Online edition of India's National Newspaper
Monday, Apr 11, 2005

About Us
Contact Us
Tamil Nadu
News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Employment |

Tamil Nadu Printer Friendly Page   Send this Article to a Friend

DMK to blame for bank collapse: Jayalalithaa

By Our Special Correspondent

CHENNAI, APRIL 10. The Chief Minister, Jayalalithaa, today accused the Union Finance Minister, P. Chidambaram, of acting with a "sinister motive" on the issue concerning the Sivagangai District Central Cooperative Bank.

Referring to the Reserve Bank of India (RBI) restraining the cooperative bank from accepting or renewing deposits and refunding more than Rs. 1,000 to deposit holders from their accounts, the Chief Minister said this directive was issued on April 5, when the bank's application for exemption (up to March 31, 2007) from Section 11 (1) of the Banking Regulation Act was pending with the National Bank for Agriculture and Rural Development (NABARD). Its application was recommended and forwarded by the State Government.

"These directions have been issued ex-parte. No show cause notice to the Bank has been issued. The State Government has not even been informed of the action proposed. This is most unfortunate and smacks of heavy-handed action when it is most unwarranted," Ms Jayalalithaa said in a press release in response to Mr Chidambaram's statement on Friday.

Giving an elaborate account of the financial condition of the cooperative bank, the Chief Minister said its net worth dropped to less than Rs. 1 lakh as on March 31, 1999, thus not complying with Section 11 (1) of the Act. "The date is significant. The DMK (Dravida Munnetra Kazhagam) Government was in office then. Thus, the Sivagangai District Central Cooperative Bank collapsed due to the mismanagement of the then DMK Government," she said, adding that initially, the bank was given exemption up to March 31, 2003 and later for one more year. "Is it part of his alliance dharma that he should attribute to my Government the serious irregularities of his alliance partner," she asked.

In 2004-05, the DCCB lent Rs. 11.7 crores as crop loans, exceeding its target of Rs. 10 crores. It rescheduled Rs. 35 crores of crop loans, reducing its non-performing assets (NPA). The State Government sanctioned Rs. 16.28 crores over the last four years to the DCCB under various schemes for interest waiver and liquidity support. Last year, it provided Rs. 6.08 crores to enable the bank to handle loans given prior to 1999, which had been converted once. The bank also received Rs. 7.7 crores as liquidity support from the NABARD.

"There are no irregularities except the issue relating to non-compliance of Section 11 (1) of the Act. There is absolutely no violation of Act. The allegations of Mr P. Chidamabaram are thus totally baseless," Ms Jayalalithaa said.

`Bank has achieved turnaround'

Thanks to various "effective measures" of the State Government in the last four years, the DCCB reduced its ratio of gross NPA to the loans outstanding from 35.8 per cent as on March 31, 2004 to 22.35 per cent as on March 31, 2005. The bank was likely to make a profit in 2004-05 and would also have a positive net worth of Rs. 2.35 crores in March 2005.

"It is thus clear that as on 31.3.2005, the Sivagangai District Central Cooperative Bank has successfully completed a turnaround and in fact now complies with the requirement under Section 11 (1) of the Banking Regulation Act. The action taken by the RBI on 5.4.2005 is totally unwarranted and should be withdrawn immediately," the Chief Minister demanded.

Referring to the State Government's proposal for continuation of the exemption for three more years (up to March 2007), she noted that the RBI and the Union Government ignored the request. With a net worth of Rs. 2.35 crores as on March 31, 2005, the DCCB did not need the exemption any more. "Instead of gloating over this vindictive action, hurting the people in his own constituency, Mr P. Chidambaram would do well to ensure that these unnecessary orders are cancelled immediately."

Ms Jayalalithaa mentioned how her Government took "far-reaching steps to completely overhaul and revamp the cooperative credit structure together with adequate financial support." A "record amount" of Rs. 1,064 crores was disbursed in 2004-05 as crop loan. Her government would ensure that the interests of farmers, artisans, weavers and the poor were given the highest importance, she added.

Related Stories:
Rs. 25,000-cr. scheme to develop water sources: Chidambaram

Printer friendly page  
Send this article to Friends by E-Mail

Tamil Nadu

News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Employment | Updates: Breaking News |


News Update


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu