Patni Co-operative Bank's licence cancelled

The Reserve Bank of India (RBI) has cancelled the licence of Sri Patni Co-operative Bank (SPCB) which has over 24,000 depositors.

The apex bank took this step after it found that the co-operative bank has violated certain norms stipulated by the RBI.

Sri Patni Co-operative Bank has two branches in operation at present in Vadodara. Gujarat registrar of co-operatives is likely to announce liquidation of the bank soon.

Sri Patni Co-operative Bank had six functioning branches before it was declared sick in August, 2003. The RBI was not satisfied with the management and had appointed a custodian for the bank.

Sri Patni Co-operative Bank had already been withdrawn from the clearing house in October 10, 2002, due to inadequate liquidity.

"We have informed the state registrar about the development. We will take further action once the government gives its consent," said I P Joshi, custodian.

Depositors who have monies below Rs 1 lakh are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Eligible depositors will have to file claims within 90 days of the announcement of liquidation, Joshi said.

"Sri Patni Co-operative Bank lost around Rs 3 crore of deposits and interest in the Madhavpura Mercantile Co-operative Bank (MMCB). There will not be much trouble for most of the depositors as Sri Patni Co-operative Bank had a wide base of small depositors. We are waiting for the direction from the state registrar to proceed," said Dipak Dalal, district registrar of co-operatives.

Sri Patni Co-operative Bank custodian has given an application to the police to probe into the alleged mismanagement by former managers.

The custodian has also filed police complaints against defaulters of the bank. The Custodian has issued 90 notices to the defaulters under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securitisation Act, 2002.

Meanwhile, speculations were rife about cancellation of licence of Shri Swaminarayana Co-operative Bank (SSCB).

The bank has outstandings of around Rs 38 crore in MMCB. SSCB also has to recover around Rs 29 crore from other defaulters.

"We have not heard anything from the RBI so far. We are in the process of recovering outstandings from defaulters," said Arvind Patel, manager, SSCB. The bank has deposits of over Rs 65 crore.