Southern States - Tamil Nadu

Thiruvanaikovil coop bank transactions suspended

By Our Staff Reporter

TIRUCHI JUNE 4. Over 6,000 investors of the Thiruvanaikovil Cooperative Urban Bank, one of the oldest here, were shocked today as all transactions of the bank were suspended following a public notification issued by the Reserve Bank, barring it from carrying on operations.

The RBI move has come in the wake of mounting overdues and poor recovery of advances made by the bank, sources in the Cooperatives Department told The Hindu. A full-fledged departmental inquiry was likely as bank authorities including some of its former elected representatives have allegedly flouted prudential norms for lending in a few cases. However, full details would be available only after a thorough audit, the sources said.

The bank is the second cooperative institution in the city, which has landed in trouble in recent times after the Chinthamani Cooperative Supermarket hit the headlines for its inability to refund deposits to investors.

The public notice from the RBI, published in some of the leading dailies today, said that (through an order dated May 20), it rejected the application of the cooperative bank for a licence to carry on banking business under Sec.22 read with Sec.56 of the Banking Regulation Act, 1949 (as applicable to cooperative societies). The cooperative bank, the notice said, was precluded from transacting the business of ``banking,'' as defined in the Act and it would not be in order for the bank, among other things, to accept deposits from the public and allow withdrawals by cheque, draft or otherwise. (A similar public notice on the Theni Cooperative Urban Bank was also issued by the RBI today.)

The Thiruvanaikovil bank's total deposit was said to be about Rs.5 crores, with the advances standing at about Rs.4.70 crores. The bank had about 6,000 depositors with about 3,000 of them having fixed or term deposits. About 38 per cent of the bank's total advances were said to be overdue, with most of the borrowers ``not responding'' to its recovery attempts. The recovery

was said to have been sluggish over the last four to five years.

With the district Joint Registrar of Cooperatives said to be away attending a training programme, the Joint Registrar of Thanjavur was asked to rush to the bank today to ``oversee the immediate functions'' of the bank. Besides, an Additional Registrar from Chennai was expected to arrive here to go into the issue.

Department sources, however, sought to allay the fears of investors, stating that the bank had adequate insurance cover and the shortcomings pointed out by the RBI could be rectified.

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