RBI terminates Suryapur Co-op Bank licence

Way cleared for liquidation of bank

The path for liquidating the Surat-based Suryapur Co-operative Bank has been cleared, with the Reserve Bank of India (RBI) terminating the bank's licence on Tuesday.

Suryapur Bank was lying closed since August 2002.

Suryapur Bank administrator R R Waghasia said: "We have received a letter from RBI stating that it has terminated the licence of Suryapur Co-operative Bank. There was little possibility of restarting the bank on account of its poor financial position, which has prompted the apex bank to take this decision."

The Gujarat government will shortly initiate measures to take the bank into liquidation. It will appoint a liquidator in the coming few days, after which the procedure to fill claim forms by the depositors would begin.

The RBI decision to terminate the license of Suryapur Bank has not gone down too well with depositors.

Paresh Parekh, the convenor of The Suryapur Bank Agent Dainik Bachat Hitvardhak Society, which represents the bank's depositors, said: "We were fighting for justice for the last two years, hoping that the RBI or the state government would do something to pay back our monies back. We were hopeful that steps would be taken against the defaulters, but the RBI has instead terminated the bank's license."

"Depositors having deposits of up to Rs 1 lakh will be paid their dues by the Deposit Credit Insurance Guarantee Corporation (DCIGC). But what about those depositors whose deposits are higher than Rs 1 lakh," Parekh said.

"We made numerous representations to the state government and administrator to take strict measures for the recovery of dues from defaulters. If this had been done, the circumstances for closing the bank would not have arisen. We now just hope that the depositors are paid their monies back at the earliest," Parekh added.

Suryapur Co-operative Bank was suspended from clearing house operations and was lying closed since August 2002, mainly because it failed to maintain the cash reserve ratio and statutory liquidity ratio.

The bank's founder chairman Kanaksinh Mangrola, a former BJP MP, and other authorities granted loans indiscriminately, which were never recovered.

Police cases were registered into the Rs. 44-crore Suryapur Bank scam and many persons were arrested. Even the bank's chairman and other directors were arrested for their dubious role in the scam.

At present the bank owes approximately Rs 60 crore to 19,000 depositors and account holders. Of these, it owes Rs 9 crore to around 8,600 small depositors, whose deposits are under Rs 1 lakh.

It is worth mentioning here that Suryapur Bank is the second co-operative bank of Surat, whose license has been terminated by the Reserve Bank of India in the recent months.

On June 19, the RBI had terminated the license of the Diamond Jubilee Co-operative Bank, which too was closed down on account of indiscriminate granting of loans.

The story thus far

• 1995: Suryapur Co-operative Bank Ltd formed.
• August 30, 2002: RBI suspends bank from clearing house.
• January 2003: Bank chairman Babu Gamit lodges police complaint against 60 people for fraudulent practices.
• March 2004: Deposits and recurring agents start agitation to get back money
• April 29, 2004: Agents and depositors file PIL in Gujarat HC, demanding inquiry into Rs 12-crore alleged hawala transaction between City Co-op Bank and Suryapur Bank.
• August 12: Former BJP MP Kanaksinh Mangrola and seven others arrested for misusing bank funds worth Rs 1.30 crore.
• August 17: RBI terminates Suryapur licence.