Three Cooperative banks in Surat are under the Reserve Bank of India (RBI) scanner as a special audit is being carried out by the RBI since last one week.
These banks have said to have offered credit more than their stipulated limit, due to which the financial body has initiated action.
The District Co-operative Department has also confirmed RBI’s action.
According to sources, the three banks, where special audit is being carried out, are functioning in the city from past many years and are one of best established names.
While names of two banks are not confirmed yet, third bank is Udhna Citizen Co-operative Bank, located at Udhna. The audit has been carried out after the RBI found violation of rules in disbursement of loans.
Due to continuous disbursement of loans in such a manner, the liquidity position of these banks has gone down, resulting in a financial crunch.
At Udhna Citizen Bank, the RBI is said to have found massive irregularities in investment department of bank, where it has made investments through a broker, rather than doing it through government security dealer.
Sources said that RBI issued notice to the bank in the past for breaching the master circular and not following accepted codes. The bank officials made certain disclosures only after the notice was received, the sources said.
” Till March 31, 2009, total Non Performing Assets (NPA) of the bank accounted to 49 per cent, while 84.7 per cent CD ratio declared by bank is also wrong and misleading. Bank has given loans of more than 70 per cent of its total assets, which is again breach of RBI rules. As per our investigation, bank has credited 85 to 90 per cent of its total assets as loans,” Kamlesh Patel, Registrar, district co-operative department (Surat), said.
He said the bank just recovered Rs 2.39 crore from 43 accounts that were given loans in the past. However, bank authorities are denying any irregularity in bank operations and term everything as per specified rules.
”We are ready to face any kind of action, if found guilty in RBI’s special audit,’ Sethu Madhavan, chairman of the bank, said.