Another Gujarat Co-Op Bank Goes Bust

Diamond Jubilee Co-operative Bank (DJCBL) is the latest addition to the list of bankrupt co-operative banks in Gujarat.

It also becomes the sixth co-operative bank in the state to face a liquidity crunch in the last 18 months.

DJCBL's one lakh depositors have total deposits worth Rs 115 crore and they are now caught in a fix as all seven branches of the bank located at Surat have closed down.

The bank has total fixed deposits of over Rs 114 crore of which deposits worth Rs 96 crore are for less than one lakh rupees.

The bank's chairman Mohammedali P Dodhia said about Rs 100 crore worth of deposits of his bank are insured with the Deposit Insurance and Credit Guarantee Corporation (DICGC).

 

"But I am not sure when we will be able to pay back the deposits as getting money from the DICGC is a long process. It might take ten days to start running the branches and if we can recover some of the dues from customers by then, we will be able to pay back depositors, specially the ones who have smaller amounts with us," said Dodhia.

He also said bank officials have already chalked up a master plan to recover dues from borrowers. Meanwhile, C R Patil, a senior leader of the Bharatiya Janata Party and chairman of Gujarat Alkalies and Chemicals, has been caught in the controversy as he is yet to pay a Rs 45 crore loan availed from the DJCBL. Patil, a regular customer of the affected bank, had borrowed the amount for his private unit, Abhishek Estates.

Asked about the loan amount lying with Patil, Dodhia said Patil had earlier taken a loan from DJCBL and paid it back with interest. "This time also, only on Saturday he paid us about Rs 65 lakh towards dues against him and assured us that he has been trying to manage more money to pay the bank back in a few days," said the chairman.

Patil said, "I have already paid a large amount to the bank and want to give back more capital so that the bank can pay the people who need money."

On Friday, employees of the main branch of the bank at Jhampabazar, which has been operating since July, 1947, told depositors that the bank was facing a cash crunch.

"There was panic and people having accounts with DJCBL in different branches went to withdraw money. But, till then the clearing house was suspended and we were informed about the development. We have already asked the bank management to prepare their explanations and senior officials have been asked to go through the account books and take necessary action against the bank management," said Vadibhai Patel, state minister of co-operation and protocol.

"We can only say that money is insured with the DICGC and it is safe. There should not be any much panic among the people banking with the co-operative banks as the government has been keeping a watch," added the minister.