Don’t bank on justice

The bail was granted despite Parekh defaulting to repayments promised to MMCB after he was charged with defrauding the bank of Rs 1,000 crore.

On the other hand, MMCB chairman Ramesh Parikh and managing director Devendra Pandya and his family members are still in jail. Mohan Jha, DIG CID (Crime) says inquiry in seven to eight of the 89 cases is complete. ‘‘We are under tremendous work pressure of other cases also… MMCB is just one of them and we cannot devote total attention to one bank only,’’ says Jha.

Gujarat’s minister of state for home, Amit Shah says he had no details on the CBI investigations. But he admits the investigation process is slow as cases are being audited individually and books of accounts verified.

While CBI Mumbai is investigating Ketan Parekh’s role in the MMCB scam, Gujarat police is probing cases of MMCB defaulters other than Parekh.

The CBI started investigation into the Parekh scandal in May 2002 and filed chargesheets against Parikh, Pandya and Ketan Parekh in December 2003. The case is still in the courts. Market regulator Sebi has acted though. In December last year it banned Parekh from operating in the stock markets for 14 years.

Till date, of the Rs 425 crore due from defaulters other than Parekh, the bank has been able to recover Rs 200 crore. On his part, Parekh has paid back only Rs 20 crore.

Says Jairambhai Patel, Chairman of Gujarat State Co-operative Bank: ‘‘The CID (crime) has taken action in only three of 89 complaints. The action taken in these cases will yield only Rs 15 crore.’’

The 89 complaints are collectively ‘‘worth’’ Rs 382 crore.

It was just another day on March 9, 2001 till MMCB depositors burst into its office on Ahmedabad’s Shahibaug Road. They had been alarmed by reports that Parekh—well-known as a big operator on the Bombay Stock Exchange—had defaulted on repayment of Rs 1,030 crore to the bank.

Unable to cope with the rush, the bank crashed in three days, forcing the Reserve Bank of India (RBI) to immediately suspend its clearing house operations. The Central Registrar of Co-operatives suspended MMCB’s board of directors within a week.

Investigations revealed Parikh and Pandya had lent money to Parekh to finance his risky stock market operations. When the BSE index had crashed in February-March 2001, Parekh had lost hundreds of crores and failed to repay the money to MMCB. Besides this, other defaulters owed Rs 425 crore to the bank and stopped making repayments after the bank went bust.

Individual depositors lost Rs 883 crore and Rs 625 crore was lost by 164 cooperative banks that had invested in MMCB. Most of the 3.5 lakh MMCB depositors lived in Union Home Minister L K Advani’s Gandhinagar constituency. This was suddenly a hot issue.