Surat co-operative bank depositors lose hope

Despite two liquidated Surat-based co-operative banks having submitted claims with the Deposit Insurance and Credit Guarantee Corporation (DICGC), depositors of the banks are not too hopeful of getting their money back.

Last week, Suryapur Co-operative Bank and the Visnagar Nagarik Sahakari Bank filed insurnace claims of over Rs 90 crore with DICGC.

"According to the DICGC Act, the corporation is liable to pay each depositor the amount of his deposit up to Rs 1 lakh within two months of the receipt of the claim. This rule is hardly followed, and DICGC takes years to repay the money," Paresh Parekh, an agent of Suryapur Co-operative Bank, said.

"The depositors of Visnagar Nagarik Sahakari Bank, which was liquidated more than two years back, are yet to get their money back. So there is no reason to believe that the depositors of Suryapur Bank and Vikas Co-operative Bank, which have submitted their claims just recently with DICGC, would get their monies anywhere in the near future," he added.

Darshak Patel, an agent of the Vikas Co-operative Bank, said: "The attitude of DICGC is difficult to understand. DICGC quotes all rules & regulations and insists that banks pay the insurance premium on time. DICGC also threatens to cancel the registration of an insured bank if it fails to make timely payment of the premium for three consecutive periods. However, when it is DICGC's turn to settle the insurance claims, it leaves all rules aside, and comes up with one or the other technical point to delay the claim settlement".

"We believe DICGC is intentionally hurting the depositors' interests. There is no doubt that the depositors of Vikas Bank and Suryapur Bank would get their monies back, but we don't see it happening for at-least two or three years, unless something very dramatic happens," Patel added.

A banking expert accused DICGC of using anomalies in rules for delaying claim settlement.

"According to the Co-operatives Act, any money recovered by a bank after its claims are submitted with DICGC, goes to the state government. However, as per section 21 (2) of DICGC Act, the corporation is eligible to get the recovered money. DICGC has raked up the issue since some months, and is using it to delay the insurance claim settlement," Jatin Naik, senior officer, The Surat Peoples Co-operative Bank, said.

"This does not make any sense as DICGC has been settling insurance claims all these years, but raised the provision only some months back," he added.

Requesting anonymity, an official of another co-operative bank, said: "DICGC officials say they are unable to settle the claims on time on account of inadequate funds. This might be true, but when the banks are paying the insurance premium on time, it is the corporation's responsibility to settle the claims, and repay the depositors on time."

"If DICGC does not have enough funds, it should talk to the Reserve Bank of India and the Central government, to sort out the issue. DICGC has no right to leave the bank depositors in the lurch under the pretext of non-availability of funds," he added.

Despite repeated attempts, DICGC officials were not available for comment. The institution PRO refused to comment on the issue.