AP govt for restarting 2 co-op urban banks

The state government is planning to request the Reserve Bank of India (RBI), through the finance ministry, for permission to restart the 'Prudential'and 'Vasavi' co-operative urban banks. The banks were closed down due to financial mismanagement and wilful defaults.

Chief minister Y S Rajasekhara Reddy, who is expected to visit Delhi on Saturday will meet the Union finance minister P Chidambaram to discuss the revival of these co-operative urban banks.

The RBI had suspended the licences given to these two banks soon after they ran into trouble. The RBI had turned down the earlier government's repeated appeals to revoke the suspension of licences to restart the banks.

Disclosing this to the media soon after a review meeting at the secretariat on the issue of urban co-operative banks on Wednesday, Kanna Laxminarayana, state co-operative minister said that the government would do every thing possible to protect the interests of depositors of these banks.

Crores of rupees of depositors money has been lost in these banks due to the management's alleged collusion with the defaulters beside benami-lendings.

The minister was particularly optimistic about the prospective revival of the Prudential Bank as the assets of the bank still surpass the total deposits.

According to the minister, the bank has assets worth Rs 531 crore as compared to around Rs 400 crore deposits it had mobilised from the people.

He said that these two banks were closed more on account of panic withdrawls of deposits triggered by the closure of the Krushi Urban Co-operative Bank.

He said that Vasavi bank too had assets worth Rs176 crore as compared to the Rs135 crore in deposits. So far Rs 63 crore loans were recovered from the defaulters of Vasavi bank, he explained.

While reviewing issues pertaining to the urban cooperative banks, the chief minister has directed the officials to disburse Rs 23 crore, which was recently received from the RBI as part of the revival package of Charminar urban co-operative bank to the depositors, immediately.

Last year the RBI had annouced a Rs 146 crore revival package for the Charminar bank which was closed due to the same kind of problems. So far the bank received about Rs 123 crore as part of this package.