In a state where rumours gain currency faster than banks can win depositors, something like the ICICI Bank crisis was always on the cards.

Collapse after collapse of co-operative banks in the state -- 22 of them in the past two years -- has turned the state's bank of depositors into an highly strung lot.

This is the milieu that helped a scuttlebutt in Surat to savage the ATM network of one of India's largest banks.

Raghu Nagrajan, vice-president of ICICI Bank, who has been camping in Ahmedabad since Friday night, believes that's the exact case.

"People here have witnessed the worst over the last two-three years. They have lost money. On Friday, when the rumours started, they started feeling unsafe and withdrew money. But after the Reserve Bank of India reiterated the financial strengths of our bank, people are coming back to deposit their money. We hope things will improve later this week," Nagrajan said.

Kishore P Ghiya, managing director of Rajkot Investment Trust Ltd and chairman of Parshwanath Co-operative Bank, believes there are two factors which led to the two-day drama.

"Since ICICI Bank is known to be broker-friendly, the market crash during the week made depositors jittery about their money. Then came the flashback effect of the co-operative bank liquidity crisis," he said.

According to him, though ICICI Bank is financially sound, people in Gujarat have, in general, lost faith in co-operative and private banks.

Ashokbhai Shivkani, a leading cloth businessman from Kalupur, who withdrew huge deposits from ICICI Bank during the last two days, said, "Now I am planning to deposit this money in a nationalised banks so that in future I need not be anxious about safekeeping my hard-earned money."

"Though the Reserve Bank of India has certified the financial strengths of ICICI Bank, I do not want to go in any of the private banks as I have lost Rs 19 crore (Rs 190 million) when the Madhavpura Mercantile Co-operative Bank went bust," Shivkani said.

ICICI Bank officials do not believe this incident will affect its business, but depositors in the state believe they should play it safe.

Says Jayeshbhai Shah, owner of construction company, "This time we survived, but you never know what could happen tomorrow. When I had lost Rs 12 lakh (1.2 million) via MMCB and then Rs 10 lakh through General Co-operative Bank, everyone assured me that the government will help me get my money back. But in the last two years, I have got only Rs 200,000 and that too after putting in a lot of effort."

Prakash Gujar, president of the All Gujarat Co-op Banks Depositors' Association, echoed similar reasons.

Chronology of a crisis

• On Thursday, April 10, a Surat-based vernacular eveninger ran a story on the falling stock markets with a mention that the ICICI Bank may face a liquidity crisis as an after effect of the crash.
• Moments after the eveninger hit the stands, people were seen queuing up at ICICI Bank ATMs in Surat and nearby Valsad.
• The rumour machine started working and the word spread. Panic withdrawals started at ICICI Bank ATMs in Vadodara too and by Friday afternoon, thousands of Ahmedabadis joined the queue.
• No official communication was forthcoming from the bank in the period, neither to the depositors nor to the media.
• On Friday evening, the bank's public relations agency, Sobhagya, issued a press note in Ahmedabad wherein it talked about ICICI Bank's expansion plans in Gujarat.
• Soon, account-holders in far off Rajkot and the entire Saurashtra region were found making a beeline to withdraw their money.
• All five onsite ATMs of the bank in Ahmedabad and offsite ATMs were jammed throughout Friday night, resulting in anxious faces all over. This resulted in some account-holders rushing to HDFC Bank ATMs to withdraw money. (ICICI Bank debit card holders can use the ATMs of HDFC Bank or any other bank plugged into the Visa and MasterCard network to withdraw money, for a charge of around Rs 50).
• By midnight on Friday, Ms Kalpana Morparia, executive director, ICICI Bank, releases a statement in Mumbai. It reads: "This has reference to mischievous and baseless rumours regarding ICICI Bank's financial position floated in Gujarat today, that have been communicated to other centers as well.

"We would like to reassure our depositors and customers that ICICI Bank is one of the premier banks of the country and there has been no adverse change in the financial position of the bank. The bank is a completely solvent and profit making organisation. The depositors', bondholders and lenders' funds are safe with ICICI Bank.

"We request all our valued customers and stakeholders to desist from paying heed to any rumours." It arrives too late for the print media to carry in their Saturday issue.

• On Saturday morning, more and more people joined the frenzy and started withdrawing money through even cheques from ICICI Bank branches in Gujarat. A mad rush ensues at JMC House, the main branch of ICICI Bank in Ahmedabad, and at the Parle Point branch in Surat.
• Local ICICI Bank officials try to assuage the account holders by coming out with explanations and calling the whole issue a result of mischievous rumour-mongering but people are not convinced.
• Withdrawals continue and by late Saturday afternoon, ICICI officials go on television channels to calm clients. Eveningers and vernacular papers in Gujarat carry clarifications from the bank and the Reserve Bank of India.
• Despite this, people were found withdrawing money and waiting for the bank's ATMs to be refilled. This continued for the whole of Saturday night.
• By Sunday morning, the panic subsided following the Reserve Bank of India's clarification and constant media coverage. The withdrawals soon tapered to a trickle. Some depositors even returned with the money they had withdrawn.