Only return of defrauded amount can rescue the Bank from turning into a financial fiasco for the community mired in poverty.
By A Staff Writer
Bangalore: Woes of the Amanath have come full circle. Unless something drastic is done to save the Bank, it may go down the annals of history as yet another Muslim financial institution that betrayed the values its very name i.e., ‘Amanath’ (honest custodianship) envisioned and cherished.
Though the Bank’s current administration headed by Naseer Ahmed MLC has initiated measures to recover defrauded amount by sale of mortgaged land (NPA figures are currently pegged at Rs. 68 crores), there are indications that the former custodians of the Bank are more interested in the Bank’s merger with some other bank in which case the defaulting parties (many of whom are their close relatives) would go scot free with only not-so-worrisome prolonged litigation proceeding at its snail’s pace.
Virtually thousands of depositors have been left high and dry with the Reserve Bank of India (RBI) slapping a moratorium on withdrawal of funds from the deposits. Hundreds of small entrepreneurs, businessmen, pensioners, intending Hajj pilgrims have been left in lurch and have nothing else to do than cursing their choice for opting for the Bank whose previous administration indulged in reckless nepotism while advancing loans to the tune of hundreds of crores to their own kith and kin. They had wrecked the bank financially while raising empires of elite schools all around Bangalore and software firms. (Ref. Islamic Voice previous story (https://islamicvoice.comseptember.2003/amanath.htm#rnu) appearing in September 2003 issue which triggered good deal of debate and exposed the plundering of the institution and cheating of gullible depositors by the Bangalore’s Muslim elite. Needless to say that the Bank’s administration was taken over by the State Government’s Cooperation Department for five years during 2007-12. It blew away a considerable amount running into crores by way of legal fee to pursue cases in court, but to no avail.
An Opportunity Wasted
However, clearance of loan dues to the tune of Rs. 8.37 crore by a leading builder i.e., Prestige Group, was one mentionable achievement during the era. But a Government appointed CEO wasted the opportunity of using this precedent to bring round other defaulters to cough up their defaulted sums. Instead of closing the case against the builder as per the given word, the then CEO pursued the criminal case against him too thereby turning others from coming anywhere near resolution of the crisis.
Current Turn of Events
The recent crisis was triggered by a notice to the Bank to curtail its transaction and allow withdrawal of funds not exceeding Rs. 1,000 in six months as the bank had failed to recover loan amounts worth Rs. 66 crore with some borrowers with robust political connections. There was a run on the bank by depositors who began to withdraw Rs. 1,000 a day. However it was only on May 16 that the RBI asked the bank to shut down its operations for its failure to report on the recoveries. It also clarified that the Bank had been asked not to allow withdrawal of more than Rs. 1,000 once in six months in its notice on April 1, but the Bank had deliberately altered the notice to allow withdrawal of Rs. 1,000 a day.
As the new notice appeared on the walls of the Bank’s headquarters located on the Bowring Hospital Road, the word spread around and stirred widespread protests ensuing scuffle with the staff members and ugly scenes. Backdoor efforts too were made to pacify the people. A prominent cleric and his institution too were involved in bringing about a deal between the defaulters/fraudsters and the bank’s current administration and to resolve the matter peacefully as much was at stake for hundreds of madrassas, mosque committees and dargahs and small cooperative institutions that were keeping their money in the Bank and depended for liquidity on daily transactions.
Sans Defaulted Money
Following end of the Governmental tenure in 2012, elections were held around seven months ago to entrust the bank to the representatives of its shareholders. Two syndicates, each blessed by founder chairman Rahman Khan and Mumtaz Ahmed Khan respectively who had fell afoul of each other in the intervening years, fought a tough battle for the control of the Bank in which Rahman Khan’s side won the race. Consequently, Naseer Ahmed MLC and a leading garment manufacturer, was elected as the head of the new management committee. According to senior Manager Jaffer Hussain, the new team’s effort had begun to pay dividends. He says the bank had mobilized Rs. 40 crore of new deposits and extended Rs. 65 crore of advances during the 7- month period. “Consequently, the Non-Performing Assets (NPA) of the Bank had come down to 33% showing healthy growth”, he claimed.
Yet the NPAs were still far higher than the health certification standards would demand. The abrupt curtailment of the transaction between the depositors and the Bank by the RBI”a level at which the functioning would be totally unviable”came as a rude shock and stirred the hornet’s nest among the Bank’s clientele leading to the present crisis.
Some Silver lining
Auction of Defaulters Property
A beginning has been made on May 23 with auctioning of two acres of land belonging to prominent defaulter Akram Khan (identified by only his last known address in Basavanagudi, Bangalore) being sold for Rs. 11 crore. Eleven bidders were present on the occasion and the plot was purchased by Rayan Build Tech. Three more auctions are slated for May 28, May 30 and June 14. Though the target of recovery of Rs. 68 crore is no tall order, the men on the prowl to put spokes in the wheel are simply too many to be ignored. Merger lobby would be working at full throttle to scuttle the process.
The Bank’s current woes are rooted in the greed-driven financial mismanagement in the past in which the political big guns have stashed away millions nay billions, and got away with them. One of them runs five franchisees of a nationally known elite school in Bangalore and Mysore. Another big gun who does not tire of invoking name of Allah and his Prophet, waived off Rs. 78 lakh of interest from his own loan while at the helms of the Bank for a short period. He is reported to have borrowed crores of rupees from two branches of the Bank in Bangalore mortgaging the same property at both places. Several of the defaulters belong to the families of former Chairman and the General Manager who lords over properties worth billion in and around the city which has seen an economic boom in the so called era of liberalization.
The enrichment of the rich and pauperization of the poor has left the community in the city leaderless as no leader enjoys credibility worth the name in the eyes of the people. The fiasco has dented the image of Muslim community which had made some strides in the field of education and entrepreneurship in the city.
Plight of Depositors
Apathy runs high in the scheme of things for the former custodians of the Amanath Bank who have built their personal empires in the last three decades. There is total lack of sensitivity towards the depositors whose money is locked up in Bank. The return of even a fraction of money by the leading defaulters would bring succor to the community in a big way. Banks constitute sinews of power in the current age and the Amanath Bank should not be allowed to turn into a financial fiasco. Lack of sensitivity is coming in the way of resolution of the crisis. Have a sampling of the suffering the curtailment of the transactions have caused to the depositors:
* Worrylines on the forehead of Sajida Begum, secretary of the Aasra Home for Women, have only been increasing all through April and May. The noted social worker in Bangalore has not been able to access the funds of the Aasra locked up in Amanath Bank accounts. Rent arrears for the premises she has hired are mounting.
* A newly set up hospital in downtown Bangalore deposited the seed funds in Amanath Bank. It is finding the going tough as transactions have been virtually frozen under the RBI instructions.
g Leather merchant Sagheer Ahmed is a sad man. He had deposited a cheque for Rs. 50 lakh in the Amanath Bank on March 27 merely for clearance as was the usual practice with him. It got credited on April 2. But as luck would have it, the RBI moratorium against issuing funds came on April 1 and locked his funds into the crisis in which he had no role.
* Iqbal Ahmed, engineer from Electricity Board, 70 is cursing his fate. All his retirement benefits and remittances from his sons abroad, are out of his reach for the last two months. He does not know when he would need the funds for any medical emergency he might face.
* Mukhtar, a computer dealer feels himself unlucky. He missed withdrawing the money by a whisker on March 31. RBI freeze on Amanath Bank has left him in a limbo.
g A cooperative society which has over 700 account holders, which refused to be identified, has to cease its operations as its funds in Amanath Bank lie frozen.
* Inaccessibility to funds in Amanath Bank led Ameena’s (name changed) marriage plan shelved as bride’s side had to backtrack on jode ki raqam. It proved a double whammy for the bride’s parents as advance made for booking for wedding hall was confiscated.