh. The Reserve Bank of India has informed that the bank had loans and advances of ₹33.62 crore on March 31, 2023, which increased to ₹42.85 crore on August 14, 2023. The bank held cash reserves of ₹10.21 crore on August 31, 2023, out of which loans totalling ₹9.37 crore were suspiciously granted. The bank also provided incorrect information to the RBI, falsely indicating an SLR of ₹1.97 crore, which was actually zero according to the CSGL (Constituent Subsidiary General Ledger). Similarly, the information provided about the CRR (Cash Reserve Ratio) was also incorrect.”
The FIR further notes that the bank did not provide complete information to the RBI’s inspectors. The bank was allegedly operated without authorisation by the former promoter, the former CEO, and the management committee. The FIR suggests that the bank’s auditors may have been complicit in these actions.
An anonymous senior RBI officer has stated that the bank’s board has been dissolved, and an administrator has been appointed. The officer also suggests that the accused may have transferred funds to their bank accounts by selling securities held to meet the SLR.
It should be noted that the bank has been restricted from accepting deposits and granting loans since August 29, 2023. This action was taken after the RBI became aware of certain irregularities involving the Purvanchal Cooperative Bank, which operates six branches in the district.
“... the Reserve Bank of India (RBI), through Directives Ref. No. Lko. DoS. SED. No. S-381/10.12.359/2023-24 dated August 28, 2023, has issued directions to Purvanchal Cooperative Bank Limited, Ghazipur. As of the close of business on August 29, 2023, the bank shall not, without prior written approval from the RBI, grant or renew any loans and advances, make any investments, incur any liabilities, including borrowing funds and accepting fresh deposits, or disburse any payments, whether in discharge of its liabilities and obligations or otherwise,” reads the directions issued by the RBI.
Eligible depositors will be entitled to claim deposit insurance of up to a maximum of ₹5 lakh within 90 days. It is important to clarify that these directions should not be interpreted as a cancellation of the bank’s banking license by the RBI. Despite several attempts, the management of the bank could not be contacted.
