Amanath Co-op Bank on revival path: President

NT Correspondent

Bengaluru: “The Amanath Cooperative Bank is on a revival path”, says President of the bank Syed Kabeer Ahmed.

Speaking to News Trail, Kabeer said all the 15 branches of the bank in the city, Belagavi, Mangalur u , Kalburgi and Mysuru are now functioning following lifting of restrictions by the Reserve Bank of India under section 35A of the Banking Regulations Act from January 2020.

The Bank was established in 1977 by Rahman Khan, who later became MLC, Rajya Sabha MP and Union Minister. He was aided by Dr Mumtaz Ahmed Khan and several other social activists. It became the first Scheduled Cooperative Bank in the state in the late 1990s.

The deposits peaked up to Rs 550 crore at the turn of the century with the bank having 140,000 depositors. But then the downslide started as some employees committed fraud and the depositors and account holders began to lose trust. The RBI suspended the board of directors in 2002.This had a debilitating effect as depositors began to withdraw deposits and borrowers withheld repayment of loans. The net worth of the bank turned negative and the RBI froze all deposits on April 5, 2013 thereby causing a lot of sufferings to lower middle class businessmen who formed its backbone.

A new board of 10 directors was elected after five years following elections. The Board needed to raise Rs 85 crore to replenish the capital. Kabeer said, “It was a Herculean task but we succeeded in bringing money in three formats i.e., conversion of 20% of the existing deposits into shares with the consent of the account-holders; infusion of capital by some wellwishers; and, collection of all the non-performing assets (NPAs) and registering them as the properties in the name of the bank”. Thereafter Covid-induced lockdown also put brakes on the bank’s revival.

Kabeer says the bank is now functioning normally.

“All those banks that faced restrictions under section 35A were either merged or liquidated, but Amanath Bank was an exception as the well-meaning directors of the board organized infusion of funds and requested the RBI to lift the sanctions,” he added. He said the pygmy collectors were now going round the market and mobilizing Rs 1.25 crore a month towards pygmy deposits.