The Hindu Business Line : High-level probe into APCOB

`Between 1995 and 2004, the APCOB's board of management disbursed Rs 13.84 crore to 23 organisations that were in no way connected with agriculture and allied activities.'

Hyderabad , July 5

THE State Government will order an inquiry by an officer of the rank of Special Chief Secretary into the irregularities committed by the AP State Cooperative Bank Ltd (APCOB).

The inquiry will be completed in two months and the Government will initiate action against those responsible for lapses, the State Minister for Cooperation, Mr Kanna Lakshminarayana, told the Legislative Assembly on Monday.

The Minister said between 1995 and 2004, the APCOB's board of management disbursed Rs 13.84 crore to 23 organisations that were in no way connected with agriculture and allied activities.

Besides, the loan amounts sanctioned to each unit were in excess of Rs 25 lakh, the normal limit prescribed under the bank's by-laws.

No reasons were recorded for sanctioning higher amounts than prescribed.

Mr Udayabhanu and 22 other legislators belonging to different political parties raised the issue in the House. While the Congress, CPM and CPI legislators wanted the Government to enquire into the irregularities committed in APCOB since 1995, the Telugu Desam legislators, including the Leader of the Opposition, Mr N. Chandrababu Naidu, wanted the probe to cover the sanctions even between 1989 and 1994 when the Congress was in power.

Replying to the debate, the Minister said a House Committee had probed into the APCOB activities pertaining to the five-year period from 1989 to 1994 and it had submitted an interim report.

He was ready to table the report if it was available. He wondered why the previous Telugu Desam Government did not act on the report during its nine-year rule.

Mr Laxminarayana said the APCOB had not evolved a policy or set of guidelines to sanction non-agricultural loans as well as collateral security requirements. As a result, collateral securities have been accepted with deficiencies. The board had used its discretion with regard to security margins and 100 per cent coverage was not ensured. A uniform policy of obtaining guarantee bonds from promoter-directors or other guarantors was not followed.

He said the APCOB had initiated legal action against the units and had recovered Rs 1.3 crore following which it had closed six accounts. In respect of the remaining 17 units, the total amount outstanding, inclusive of interest, was Rs 18.4 crore.

An inquiry officer probed the issue and the APCOB had initiated action against the bank officers found accountable for the lapses.

The Registrar of Cooperative Societies, however, observed that the findings of the enquiry officer were not adequate enough to fix any specific responsibility on the board of directors and the then managing directors. "This calls for a further investigation into the matter."

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