Vasavi Bank hopes to restart operations

Vasavi Cooperative Urban Bank, which suspended operations on March 7, 2003, is hoping to restart operations soon. The bank is also planning to liquidate the assets by mid July, kept as sureties by the previous directors of the bank.

Speaking to Business Standard, P Rajeshwar Rao, chairman of Vasavi Cooperative Urban Bank, said: "We have approached the Reserve Bank of India for lifting 35A of the Banking Regulation Act 1949 and hope to get a positive response from them to start operations soon."

Rao said that the bank once it started operations would reduce the interest rate it offers on deposits.

"The interest rates would be brought down from 7.25 per cent to around seven per cent, which is one per cent higher than what the State Bank of India gives," Rao said.

Last year, when the operations were suspended, the bank had a deposit base of Rs 148 crore and the advances were Rs 126 crore.

The bank as on March 31, 2004, has to pay back Rs 178 crore to its two lakh depositors. The bank has so far recovered Rs 63 crore out of the total 173.81 crore that it had lent. As of March 31, 2004, Vasavi has a loan portfolio of Rs 135.48 crore.

Rao said that the previous directors still owed the bank Rs 51 crore. "The legal problems regarding the sureties that the directors had submitted have almost been resolved. We hope to liquidate these assets by mid July," Rao said.

According to him, one of sureties "� a piece of land in Begumpet "� would repay a large amount that the directors owed.

"The land that they kept as surety would repay Rs 22 crore out of the Rs 51 crore that they owe the bank. Apart from this, the other assets that were attached would also be liquidated to recover the rest of the amount," Rao said.

He also said that the cases against the collaterals of other borrowers were at an advanced stage in various tribunals. "In the last three months, the recovery rate has been encouraging and the bank has recovered a fairly good amount," Rao said.

The bank has received 900 applications under the one-time settlement (OTS) scheme. Rao said that the bank hopes to get back at least Rs 31 crore under the scheme which is open till the end of June.

The bank has 17 branches in the twin cities and one branch at Nandyal in Kurnool district. At present, only recovery operations are through about 380 employees across 11 branches.

Rao also said that the bank had inducted new members in to its board.

"The eight-member board has started performing their duties in the last three months. Out of the eight, six are professional bankers who have earlier served at top levels in various banks and two are from the depositors' forum," Rao said.