Former Supreme Court judge and erstwhile National Law Commission chairman Justice D A Desai has held politicians and chartered accountants primarily responsible for the turmoil in the cooperative banking sector in Gujarat.
Presiding over a function organised by the Surat Citizens Council on 'Scams in cooperative and other banks - reasons and solutions', on Saturday, Justice Desai said that every bank scam at the local or the national level had a chartered accountant brain behind it.
According to him, the police was not fully equipped to deal with economic offences as the Indian Penal Code was of 1860 vintage and the Evidence Act was 143 years old.
"The law has to adjust to the needs of a developing society and for economic offences, if you want results, then changes in the Evidence Act becomes imperative," Desai said.
V K Gupta, police commissioner, Surat, who had a long eight-year stint (1990-1998) with the Central Bureau of Investigations (CBI) and who has investigated many scams including the Harshad Mehta scam and the Indian Bank scam, said personal and political ambitions lead to scams.
Gupta called for deep and in-depth measures on a long-term basis to tackle the malice. He advocated for more disciplined supervision from government nominees on these banks' boards.
According to him, police officers knew how to fire shots from a rifle and wield a lathi and were finding it difficult to deal with such complex frauds.
Banking and finance expert and Gujarat High Court lawyer Devesh Bhatt said the cooperative banking sector in the state was passing through a "crisis of character" with corrupt management and employees and sleeping depositors presenting a grim picture.
He, however, added that while the cooperative banking sector will survive such crises many cooperative banks will vanish from the scene.
Giving historical evidence about how banking and Gujaratis were inseparable from each other, Bhatt said, Gujaratis were adept at different forms of banking with negotiable instruments being transacted in the state more than 500 years back whereas the Negotiable Instruments Act came only in the 19th century.
He said further, "A majority of our cooperative banks do not have the vision. City-based banks do not think beyond the city while district banks do not think beyond the district," he said.