Co-ops to challenge deposit allocation order

Co-operative banks in Saurashtra and Kutch have decided to move the Gujarat High Court against a state government notification which stipulates profit-making banks to spend 15 per cent of their deposits for the revival of weaker banks.

According to Ashwinbhai Mehta, president, federation of Saurashtra Kutch Urban Co-operative Banks, "The government has notified all the profit earning co-operative banks to share 15 per cent of their profits to help weaker co-operative banks.

They have been ordered to deposit this amount with the Gujarat State Co-operative Bank.

The decision to move the high court was taken at a recent meeting of the federation. Around 100 branch representatives of co-operative banks participated in the meeting.

Though the sector is going through a crisis situation, most of the co-operative banks in Saurashtra and Kutch have managed to mop up deposits in recent times.

At the end of 2003, around 58 co-operative banks of Saurashtra and Kutch have aggregate deposits of Rs 4,000 crore and advances worth Rs 3,000 crore.

During the period, deposits of five co-operative banks in Rajkot have increased by 5.82 per cent to 36.82 percent.

"Co-operative sector players in Saurashtra and Kutch are aware of their social responsibilities.

"This has helped them to win the confidence of the people. This notification blatantly ignores their efforts," Ashwinbhai added. According to Prakash Gurjar, All Gujarat Co-operative Banks Depositors and Account Holders Association, in the past two years, 25 urban co-operative banks have collapsed in Gujarat, with depositors losing around Rs 2,500 crore.