Sunday, Apr 21, 2002
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By D. Sreenivasulu
The latest decision of the RBI, which is yet to be made public, is likely to create anxiety among depositors. Without the knowledge of the RBI decision, many depositors are approaching the bank for refund of deposits. However, the refund is not possible until the Registrar of Cooperative Societies nominates a liquidator. Senior chartered accountants feel that it is better to appoint the liquidator earlier to stop erosion of bank resources. The bank has been paying interest on the deposits since its closure in March last year. Also, the bank has to pay salaries to the staff till the date of liquidation.
The RBI rated the bank as "weak'' 13 years ago and asked it to improve the financial strength. As the RBI was not convinced of the measures taken by the bank, it ordered closure of the bank in March last and announced rejection of its application for licence made 30 years ago. The governing body of the bank challenged the RBI order in the High Court, which asked the RBI to allow the bank to make a fresh representation after giving sufficient time. Subsequently, the bank made a fresh representation in October last, which has been rejected now.
A debate started on the financial condition of the bank. The bank mobilised Rs. 6.5-crore deposits and the advances stood at Rs. 3.8 crores as on today. The bank has deposits to the tune of Rs. 3.5 crores in various financial institutions. The non-performing assets were around 51 per cent when the bank was asked to stop transactions in March. Now the NPAs came down to 30 per cent. The recovery of loans has been satisfactory despite the closure of the bank.
Of total outstanding loans of Rs 3.8 crores, the bad debts were to the tune of Rs 1.2 crores accounting for 30 per cent. The deposits amounting to Rs 2.3 crores matured but bank could not refund them because of the RBI order despite possessing liquid cash. Anxiety is growing among depositors due to the delay in repayment. According to experts, no depositor will lose money.
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