HC upholds licence cancellation order

The Petlad Nagarik Sahakari Bank (PNSB) in Anand district is now likely to go for liquidation as the after the Gujarat High Court withdrew the stay on the cancellation of licence order issues by the Reserve Bank of India (RBI).

The board directors and a group of depositors had filed a civil petition in the HC after the RBI cancelled the bank's licence on March 13, 2004. The court had ordered a temporary stay on the cancellation of licence.

The PNSB is the second bank in Petlad town to lose its licence within one month. Earlier, Petlad Commercial Co-operative Bank (PCCB), with three branches and about 18,500 depositors, lost its licence on August 24, 2004.

Petlad Nagarik Sahakari Bank found itself in quandary two years ago when the RBI declared it sick after finding unprofessional handling of funds.

PNSB lost adequate liquidity to manage day to day operations during the same time due to the run on bank. This compelled PNSB to withdraw itself from the clearing house immediately.

The manager and the cashier are alleged to have manipulated the record books of PNSB.

PNSB has issued loans and cash credit of Rs 5.20 crore against the deposits of about Rs 5.39 crore.

According to the sources, major portion of the loan and cash credit amount is unsecured and it will be difficult to recover the outstanding soon.

However, district registrar for co-operatives, C B Kotecha declined to comment on the issue, as he has not received any orders either from court or from state registrar for co-operative.

"We will decide further course of action only after we receive the instructions from the higher ups," said Kotecha.