New Delhi, February 14: As many as 32 co-operative banks in the country folded up last year forcing the depositors to invoke insurance guarantee to recover part of their losses.
Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank’s credit insurance arm, paid nearly Rs 482 crore to these 32 cooperative banks in the period between January and December, 2009, to settle the dues of the depositors.
A maximum of Rs 1 lakh is paid to a depositor in case of failure of banks under the DICGC insurance norms.
Maharashtra-based banks– Vasantdada Shetkari of Sangli was paid the maximum of Rs 159.93 crore, followed by Shri PK Anna Patil Janata Bank (Rs 56.48 crore), The South Indian Co-operative Bank Ltd of Mumbai (Rs 35.40 crore) and Rohe Ashtami Sahakari Bank Ltd (Rs 34.94 crore).
Other banks which closed down during the year were, Ajit Sahkari Bank for which the DICGC paid Rs 25.72 crore as claim, Bhavnagar Mercantile Co-operative Bank (Rs 24.52 crore), Chalisgaoan Cooperative Bank (Rs 14.97 crore) and Hirekerur Bank (Rs 13.73 crore), according to the DICGC data.
Out of 32 banks that closed counters, most (15) were from Maharashtra, which was followed by Karnataka (7).
Gujarat’s tally was at 5, while Uttar Pradesh’s 3 banks downed shutters.
In 2008, the number of co-operative bank collapses was 17. Out of this, 4 banks of Gujarat and Maharashtra failed to pay back the depositors’ money.
Last month, RBI Deputy Governor Subir Gokarn said that premium charged from banks for deposit insurance should be linked to the quality of loans.
“One way of encouraging overall efficiency is to differentiate insurance premiums between institutions based on some objective measure of the riskiness of their loan and asset portfolios. This will help to bring about a better alignment between the cost of funds and the portfolio risks across the deposit-taking financial sector,” Gokarn had said.
By simply making it compulsory for banks to buy insurance, would impact their operating expenses as they have to service a large number of small accounts, and the depositors also have to bear it to some extent, he had said.
-PTI