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June 22, 2001
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Money > Business Headlines > Report June 22, 2001 |
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Madhavpura revival to dent DICGC kittyK Ram Kumar The Deposit Insurance and Credit Guarantee Corporation's Rs 50 billion deposit insurance fund will be poorer by about 9 per cent following the Rs 4.64 billion outflow which the corporation will have to shell out as part of the revival package for the Ahmedabad-based Madhavpura Mercantile Co-operative Bank. This is probably the first time that the corporation is throwing a long line for a single banking entity involving such a huge sum. The centre-approved plan will see a new co-operative entity being floated under a totally fresh management. This entity will take over the assets and liabilities of MMCB. The bank will then be liquidated and individual depositors not desirous of continuing with the new co-operative bank will be able to get back their monies by applying to the MMCB administrator and it is here that the DICGC funds will be utilised, according to sources familiar with the developments. As per the DICGC Act, the ceiling amount of insurance cover for deposits with an insured bank is Rs 100,00 per depositor per bank. The percentage of insured to assessable deposits of commercial banks, regional rural banks and co-operative banks in 1999-2000 is 70.81 per cent. The last time that DICGC had to dip into the deposit insurance fund in a big way was in early-90s when the Bank of Karad went under in the securities scam of 1992. Then the total insured deposits paid and provided for was Rs 370 million. The Rs 8 billion to be pumped in by the 350 Gujarat co-operative banks, many of which held deposits with the MMCB, will be utilised towards running or meeting working capital requirements of the new bank. The financial instrument, whether bonds, convertible debentures or only fixed deposits, to be offered to these banks in lieu of their parking funds in the new co-operative bank is yet to be worked out, sources said. Powered by YOU MAY ALSO WANT TO READ:
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