Bharat co-op bank hopes to restart in 2005

Co-operative urban bank bullish on recovery of bad debts by march next year

Hyderabad-based Bharat Mercantile Co-operative Urban Bank Limited expects to restart its operations from March 2005.

The bank suspended its operations in September following an order from the Reserve Bank of India (RBI) under Section 35A of the Banking Regulation Act 1949 as applicable to the co-operative societies.

Speaking to Business Standard, D N Somayajulu, managing director of Bharat Mercantile Co-operative Urban Bank Limited, said, "The recoveries in the last three months (September 15 to December 14) have been good. We expect to recover most of the advances in the next three months in order to restart operations."

The advances of the bank, when the moratorium was imposed, were Rs 11 crore and the deposits Rs 10.3 crore. As on date, the bank's deposits are Rs 5.3 crore and the advances Rs 5.7 crore.

According to Somayajulu, out of the total advances, the bad debts were mainly from three accounts amounting Rs 3.5 crore. Pioneer Commercial Enterprises owes the bank Rs 1.95 crore and another individual Rs 50 lakh.

"We have recalled the money lent to all the borrowers and filed for arbitration. We expect to recover the amounts due in the next three months," he said.

Somayajulu said that apart from the necessary legal procedures being followed, the bank has also appointed a special officer to oversee speedy recovery of the debts.

The bank is currently in the process of auctioning a property of Pioneer which would fetch at least Rs 1.57 crore and another asset which would fetch Rs 70 lakh.

The bank, which had 5,000 accounts at the time of the moratorium, currently has around 3,000 accounts. It has also cut its staff strength from 26 to 14 and currently operates out of only two branches.