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Curtains Come down on Amanath Bank

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Bangalore’s Muslim elite who had plundered the Bank to stash millions, turn deaf ear to calls for the rescue of the Bank that had helped several Muslim entrepreneurs to emerge on the business scene. The Bank makes final moves for merger with Canara Bank.

By A Staff Writer

Bangalore: It is curtains for Amanath Cooperative Bank established in the early 1970s.
The sad saga of Amanath Cooperative Bank ended on a tragic note on October 20, 2013. The special general body meeting of the Bank’s shareholders, attended by around 1,000 of them, passed a resolution allowing takeover of the bank by Canara Bank. The gloomy story of the plunder of the Bank’s finances by Bangalore’s powerful and greedy Muslim elite, among whom there are a dozen defaulters of the Bank, led to the catastrophic decision to ask the Canara Bank to take over the entire assets and liabilities. The bank’s President (elected in 2012) Mr. Naseer Ahmed MLC, announced that the ‘historic decision’ was taken in view of the severe moratorium on the Bank’s transactions by the Reserve Bank of India in April this year. It seemed the Bank had few choices. Even if the Bank would have returned to normal functioning, the low credibility that it had come to have, would have led to a run on the bank with depositors queuing up to withdraw their money. The crisis that led to the latest decision was triggered in April this year when the Reserve Bank of India placed a moratorium on transactions, allowing the depositors to withdraw only Rs. 1,000 in six months. The RBI had asked the Bank to recover a minimum of Rs. 66 crore from the defaulters among its borrowers.
Several meetings of the Bank’s directors under the aegis of well meaning persons such as Maulana Muft Ashraf Ali Saheb, rector of Darul Uloom Sabeelur Rashad, mediators like businessman Kamal Pasha and Feroze Abdulla etc, did not result in breaking the impasse and recovering the requisite funds to save the Bank from certain collapse. List of the major defaulters reads like the who’s who of Muslim elite in Bangalore. A last ditch attempt was made by veteran Congressman and former Union Railway Minister C. K. Jaffer Sharief, Shivajinagar MLA Roshan Baig, social worker Sardar Qureshi and former union minister C. M. Ibrahim. They led a delegation to the Chief Minister, Mr. Siddramaiah last July, seeking assistance of Rs. 100 crore to pay up the Bank’s outstanding liabilities. But the Chief Minister pleaded his inability, citing this to be setting a wrong precedent for other similarly crisis-ridden banks. Sharief and Ibrahim even went on a fast in protest against the bank’s failure to come up with adequate response to the depositors’ grievance between August 1 and August 4. They alleged that the Bank’s management was not serious in recovering dues and was instead pushing the situation towards takeover by some other bank, thereby washing off hands from the debts owed by the high and the mighty.
The Registrar of Cooperative Societies had ordered the management of Amanath Co-operative Bank Limited to take action, including filing criminal and civil cases and taking disciplinary action, against those found involved in financial irregularities to the tune of Rs. 102.03 crore. On July 20, Registrar N. S. Channappa Gowda gave the direction to the bank management to take action within the next 45 days. The registrar is the quasi-judicial authority.
The Registrar gave the direction to the bank management based on the inquiry report submitted by K. P. Appanna, who was deputy registrar in 2007. He had investigated how funds were misappropriated by sanctioning loans to fictitious persons from 2002 onwards. The inquiry was conducted after the RBI submitted its inspection report in 2003 on the irregularities.
Appanna’s 129-page report has gone into every instance to establish how the norms were violated by creating false documents. In the conclusion, the report, while putting the loss at Rs. 102 crore, held the following 10 people jointly and severely responsible – Mr. K. Rahman Khan, President (currently Union Minister for Minority Affairs); Abdul Gaffar Haji Lateef, Mohammed Azam Jan (both businessmen and now deceased); businessman S. S. Peeran; Builder and leading coffee estate owner Ziaullah Shariff; former MLA Sadath Ali Khan; businessman Aziz Mohammed, businessman and noted social worker Ateeq Ahmed; Chartered accountant Hyder Ali Jeevabhai and Jamila Khaleel (all directors). Rahman Khan, the Union Minister for Minority Affairs, had denied any wrongdoing.
The accounts of not less than 42 institutions were examined for the purpose of investigation. It observed that Al-Ameen Charitable Trust and the educational institutions allied to it were being sanctioned/granted loans, without any rationale, as and when they needed funds for their operations. The report observed, “The bank’s funds were utilised more for the Al-Ameen institutions than for normal banking purposes.”
The recommendation by the inquiry authority asked for “launching criminal proceedings against the above persons and initiating action for recovery to be taken against them.” In addition, the following five people were named as abettors in the crime “” K. Hidayathulla, Khairunnisa, Naseema Begum, M. A. Raj, Sadiqa Begum and Noorjehan Begum. They were found to be involved in various types of irregularities, including opening fictitious digital accounts, tampering with the minutes book, creating loan documents, etc.
The Cooperation Minister Mr. H. S. Mahadev on July 22, while replying to a demand by the BJP MLAs to refer the Amanath Bank scams to the Central Bureau of Investigation, had pointed out three scams pertaining to the Bank. The first scam – involving Rs. 102.2 crore – was committed during the period 1992-2002, the second – of the magnitude of Rs 54.77 crore – between 2002 and 2005, and the third scam pertaining to purchase of land was of the magnitude of Rs 17.10 crore.
Though the Minister had assured that the culprits responsible for the embezzlement would be booked, no action was initiated in the intervening months. It seems the State Government’s hands were tied against initiating action against some of the accused who have mightier connection in Delhi.