Kolhapur bank under 3-mth moratorium

The ailing private sector Ganesh Bank of Kurundwad (GBK), based in Kolhapur, has been put under moratorium by the Reserve Bank of India (RBI) for three months till April 6.

The apex bank would now consider various options such as amalgamation of GBK with a strong bank, restructuring or winding up its operations.

Its depositors would now be able to withdraw a maximum of Rs 5,000 from their accounts, during the moratorium period. When RBI puts a bank under moratorium, all business activities of the concerned bank are suspended except for loan recoveries and withdrawals by customers upto the maximum amount permitted. GBK has deposits of Rs 217.43 crore and advances of Rs 105.73 crore.

According to the apex bank, GBK has failed to come up with a credible plan to raise fresh capital. Its net worth and capital adequacy ratio have turned negative. The bank has a negative net worth of Rs 3.05 crore and capital adequacy of a negative 5.83 per cent as on March 31, 2005, which had resulted in the erosion of depositors' money.

The bank has a gross non-performing assets (NPAs) of18.04 per cent and net NPAs of 8.32 per cent. Its asset base was Rs 233.48 crore at the end of March 2005 (Rs 222.14 crore a year ago).

The central government has given the moratorium order in the interest of depositors, public and the banking system. Over 30 per cent of the bank's stake is held by a Joshi family, RBI said.

Its total income in 2004-05 declined to Rs 17.43 crore from Rs 22.89 crore in 2003-04.

The bank has a network of 32 branches and its operations are concentrated in Sangli and Kolhapur in Maharashatra and Belgaum (Karnataka).