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Shree Laxmi Co-op Bank's depositors get back their money

BS Regional Bureau

More than 600 depositors of the failed Shree Laxmi Co-operative Bank were handed over cheques for their deposit claims on Saturday evening -- within five months of the bank going for liquidation.

The depositors were handed over cheques by Gujarat Chief Minister Narendra Modi in presence of chairman of Ahmedabad District Co-operative Bank Amit Shah who was nominated as liquidator of the bank which has closed down its operations since mid-October, 2001.

The bank having a deposit of Rs 170 million and five branches had to cease functioning as it turned sick.

"We were asked by the government to play the vital role of the liquidator and just few days back, our claim with the Deposit Insurance Credit Guarantee Corporation, Mumbai, was settled and Rs 120 million has already been credited in the account of ADC Bank from where we have started disbursing the money to the depositors," said Shah today.

He also said that DICGC is yet to settle the claim of another Rs 25 million.

"But we believe this amount also will be paid to us so that we can settle more claims. Meanwhile, we have already recovered Rs 50 million from outstanding amount of Rs 178 million and this amount also will be distributed among the depositors giving them relief," Shah said.

It also has been learnt that among the five branches of the liquidated bank, two branches were housed at the bank's own property, selling them will bring another Rs 20-30 million.

"We are confident to pay back all the depositors within a record time and we have started with the persons having small claims with the bank, and in coming days we will settle the larger claims," Shah added.

Sree Laxmi bank had more than 32,000 depositors. Meanwhile, the National Bank for Agriculture and Rural Development (Nabard) has classified 130 district central cooperative banks as sick because their net worth has eroded. There are about 800 such banks in the country.

Besides, they have not complied with the statutory requirement of a minimum share capital of Rs 100,000.

Most of these banks are located in Bihar, Madhya Pradesh, Maharashtra and Orissa.

Around 25 district central cooperative banks in Bihar have failed to meet the minimum share capital norm.

"These banks are in distress because their accumulated losses are piling up. They have no choice but to seek exemptions under the Banking Regulation Act from the Centre in order to continue in the business," sources familiar with the development said.

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