High NPA level: RBI issues notice to Junagadh bank

RNSB passes resolution to merge JVNSB with itself

The Reserve Bank of India (RBI) has issued a show cause notice to Junagadh Vibhagiya Nagarik Sahakari Bank (JVNSB), on grounds that its non-performing assets (NPA) were well above the permissible limits.

Meanwhile, Rajkot Nagarik Sahakari Bank (RNSB), a multi state co-operative bank based in Rajkot and the custodian of the JVNSB, has passed a resolution to merge JVNSB with itself.

Dinesh Bhatt, general manager, JVNSB, said that the bank has two branches, both of which are located in Junagadh.

"Rajkot Nagarik Sahakari Bank has been looking after the affairs JVNSB since 1996 and since then, the deposits have increased considerably and NPAs have also been reduced to half. The showcause notice is just a part of the procedures in merging JVNSB into RNSB", said Bhatt.

The beleagured JVNSB has two branches and over 21,000 depositors. The total deposits of the bank stand at Rs 21 crore.

"From an NPA level of 98 per cent, the NPA level has been brought down to 48 per cent. Four years ago, the total deposits were just Rs 2.95 crore and loans stood at Rs 5 crore with no recovery whatsoever," Bhatt said.

He however added that today, the deposits are in exces of Rs 21 crore and recovery has been substantial.

The general manager stated that depositors of the bank must not be worried, as the deposits are covered under Depsoit Insurance Credit Guarantee Corporation (DICGC).

Dahyabhai Delawala, vice chairman of Rajkot Nagarik Sahakari Bank said that the bank has already pased a resolution to merge the JVNSB with RNSB.

Asked wether it would be possible to merge a urban co-operative bank registered under the state registrar of co-operatives with the RNSB, which is a multi state co-operative bank, Delawala said that even the RBI had suggested this on previous occasions.