Third co-op bank set for liquidation in Anand

RBI appoints liquidator for Petlad Commercial Co-op Bank

One more co-operative bank in Anand district is headed for liquidation. The Reserve Bank of India (RBI) on August 24 cancelled the licence of the Petlad Commercial Co-operative Bank (PCCB). The bank has three branches and about 18,500 depositors.

The RBI has appointed B K Hingu, an officer from the district registrar of cooperatives office as a liquidator for the PCCB. The process of liquidation will start soon after consulting the state registrar of co-operatives.

The PCCB has issued loans of Rs 8.75 crore.

"The small depositors will not find much difficulty in receiving their deposited money as they were insured with Deposit Insurance and Credit Guarantee Corporation (DICGC). The liquidator will claim the insurance money as soon as the required formalities over. However, it will take about six months to receive insurance money," said C B Kotecha, district registrar and former custodian for PCCB.

The PCCB withdrew itself from the clearing house in March 2002, after the loosing adequate liquidity. The bank started facing more difficulties when depositors in the district lost their faith from co-operatives banks and started withdrawing their deposits after the largest bank in the district, Charotar Nagarik Sahakari Bank (CNSB) went into turmoil.

This is the third co-operative bank in the cash-rich Anand district to become defunct. Earlier, Charotar Bank and Umreth Co-operative Bank with one branch and Rs 1.75 crore deposits in MMCB were liquidated by the orders of RBI.

The Umareth Bank has shown total loss of about Rs 1.87 crore on its last balance sheet. The liquidator of Umreth Bank is processing papers for the claim from the DICGC.

At present, 24 co-operative banks are registered with the office district registrar, out of which six banks including Sunav Co-operative Bank, Petlad Nagarik Sahakari Bank and Anand Peoples Co-operative Bank are de-listed from the clearing house.

After the success stories of one after the other co-operative banks and credit societies in the mid 1990s, the sector witnessed the rapid growth of number of co-operative banks and credit societies.

At present, about 250 credit societies are registered with the office of district registrar of co-operatives.

"Anand has a large number of credit societies along with co-operative banks. Over half of the credit societies' status is defunct due to the management's unprofessional approach. Some of the credit societies are even bigger than the co-operative banks in terms of value. The co-operative banking system in the district is in awful state today," said an official of the district registrar office.