Beginning of the end for Diamond Jubilee Bank

After retrenching 65 employees last month, the state government appointed administrator of the beleaguered Diamond Jubilee Co-operative Bank Ltd has issued a one-month notice to the remaining 73 employees last week.

Defending his move, the bank administrator B C Patel said the bank, which has remained closed since mid-2002, was not in a position pay its employees.

Many in the banking circle view the new development as the end of the road for the bank.

"In all probability, the bank would be taken into liquidation after the Lok Sabha polls in April", a leading banker said.

One of the biggest and the oldest co-operative banks in south Gujarat, the Diamond Jubilee Bank collapsed on September 1, 2002 when the senior BJP Leader C R Patil had failed to repay the loan he has taken in violation of the banking norms.

This resulted in a severe liquidity crisis and the bank was suspended from the clearing house.

Patil had taken a loan of Rs 46 crore in two installments in gross violation of the Reserve Bank of India guidelines which stipulate that a co-operative bank can advance a maximum of Rs 10 crore per loan applicant. Along with interest, Patil owed Rs 55 crore to the bank.

After the collapse, bank employees were getting 60 per cent of their monthly salary. Aggrieved employees now demand that the bank should pay all their dues by selling the assets. "The bank should sell its prime property and repay our dues", an employee said on conditions of anonymity.

Meanwhile, C R Patil has been granted bail and is out of the Surat jail.