The Hindu Business Line : TDP walkout over Prudential issue

THE members of the Telugu Desam Legislature Party (TDLP) staged a walkout in the State Assembly on Tuesday protesting that the State Government was bent upon going ahead with the liquidation of the Prudential Co-operative Urban Bank to shield the major defaulters, who include Congress Party legislators and a relative of the Chief Minister, Dr Y.S. Rajasekhara Reddy.

The TDLP Leader, Mr N. Chandrababu Naidu, said the State Government could enact a legislation to recover the outstanding loans of the bank but it did not want to do so because the major defaulters of the bank were the Chief Minister's relative, Mr Rajeev Reddy, and the Congress legislators Mr J. Krishna Rao, Mr M. Ranga Reddy, Mr R. Damodar Reddy and Mr Shashidhar Reddy.

Mr Naidu said that due to the efforts of its employees and depositors, Prudential Bank had recovered Rs 184.10 crore out of its total outstanding of Rs 365 crore. As its financial position had vastly improved, it could be merged with another profit-making bank. Hence, the State Government should appeal to the Centre against the liquidation proceedings ordered by the Reserve Bank of India.

Earlier, making a statement in the House, the Minister for Co-operation, Mr K. Lakshminarayana, said he and the Chief Minister had a meeting with the Union Finance Minister on June 9 in which the latter was requested to permit the bank to commence business with its own funds or allow the State Bank of India or any other bank to take it over. However, the proposal for the merger of the bank with other banks was not approved.

Prior to this, on October 10, 2003, he said, a reconstruction scheme was prepared for the bank's revival and was sent to the RBI, which restricted the operations of the bank. But the RBI did not approve the scheme and asked the bank to come up with alternative proposals.

Almost a year later, on September 9, the RBI issued a notice for cancellation of the bank licence under the Banking Regulation Act, 1949.

In reply, the bank appealed to the RBI to approve the reconstruction package but to no avail. Finally, the RBI, on December 3, cancelled the bank's licence and asked the Registrar of Co-operative Societies to appoint a liquidator.

Nevertheless, Mr K. Lakshminarayana said the State Government would take all necessary steps to protect the interests of the depositors. Out of a total of 1.82 lakh depositors in the bank, he said, 1,77,958 depositors have a balance of up to Rs 1 lakh each while 3,239 depositors have a balance of more than Rs 1 lakh but less than Rs 2 lakh each. And 810 depositors have a balance of more than Rs 2 lakh each.

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TDP walkout over Prudential issue

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