May 9, 2002 | 0835 IST
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Money > Business Headlines > Report May 9, 2002 | 0835 IST |
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130 district co-op banks sick: NabardBS Banking Bureau The National Bank for Agriculture and Rural Development (Nabard) has classified 130 district central co-operative banks across the country as sick because their net worth has eroded. 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. In fact, almost all the district central co-operative banks in Bihar, around 25, have failed to meet the minimum share capital norm. There are about 800 such banks in the country. "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 banking business," said sources familiar with the development. The Reserve Bank of India rejected the licence applications of the Daltonganj Central Co-operative Bank in Jharkhand and the Chapra District Central Co-operative Bank in Bihar a couple of months ago. "This move to cancel the licences of the banks was unprecedented. District central co-operative banks make up the intermediate tier in the three-tier co-operative banking system. Owing to the linkages, adverse developments in one tier can have negative consequences on the other two. The RBI probably was left with no option and moved against these banks to protect the system," officials said. The revival in the fortunes of these banks now depends on their recapitalisation, for which the Centre has announced an initial contribution of Rs 1 billion. "However, given the precarious financial condition of most state governments, which are required to chip in with a contribution of 40 per cent of the recapitalisation amount, the revival plan may turn out to be a non-starter," the officials pointed out. The district central co-operative banks had a collective deposit liability of over Rs 540 billion on March 31, 2000. Their advances portfolios stood at Rs 445.84 billion, and investments Rs 226.77 million. Powered by ALSO READ:
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