Relief for Charminar Bank depositors

Hyderabad-based co-operative urban bank to repay deposits up to Rs 1 lakh from today

The Charminar Co-operative Urban Bank Limited, which went sick a couple of years back, is all set to settle amounts of up to Rs 1 lakh to all the eligible depositors from May 17.

This scheme, which would provide relief to thousands of small depositors, is open to all those who have submitted their claim forms and photographs, and those who have satisfied the branch manager that their claims are complete and in order.

"The bank has decided to start settling accounts of up to Rs 1 lakh irrespective of the customers' deposits. The remaining amount, if less than Rs 5 lakh, will be paid back in eight half-yearly installments starting from March 2006 along with the interest," J Raghu, chairman of the Charminar Co-operative Urban Bank Limited, told Business Standard.

If deposits are more than Rs 5 lakh, the repayment will start from 2008 and will be paid in eight half-yearly installments within four years, he added.

The bank suspended its operations following an order from the Reserve Bank of India (RBI) after Syed Alamdaar Hussain Sajjad Aga, former chairman of the Charminar Co-operative Urban Bank Limited, committed suicide in February 2002.

The reason that was attributed to the crisis that the bank plunged into was that the bank's management advanced unsecured loans to the relatives of the bank officials, businessmen and politicians.

Out of the Rs 280 crore it lent, the bank has recovered Rs 90 crore till now. According to Raghu, the bank expects to raise Rs 50 crore in the next one month under special scheme of onetime-settlement (OTS) given by the government of Andhra Pradesh.

"Another Rs 20 crore will be coming under the OTS schemes approved earlier where borrowers are re-paying in installments," Raghu said.

The bank expects to realise Rs 160 crore by November this year. "We have already initiated legal and police action against the depositors who have failed to repay the loans. We would be also taking help of income tax officials and other government officials while we attach the properties to recover the rest of the Rs 130 crore," Raghu said.

"We have recovered Rs 15 crore in the last two months itself. We would be recovering at least Rs 6 crore this month," he said, adding that the total amount would be recovered in another three years. "The bank has around 3,000 new customers with deposits of up to Rs 3 crore," he said.

The bank has also started accepting fresh deposits and new accounts from the last five months. Apart from this, the bank also plans to start e-Seva services at some branches.

The e-Seva, an initiative by the government of Andhra Pradesh, offers a wide spectrum of citizen-friendly services like payment of bills and reservation services. At present, there are 44 e-Seva centers (with 400 service counters) spread over the twin cities and Ranga Reddy district.

The chairman also said that its operations at the Ameerpet branch in the city would re-start soon. "We have already put up the board and expect the operations to start as soon as possible," Raghu said.

On the recent visit by the officials of RBI's Depository Insurance and Credit Guarantee Corporation, Raghu said: "The officials were here to check the recovery rate and to oversee the arrangements for the amount disbursement. The bank has received a total of Rs 123 crore last year from the RBI and is paying the amount back in stages. The agreement is that out of the recovered amount 50 per cent will be paid to the RBI and the other half to the depositors." Raghu said.

The bank hopes to start operations in all it 21 branches including the branches in Mahaboobnagar and Nizamabad by 2006.

"At present, we are working with 150 employees from a original strength of 500. As and when the branches are operational, recruitment would commence," Raghu said.