Retrenched Diamond Bank staff yet to get dues

The retrenched employees of Diamond Jubilee Co-operative Bank are yet to receive their dues even a month after they were promised. The RBI has directed Surat District Co-operative Bank not to pay the Diamond Jubilee employees as it would violate Section 35 (A) of the Banking Regulations Act.

The Section disallows a urban cooperative bank from making payments of over Rs 1000 to each of the depositors. It also bars the bank to attract deposits, ultimately leading to the closure of the bank.

State co-operatives minister Bhupendrasinh Chudasma had on May 1 (Gujarat Formation Day) approved a formula prepared by joint registrar A S Khandar, Diamond Jubilee Bank CEO Jimmy Kharadi and bank administrator B C Patel.

According to the plan, the 179 retrenched employees of the bank were to receive 70 per cent of their salary and other dues within a week.

Patel had prepared cheques for the employees and deposited the amount (around Rs 5 crore) with Surat District Co-operative Bank on May 17.

However, instead of paying the amount, Surat District Bank decided to seek permission from the Reserve Bank of India. The apex bank referred to Section 35 (A) of the Banking Regulations Act and directed Surat District Bank not to pay any money to the employees.

It is worth mentioning here that when the 179 employees were retrenched on February 28, Patel had assured payment of their dues within 15 days. Even at that time, RBI had quoted Section 35 (A) and stopped payment to the employees.

These delays have not gone down well with the employees. Bank Kamdaar Sangh president Natu Patel, said: "It seems that no one is interested in solving the problems of the employees. The amount was deposited with Surat District Bank and it (the bank) should have paid the money to the employees instead of approaching the RBI".

"RBI too has committed a serious error by stopping the payment quoting Section 35 (A)," Patel added.

Employees are also doubting the role of the joint registrar in the entire episode. Natu Patel said: "Khandar is yet to give us any assurance in writing about the agreement reached with bank employees on May 1. RBI has stopped payment to employees quoting section 35 (A) on two occasions. We want to know if Khandar was aware of this rule?"

Meanwhile, the registrar, B K Gupta held talks with RBI officials on May 25 and tried to convince them to pay the full amount to the employees of Diamond Bank, instead of 70 per cent of the amount.

RBI is yet to take a final decision in this regard. Gupta also met Bank Kamdaar Sangh representatives on May 26 and asked them to wait for a week. Said Natu Patel: "We had met Gupta last Wednesday. We will again contact him tomorrow and hope he would give Diamond Bank employees something to cheer about."

Diamond Jubilee Co-operative Bank, which is out of business since August 2002, owes approximately Rs 7.55 crore to the 179 retrenched employees.