Panic withdrawals at GICB

Deposit Credit Insurance Guarantee Corporation's letter causes concern

Gujarat Industrial Co-operative Bank (GICB) branches saw depositors thronging their cash counters on Thursday, apparently following the Deposit Credit Insurance Guarantee Corporation's (DCIGC) letter to multi state co-operative banks stating that their deposits are not insured with it.

The Parsi Sheri branch at Surat of Gujarat Industrial Co-operative Bank witnessed panic withdrawals, while there was a rush at the two other branches of the bank in Surat.

Bank officials said the withdrawals were sparked by the announcement of DCIGC that the deposits were not insured.

"There were panic withdrawals of about Rs two crore from the bank, but this was just at the Surat branch and GICB has 20 branches in areas from Kutch to Silvassa. The withdrawals have subsided now," said B R Diwan, managing director of Gujarat Industrial Co-operative Bank.

He said the bank has deposits of around Rs 450 crore and there was no liquidity crunch.

Nine or ten branches of the bank in south Gujarat alone have deposits of over Rs 300 crore.

The bank's general manager Ashok Raval said, "The deposits of up to Rs one lakh in all co-operative banks are insured by DCIGC. The GICB is also a multi-state bank. We had approached the Gujarat High Court and secured a stay on the DCIGC letter, but our depositors are not aware of it."

"Many co-operative banks have collapsed in Gujarat in the last two to three years, because of which people's faith in such banks has shaken. The rush for withdrawing deposits from Gujarat Industrial Bank is purely because of the feeling of insecurity. The rush is only at our Surat branches. There is no such problem at any of our branches in the other cities," said Raval.

Raval also dismissed rumours that withdrawals from the bank were in any way connected with the crisis facing the City Co-operative Bank.

"We are not connected in any manner with the City Co-operative Bank or with any other bank that is facing crisis. The bank is sound and stable and there is no cause for any worry for the depositors," said Raval.

Gujarat Industrial Co-operative Bank is one of the eight multi-state co-operative banks in the state with 20 branches from Bhuj to Silvassa. In Surat, the bank has three branches "" one each at Parsi Sheri, Salabatpura and Udhna.

The bank has total deposits of Rs 450 crore and advanced Rs 250 crore. The bank has government securities worth Rs 67 crore.

State co-operation minister Bhupendrasinh Chudasma could not be reached for comments.