Financial Daily from THE HINDU group of publications
Thursday, Feb 27, 2003
Money & Banking
RBI okays revival package Charminar Bank to reopen on Monday
HYDERABAD, Feb. 26
AFTER months of uncertainty, and sustained efforts by the Andhra Pradesh Government that lead to the clearance of a revival package by the RBI, Charminar Urban Co-operative Bank, will function again from March 3.
Making this announcement here on Wednesday, the Chief Minister, Mr N. Chandrababu Naidu, said that the revival package will come into effect from March 3 and a notification to this effect was being issued. Without prejudice to this development, all those high networth individuals who have taken huge loans from the bank, will be pursued to repay them at the earliest. Thus far, Rs 42 crore had been recovered, he said.
Explaining the salient features of the revival package, Mr Naidu said that in the case of individual deposit holders with deposits up to Rs 1 lakh will be repaid immediately, those who have deposits of more than one lakh will also be paid an amount up to Rs 1 lakh initially.
With respect to deposits above Rs 1 lakh and up to Rs 5 lakh, the interest earned as on date of revival will be converted into share-capital and the deposit of the principal will be renewed and will be repaid in eight equal half-yearly instalments after an initial moratorium period of three years.
In respect of deposits above Rs 5 lakh, the existing interest portion will be converted into share capital and the principal amount will be paid after a moratorium of five years in eight half-yearly instalments.
Further, deposits to be renewed during the moratorium period will carry an interest rate of one per cent above the interest rate paid by the SBI.
The deposits, which are to be returned to the depositors, will be from the claims from the Deposit Insurance and Credit Guarantee Corporation (DICGC), which is estimated at about Rs 186 crore.
The amounts claimed from DICGC will be repaid to the corporation from out of the recoveries of the loans in eight half-yearly instalments after a moratorium period of three years.
Mr Naidu said that as per the audit reports, the bank deposits totalled Rs 297.35 crore and the depositors base was 1,20,364. While deposits below Rs 1 lakh constituted 97.48 per cent, all these small depositors will be able to get back their deposit amounts.
About 3,035 depositors have more than Rs 1 lakh and their total deposit base amount works out to Rs 156.63 crore. In addition to this, NRI deposits work out to Rs 34 crore. While the co-operative bank advances are estimated at Rs 300.43 crore, the bank has fixed assets worth Rs 10.62 crore.
In such cases, where revival of the bank is important, some sacrifices have to be made. This means that the larger deposit holders will bear inconvenience due to moratorium and delayed repayment through instalments. Further, the State Government has issued orders to set up an implementation and monitoring committee to monitor and review the functioning of all the co-operative urban banks in the State, Mr Naidu said.
Each urban bank will have to prepare its action plan to improve their financial management, reduce administration costs, bring in transparency and accountability and provide proper banking services to the people, the Chief Minister, said.
Stringent action will be taken against such banks that do not adhere to discipline or do not function according to the guidelines of the RBI and State Government. Further, the State Government has issued orders for the establishment of a committee to oversee the functioning of co-operative banks in the State.
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