The Criminal Investigation Department of the Andhra Pradesh police on Thursday evening picked up thirteen former directors and chairmen of the Vasavi Cooperative Urban Bank in connection with irregularities in the functioning of the organisation.

They were picked up when they came out after meeting the in-charge of the bank, G Srinivas, who headed a three-member committee nominated by the government last week to manage the affairs of the bank following en masse resignation of its directors owing to their failure to repay their loans.

During the hour-long meeting, Srinivas pleaded with the former directors to pay at least Rs30 crore [Rs300 million] to partly clear their loans amounting to Rs53.88 crore [Rs538.8 million], so that the bank could free itself from the Reserve Bank of India restrictions on transactions. But they could not give any commitment except stating that they would not be able to pay more than Rs1 crore [Rs10 million] in the next two days.

Those taken into custody by the CID included former chairmen G Rajamouli Gupta, K Jayaprakash Ram and B Rajender and former directors M Sudhakar Gupta, G Veeresham, G Chandraiah, G Ashok Kumar, R Venkateswara Rao, S Sangameswara Rao, V Narasimha, R Narasimha Rao, V Ravindranath Gupta and B Janardhan.

According to the Additional Director-General of Police [CID], M L Kumawat, they had advanced loans to the extent of Rs20.02 crore [Rs 200.2 million] to various people without obtaining proper collateral securities.

They had also disbursed loans to their kith and kin by floating fictitious companies.

One former chairman had taken a loan of Rs3.31 crore [Rs33.1 million] for himself, his two sons and a daughter-in-law. Later, the loans were converted into overdrafts to evade repayment.

A former director took a loan of Rs2.7 crore [Rs27 million] in the name of his driver for doing business for a non-existent firm.

All these directors took loans by pledging a particular plot in Begumpet, measuring 7,528s square yards, over which they did not have any ownership rights.

They also facilitated loans for several firms, most of whom did not submit relevant documents.

At least 10 such firms obtained loans of Rs97 lakh [Rs9.7 million] each.

Vasavi Bank, a scheduled bank that started its operations in 1982, had deposits of Rs143 crore [Rs1.43 billion] and advances of Rs126.34 crore [Rs1.26 billion] as on February 14 this year.

The non-performing assets of the bank amounted to Rs67.02 crore [Rs670.2 million], including loans of Rs53 crore [Rs530 million] taken by past and present directors.

"If we get sufficient evidence against them, they would be formally arrested," Additional DGP Kumawat said.

Following complaints from some depositors that the bank had failed to refund their deposits, the Central Crime Station of the police had registered a case against the officials under sections 420, 406 and 408 of the Indian Penal Code and the AP Chit Funds Act. The case was entrusted to the CID a few days ago.