Vasavi recovers 43% of total advances

Urban co-operative bank recovers Rs 75 crore out of Rs 173.81 crore that it had lent.

Vasavi Co-operative Urban Bank, which suspended operations on March 7, 2003, has recovered Rs 75 crore out of the Rs 173.81 crore that it had lent. The bank expects the recovery process, which in the last few months had slowed down, to pick over the next three months.

Speaking to Business Standard, P Rajeshwar Rao, chairman of Vasavi Co-operative Urban Bank, said, "Though the bank has recovered about 40 per cent of the total advances, I must admit that there has been a slow down in the recovery process in the last four months."

According to him, the drop was because borrowers were expecting special concessions like another one time settlement (OTS) scheme. When asked if the bank was planning one more OTS, Rao said, "Taking into account the previous experience, the bank is not planning any such schemes at the moment."

Vasavi had announced an OTS scheme in May 2004, when it received around 900 applications, but when it came to the payments they fell short of the expectations. "We expected to get back at least Rs 31 crore under the previous OTS scheme, but actually only got Rs 12 crore," he said.

He, however, said that they do not expect the same fate that was meted out to Prudential Co-operative Bank. "We do not expect such things to happen with us because many of the suits that we have filed are in advanced stages in various tribunals," he said.

Rao said that another reason was because of the strong collaterals and the sureties that the bank has in its possession.

Another long pending issue that the bank has overcome was on the jurisdiction matter, where the borrowers went to court on the grounds that the co-operative officers do not have the power to give judgements where the loan amount is more than Rs 10 lakh, in the last 10 days.

"A special full bench constituted by the Andhra Pradesh High Court said that if the co-operative courts have passed the judgements then the borrowers must honour it. The court also said that if a co-operative court has passed the order then 50 per cent of the outstanding amount has to be paid and if the order is pending then 25 per cent of the outstanding amount has to be paid within 15 days to one month," he said.

Rao said that the previous directors and their associates still owed the bank Rs 55 crore. According to him, one of the sureties "� a piece of land in Begumpet "� which was expected to help recover a large amount that the directors owed, got into a legal tangle at the last moment when the court passed a stay order filed by one of the claimants who owned part of the land.

Rao said that the bank has to pay Rs 185 crore to the depositors. "The RBI, about a month back, agreed to the proposal that we could pay Rs 20,000 to the depositors out of the recoveries that we have made. Till now under this facility we have paid around Rs 20 crore out of the total estimate of Rs 60 crore," he said.

According to him the bank worked out this model to clear the dues of a large number of depositors. "Out of the 86,000 depositors under this scheme, we would be able to clear around 74,000 accounts," Rao said.

Further the bank as a measure of cost cutting has closed down more branches and is currently working with five branches with a strength of 150 employees.