Date:11/04/2005 URL: http://www.thehindu.com/2005/04/11/stories/2005041110900400.htm

Tamil Nadu

Action against cooperative bank hasty: unions

By S. Vydhianathan

CHENNAI, APRIL 10. Union leaders described the Reserve Bank of India's action against the Sivaganga District Central Cooperative Bank as "hasty". The RBI order, they said, came at a time when the bank was showing signs of improvement.

The closure would affect small farmers depending on the bank for credit. With widespread rain in the district, the farmers would be hoping for bank assistance for beginning farming operations.

P. Balakrishnan, general secretary, All-India Cooperative Bank Employees Federation, said that as on March 31 this year, the bank made a profit of Rs. 3.86 lakhs. It did not default on a single deposit. Its main cash reserve ratio and statutory liquidity ratio were as per the RBI norms.

`Cut in NPA'

The gross non-performing assets (NPA) came down to 25 per cent in the last financial year from 35 per cent in the previous year. Its deposits stood at Rs. 145 crores and the outstanding was Rs. 237 crores.

Mr. Balakrishnan said 147 banks in the country did not comply with the Section 11(1) of the Banking Regulation Act, pertaining to minimum paid-up capital and reserves. The RBI gave the Sivaganga bank exemption two times of six years each, but there were other banks that were given exemption for more than two terms.

T. Tamilarasu, general secretary, Cooperative Bank Employees Federation, Tamil Nadu, blamed the Central and State Governments for the RBI action.

The State Government failed to honour the guarantee it gave to the bank: while it asked the cooperative banks to waive crop loans, it failed to reimburse the money. Loan recovery was poor in many cooperative banks for lack of manpower.

They appealed to the Finance Minister and the RBI to withdraw action taken under 35 (A) of the Banking Regulation Act.