The Purvanchal Cooperative Bank in Ghazipur has been barred by the Reserve Bank of India (RBI) from accepting any deposits or granting fresh loans and advances for six months due to alleged gross irregularities and misappropriation of funds. The bank is also now facing additional accusations of failing to maintain the statutory liquidity ratio (SLR) and violating the provisions of the Money Laundering Act.
Former founder Ram Babu Shandilya, former CEO Vivek Pandey, the management committee, auditors M/s Vijay K. Sharma and Company, the bank proprietor, and related parties have been charged in a case filed at the Kotwali city police station.
The Purvanchal Cooperative Bank, based in Ghazipur, is one of 59 urban cooperative banks operating in various districts of the state under a license from the Reserve Bank of India. It operates six branches and serves approximately 19,000 depositors with total deposits of about ₹40 crore.
An FIR filed in Ghazipur names the bank’s former promoter, former chief executive officer, and the management for these violations, stating, “There are gross irregularities in the Purvanchal Cooperative Bank, Ghazipur, which now has a negative net worth of ₹6,61.70 lakh. The Reserve Bank of India has informed that the bank had loans and advances of ₹33.62 crore on March 31, 2023, which increased to ₹42.85 crore on August 14, 2023. The bank held cash reserves of ₹10.21 crore on August 31, 2023, out of which loans totalling ₹9.37 crore were suspiciously granted. The bank also provided incorrect information to the RBI, falsely indicating an SLR of ₹1.97 crore, which was actually zero according to the CSGL (Constituent Subsidiary General Ledger). Similarly, the information provided about the CRR (Cash Reserve Ratio) was also incorrect.”
It is known that the Purvanchal Cooperative Bank in Ghazipur had been delaying payments to its depositors for quite some time, leading depositors to stage protests in front of the bank for several days. Moreover, the investigation report of the Reserve Bank of India (RBI) in this matter has been made public, leading to several serious cases being filed based on this report.
The establishment of the Purvanchal Cooperative Bank took place in 1989 with its headquarters in the district, and it opened 4 to 5 branches in other areas of the district as well. Over the past 1-2 months, account holders have been distressed about withdrawing their deposited amounts, even resorting to multiple protests.
According to the cases filed at the Kotwali city police station, the bank did not provide complete information to RBI inspectors. The bank was being operated unofficially by its former founder Ram Babu Shandilya, former CEO, and the management committee. Based on this, Cooperative Officer Radheshyam Singh, who is above the bank’s auditors M/s Vijay K. Sharma and Company, filed a case against them for irregularities.
It is worth mentioning that a freeze on deposits and withdrawals has been imposed on all branches of this bank since August 29. If this bank shuts down, depositors will be compensated up to a maximum of 5 lakhs from the insured amount.
According to Assistant Commissioner and Assistant Registrar Cooperative Anshul Kumar, the bank currently has no balance. The information sent by the bank to RBI officials is also incorrect.