ONGOLE: The Reserve Bank of India has partially relaxed restrictions imposed on the Ongole Cooperative Urban Bank and permitted it to pay the depositors an amount of Rs. 15,000 each. It has also permitted the bank to sanction fresh loans upto Rs. 2 lakh per borrower against tangible securities like Kisan Vikas Patras, Government securities, gold ornaments etc and also grant retail loans against consumer durables and residential or dwelling units.

The RBI had declared moratorium on the bank on October 11, 2004 and directed to cease all its operations except recovery of loans until it achieved financial discipline. About 8,000 depositors who had deposited nearly Rs. 23 crore in the bank have been left in the lurch for the last 14 months as they could not get back their money.

Following moratorium, the bank officials stepped up their efforts, recovered loans and brought down the non-performing assets from Rs. 11 crore to Rs. 4.5 crore or from 21 per cent to 9 per cent. But the RBI wants it to bring down the NPA to Rs. 2 crore (five per cent) to ensure that the bank would regain its financial health.

Loan adjustments

The bank would pay the depositors the amount permitted by the RBI from March 3. The executive board of the urban bank, which met here on Tuesday, resolved that the depositors who had deposited less than Rs. 1 lakh in the bank can adjust their deposit against loans of their relatives or others, which have been declared as NPAs. Those depositors who had deposited more than Rs. 1 lakh can adjust only 80 per cent of their amount against loans. This facility can be availed up to March 31.

The depositors' welfare association president Kola Prabhakara Rao expressed unhappiness over the RBI decision. He demanded that the depositors should be paid at least 50 per cent of their amount as loan so that the bank can earn interest. He criticised the board for delaying the merger proposal. Though the RBI had directed the urban bank to send merger proposals within three days on March 18 last year, the bank sent them only on November 23. So Cosmos Bank refused to consider the merger proposal. Had the merger taken place, it would have solved the problems of the depositors and employees.

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