Southern States - Andhra Pradesh-Hyderabad   

Prudential Bank too comes under RBI gaze

By Our Special Correspondent

HYDERABAD March 22. After Vasavi, it appears to be the turn of the Prudential Cooperative Bank. The Reserve Bank of India (RBI) in a direction issued to the bank has put controls and restrictions on its operations effective March 21 (after office hours), in `public interest'.

On its part, the State Government is learnt to be considering appointment of an Administrator for the bank, on the lines it has been doing for other cooperative banks in trouble.

The RBI in its directive has barred all commercial transactions and said each account-holder should be allowed to withdraw Rs.1,000 only. Renewal of term deposits, however, will be allowed. Also, compromise settlement of non-performing assets (NPAs) shall be allowed, as permitted by the State Government. Pending demand drafts can also be paid, as also bills received for collection as of March 21, it said.

The RBI has directed that the Prudential Bank `shall not incur or extinguish any other liability unless specifically approved in writing by the RBI''. It said that as from close of business of March 21, the bank shall not, without prior approval in writing from RBI, grant or renew loans and advances, make any investment, incur any liability including borrowing of funds and acceptance of fresh deposits, disburse or agree to disburse any payment. Such restrictions have been imposed in the matter of disposal of properties and assets also.

Expenditure towards salary payments and payment of premium to Deposit Insurance and Credit Guarantee Corporation is however allowed. The directive will remain in force till further orders.

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