By Shaik Zakeer Hussain, TwoCircles.net,
Bengaluru: The distress faced by city’s Amanath Bank to pay back their depositors is far from receding, as the fresh Reserve Bank of India (RBI) directive has ordered the co-operative bank to cease all its financial activities.
Owing to the bank’s high level of non-performing assets (NPAs), early last month the RBI, under sub-section (1) of Section 35A of the Banking Regulation Act, 1949 (AACS) had issued a notice curtailing transaction to not more than Rs. 1,000 per account a day, later restricting withdrawals to Rs. 1,000 within a period of six months.
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Under the issued directions, the bank cannot grant or renew any loans and advances, make any investment, incur any liability including borrowing funds and acceptance of fresh deposits.
The bank’s dwindling financial situation and the uncertainty surrounding their lifelong savings has incensed the depositors, most of who belong to the poor and lower middle class sections of the Muslim community.
“I have all my savings deposited in the bank, which I no longer have access to”, says Imam Ali, a retail cloth store owner and an account holder, who has debts to clear and a sick wife to tend to.
“Many of us had put our money in this bank, as it was run by people belonging to our community, but our trust has now been betrayed”, said another depositor.
Mohammed Akmal H., Officer on Special duty at the Amanath Bank, told TCN that the bank has now decided to auction two of its immovable properties in the city to repay its depositors. “We expect that the sale of these properties should profit us with around Rs. 40 crore. The money will in turn be infused in the bank, revitalizing our operations”. The bank should be back to its normal state within two months, he assured.
Amanath co-operative bank was established in 1977 with a capital base of Rs. 3 lakh by Mumtaz Ahmed Khan, founder of Al-Ameen Educational Society and K. Rahman Khan, now a union Minister of Minority Affairs, soon attaining the status of Karnataka’s first scheduled urban co-operative bank. It was started with 3,000 members and now has 41,000 members and has 15 branches across Karnataka
Though it had a smooth sailing for years, the bank came under intense scrutiny as allegations of misappropriations of funds came into public light. Sources told TCN that the bank founder and former chairman K. Rehman Khan had in his capacity, sanctioned benami loans to his relatives accounting to more than Rs. 100 crore, which were not recovered.
Though Khan has admitted that loans were sanctioned to his relatives, however he has said that he is not responsible for the defaults.
Whether responsible or not, the fate of more than two lakh account holders and its 419 employees now hangs in balance, eagerly waiting for RBI’s next orders albeit with little hope.
