The Hindu : Kerala / Thiruvananthapuram News : No threat to scheduled status, says KSCB chief

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Saturday, Oct 06, 2007
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Kerala - Thiruvananthapuram

No threat to scheduled status, says KSCB chief

Special Correspondent

Says bank has initiated steps to bring down non-performing assets

Recovery proceedings being initiated without any political considerations
Director board members, section of officers responsible for sanctioning loans violating rules

THIRUVANANTHAPURAM: The Kerala State Cooperative Bank (KSCB) has taken all steps to retain the scheduled status accorded by the Reserve Bank of India (RBI), president Kadakampally Surendran has said.

Mr. Surendran said in a release here on Friday that the bank had initiated steps to bring down the rate of non-performing assets (NPAs) through recovery, invoking provisions of the Securitisation Act and filing Vigilance cases against those who have availed themselves of huge amounts without adequate security.

The director board of the bank during 2001-06 had sanctioned loans worth crores which subsequently became NPAs.

If the loss in 2005-06 was Rs.2.59 crore, it shot up to Rs.28.96 crore in 2006-07.

State help sought

The bank had sought government assistance to bring down the NPAs of cooperative and public sector institutions which had government guarantee. “Recovery proceedings are being initiated without any political considerations,” he said.

A detailed inquiry conducted by the bank revealed that the director board members and a section of officers were responsible for sanctioning loans in violation of rules.

NPA of Rs.504.48 crore

The NPAs had been pegged at Rs.504.48 crore. While the director board led by the LDF left office in 2001, the NPAs stood at Rs.49.81 crore and the bank had to keep a reserve fund of Rs.72.99 crore. Hence, the bank had incurred a loss. The bank incurred heavy loss within two years after the new director board took over in 2001. The loss was covered up by citing the money earned by selling the security deposits.

The bank also suffered a loss of Rs.50 crore owing to the decision of the board to deposit money in securities which did not yield any returns. A sum of Rs.9 crore was spent for computerisation and Rs.5 crore for building maintenance. Replacing of air-conditioners and lift also incurred additional expenses. All these expenses were met during 2005-06 and 2006-07.

The RBI as well as the National Bank for Agriculture and Rural Development (NABARD) were aware of the steps taken by the director board to bring down the NPAs.

The district cooperative banks too are lending whole-hearted support to the initiatives of the director board. Mr.Surendran cautioned the public against the conspiracy to destabilise and destroy the credibility of the bank.

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