Swaminarayan Bank may be liquidated soon

One of the oldest co-operative bank in the state, Shri Swaminarayan Co-operative Bank is on the brink of liquidation.

Last week, a team from the Reserve Bank of India (RBI) studied its books for five days. It is learnt that the team was not impressed with the performance of beleaguered bank.

Swaminarayan Bank, established in 1981, has been reporting losses for the last two financial years. The loss of Rs 2.94 crore reported in 2002-03 mounted to Rs 7.04 crore in year 2003-04.

As on March, 2003, the deposits stood at Rs 63.76 crore, of which about 90 per cent of deposits are covered by Depositors Insurance Credit Guarantee Corporation (DICGC).

However, the bank custodian appointed by the state government, N A Chauhan, has not received any intimation about the liquidation from the state Registrar of Co-operatives.

"Last week the RBI team had visited to examine books of the Bank. So far, we have not learnt anything about liquidation from the higher authorities in Gandhinagar. But in view of poor performance by bank, we can not deny the possibility of liquidation," said Chauhan.

Following inadequate cash reserves, the bank had withdraw itself from the clearing house in December 2003 and a custodian was appointed to look after the operations.

The bank's investments of about Rs 65 crore with outstanding interest are not likely to be recovered. The bank is yet to recover loans of Rs 30.72 crore from 1,511 members as on March 2003.

"We have filed five cases against former employees of bank and are in process of filing more complaints against defaulters.

"The bank machinery is trying its level best to recover money but the depositors with deposits with less than Rs 1 lakh are of the opine that the bank should be liquidated so that at least DICGC can repay deposits," said Chauhan.

In the last annual general meeting shareholders of Swaminarayan Bank had passed a resolution agreeing to merge the beleaguered bank with another co-operative bank. But so far no bank has shown interest in taking over the beleaguered bank.