Co-operative banks are unhappy over the recent decision of the Reserve Bank of India's Deposit Insurance and Credit Guarantee Corporation to hike the premium amount for providing insurance cover to deposits of co-operative banks while keeping the insurance cover limit unchanged. |
Surat People's Co-operative Bank Ltd chairman Dilipbhai Gajjar said, "Earlier, the premium was 5 paise per Rs 1,000. This has been increased to paise now. We have come to know that the premium will be increased to 10 paise by the end of this month." |
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"The corporation has said the hike in premium is due to increase in risk factor. We have no qualms in paying this extra premium, but we had demanded that the insurance cover limit also be increased from the current limit of Rs 1 lakh, which has not been done," Gajjar said. |
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Bansibhai Fudnawala, chairman of Surat Nagarik Sahkari Bank Ltd, said, "Depositors' faith in co-operative banks has weakened over the last two to three years as a number of co-operative banks have collapsed during this period. We had sought an increase in insurance cover limit from Rs 1 lakh to Rs 5 lakh to re-establish the faith of depositors in the co-operative sector. The corporation has rejected this proposal and instead increased the insurance premium. We were neither consulted nor given any proper reason for the move." |
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"We have written to the South Gujarat Co-operative Bankers' Association, which represents co-operative banks of the region, and requested it to make a joint representation regarding these decisions to the corporation," Fudnawala said. |
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Udhna Citizens Co-operative Bank chairman Setu Madhavan said, "The corporation has increased the premium from 5 paise to 8 paise because the number of claims have gone up due to problems in several co-operative banks in the recent past. |
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"We have no objection to the hike in the premium amount, but we are disappointed that our proposal to hike insurance cover limit has been rejected." |
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Madhavan, who is also the vice president of the South Gujarat Co-operative Bankers' Association, said, "We do not know the exact reason why our proposal has been rejected, but may be the corporation does not want to increase its liability by hiking the insurance cover limit." |
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About the strategy the bankers' association would adopt, Madhavan said, "We plan to send a fresh proposal with regards to hiking insurance cover limit to the Union finance ministry before the budget session of the Parliament. If possible, we will also meet the finance minister." |
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