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Tamil Nadu
By S. Vydhianathan
Until now, PACBs having their own funds to the tune of Rs. 25 lakhs and above alone were eligible for accepting the public deposits. Now the Government has kept the minimum requirement at Rs. 20 lakhs. While doing so, it has also prohibited unviable PACBs from accepting public deposits even if they have Rs. 20 lakhs and more as their `own' funds. By its decision, the Government has virtually rejected various trade unions' demand against any ceiling for deposit mobilisation by the PACBs. Till November 2001, there had been no restriction on the PACBs to receive public deposits, and many PACBs, irrespective of their financial position, accepted deposits. People in rural areas deposited money in cooperative institutions believing it would be safe there. But the trouble started when many PACBs were unable to return the deposits after maturity and some of them were not able to disburse even the annual interest payment. This forced the Registrar of Cooperative Societies to issue a circular in November 2001, restraining the PACBs from accepting public deposits unless they had own funds of Rs. 25 lakhs apart from the government share capital. Own funds included paid-up share capital, statutory reserve fund, bad debts reserve, agriculture credit stabilisation fund, bad debts reserve dividend equalisation fund, building fund and risk fund. The circular was opposed by various trade unions on the ground that it would affect the cash flow to the banks and day-to-day transactions. Subsequently, the Government appointed a high-level committee, which recommended that the ceiling be brought down to Rs. 5 lakhs. However, the Government fixed it at Rs. 20 lakhs. Of the 4,595 PACBs in the State, only 635 have own funds of Rs. 20 lakhs and more. The banks, which fail to satisfy the eligibility norm but have already accepted deposits, have been directed to return the deposits. They should not indulge in deposit mobilisation hereafter, officials explained. Total deposits in these PACBs amounted to Rs. 3,300 crores. The financial position of a majority of the banks is poor. While about 3,545 banks were in the red until last financial year, only 923 banks earned profit. The remaining 118 were working with no-profit-no-loss. However, the All-India Cooperative Bank Employees Federation and the Tamil Nadu Cooperative Employees Federation demanded either removal of ceiling or that it be fixed at Rs. 5 lakhs. The working president of the TN Cooperative Employees Federation, T. Tamilarasu, blamed the Government for the poor financial position of the cooperative banks. He said the Government time and again announced waiver of cooperative loans, but failed to reimburse the amount to the banks. The Government owed about Rs .1,000 crores to the cooperative banks and if the amount was returned, many PACBs would become financially viable. The general secretary of the bank employees' federation, P. Balakrishnan, said the Government should fix stringent norms for accepting deposits instead of fixing a ceiling.
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