RBI moratorium on Samata Bank

In a surprise move, the Reserve Bank of India (RBI) on Saturday imposed a moratorium on Samata Sahakari Bank, restricting withdrawals at Rs 1,000.

The limitation has created a panic run as depositors thronged branches and mobbed bank staff demanding that they be allowed to operate their accounts.

Though the bank maintained that it was a temporary measure, account holders were not ready to believe that. By evening, the police were called in to control the situation.

Some of the bank staff were manhandled and senior citizens, who had deposited their savings, resorted to a demonstration in front of a branch. Samata Sahakari Bank is the second co-operative bank from the region to be placed under such a moratorium. Two years ago, Nagpur Mahila Sahakari Bank had met with a similar fate. Samata Sahakari has seven branches here.

The RBI order also asks the bank to adjust depositors' money against any outstanding loan or surety against it. However, the bank can incur expenditure required for day-to-today operations such as payment of salaries, taxes and rent. The clearing house membership of the bank has also been suspended.

The RBI, Samata Bank officials said, clamped restrictions as the bank's capital adequacy ratio (CAR) had come down drastically. As per the RBI norms, CAR should not be less than 9 per cent. However, it had slipped to 3 per cent in Samata Bank. Bank's paid-up capital stands at around Rs 2.75 crore which should have been double the figure for safe banking.

Samata's advances were just a crore less than its deposits of Rs 95 crore whereas the ideal credit to deposit ratio has been pegged at 60:40. The statutory liquidity ratio (SLR) had slipped to 18 per cent against the mandatory 25 per cent.

Non-performing assets (NPAs) were as high as 25 per cent against the RBI guidelines of less than 15 per cent. A loan of Rs 2 crore, which had gone bad, was found to have been disbursed to relatives of director, AN Narkhede.

Samata Bank has been categorised as a grade 'C' bank by the RBI. It has accumulated losses of around Rs 7 crore and since the past two financial years has not been able to pay any dividend. The CEO of the bank, Pradip Chaudhary said the bank was still sound and various methods were being tried to bail it out.

"We are studying various ways and conversion of a part of deposits into share capital can also be one of the alternatives. However, this would need prior sanction from depositors," he said.

Chaudhary said that the deposit base of the bank was earlier Rs 114 crore but had come down drastically after the Mahila Bank fiasco. The RBI has not yet lifted its moratorium on Mahila Bank and this has impacted business of all co-operative banks.

"Despite such a situation the bank never skipped paying depositors on demand. We were in a position to meet all the liabilities and there was no need for the RBI to issue such an order," Chaudhary said.

The bank's chairman is DS Chimurkar while vice-chairman is ED Haware. Both were not present at any of the branches when they were mobbed by angry depositors. Its directors include AK Bramhe, AA Bondre, SN Pinjarkar, NV Shriniwas, AN Narkhede, S Prakash Bhisikar, AK Kadrekar, GR. Selukar and NM Tirpude.

The RBI's move shook up the entire co-operative banking sector in the region as most banks are expecting heavy withdrawals from Monday.

"They should relax norms for the cooperative sector. People will lose confidence in cooperative banks," said the chairman of Akola Urban Cooperative Bank, RK Deshpande.