Industrial Co-operation Bank’s licence cancelled

The Reserve Bank of India (RBI) has cancelled the banking licence of Gujarat Industrial Co-operation Bank. The bank’s fate became uncertain after RBI clamped restriction on it due to insolvency.

The only saving grace is that 96 per cent of its depositors hold less than Rs 1 lakh in it and thus their deposits are covered by insurance.

B R Divanji, chief executive officer, has said the bank has been under an administrator since September 2008 when RBI had imposed restrictions on it under section 35A of Banking Regulation Act. In Surat alone, where it had nine out of 20 branches, had withdrawn over Rs 31 lakh in a single day. Depositors holding more than Rs 1 lakh in this bank are 8,100 and they constitute four per cent of total Rs 2.05 lakh depositors as of now. They hold Rs 190 crore collectively.

The bank has 20 branches in the state. It has been facing crisis for long and which has become the cause of its closure. Divanji said that the total deposits as on date stood at Rs 507 crore while its non-performing assets (NPAs) had crossed Rs 350 crore. In March 2008, the NPA level were Rs 201 core and instead of going down it rose to Rs 198 crore by October 2010. (Indian Express)