UP to rescue 16 ailing cooperative banks

The Uttar Pradesh government on Monday announced to rescue 16 ailing district cooperative banks (DCB) in the state even as the Centre is yet to provide its share of Rs 922 crore for their recapitalisation.

These 16 banks are located in eastern UP districts, including Gorakhpur, Basti, Ballia, Siddharthnagar, Deoria, Azamgarh, Sultanpur, Jaunpur, Ghazipur and Bahraich.

BJP legislator from Gorakhpur Radha Mohan Das Agarwal had raised the issue in the assembly on Monday.

He informed the House that the Reserve Bank of India had served notices on these 16 banks giving them a fortnight's notice, which would expire by the end of this month. These banks employ about 8,000 people and provide credit to small farmers and enterprises.

He urged the state to inject funds in these banks to keep them afloat. Giving the example of Gorakhpur, he said the local DCB supported about 275 institutions, while lakhs of small and marginal farmers had taken loans from them.

Earlier, the government had given about Rs 220 crore for the revival of other 9 DCBs in Lucknow, Faizabad, Unnao, Rae Bareli and Mau districts. Subsequently, these banks had reported 73 percent rise in their credit portfolio.

He urged the government to provide similar aid to the remaining 16 banks for their revival, else their failure would affect other banks as well as people might decide to withdraw their deposits in apprehension.

In his reply, UP cooperative minister Shivpal Yadav said following the Vaidyanathan Committee report in 2006 for strengthening cooperative credit institutions, the Centre was to provide Rs 2,400 crore to UP.

The state had even got around Rs 650 crore in the first installment. He said the government had already made several representations to the Centre for release of Rs 922 crore. "Even if the Centre delays its share, the state government would marshal resources for the 16 banks to keep them alive."