Depositors to intensify stir for Udhna Bank's revival

SURAT: Account holders of Udhna Citizens Bank have decided to intensify their agitation for the revival of the bank. Members of the Bank Bachao Samiti (BSS) will go on hunger strike and organise sit-ins in Gandhinagar and before the district collectorare here.
They are not averse to converting their deposits into equity if it helped in the revival of the bank.The depositors held a meeting at Sun Grace High School in Udhna on Saturday.
"The administrator is not taking any action to recover money from the defaulters," said Jaisukh Kathiriya, a BSS member.
Udhna Citizens Bank had 51,339 depositors and account holders. Its net worth was Rs 95 crore. But, it showed a lending of Rs 68 crore. Its NPA ratio rose alarmingly in October-November 2010 forcing the Reserve Bank of India to clamp down 35 (A) rule on the bank. The bank chairman obtained a stay on RBI order till November 18. The RBI got the stay reversed at a later date. An administrator was appointed for the bank in the last week of November 2010. The board of directors and bank chairman Setu Madhavan were removed.
To save the bank from going into liquidation, the BSS has put up a scheme of converting 20 per cent of the deposits into equity. About Rs 41 crore of the bank falls in the category of NPA of the total lending of Rs 61 crore. This has become an obstacle to any attempts of its merger with other banks.
At present, the bank has Rs 3.84 crore share deposits, Rs 5.04 crore of reserve fund, Rs 2 crore interest capital and Rs 12.62 crore of BDDR fund. These put together work up to Rs 23 crore, which is Rs 18 crore short of Rs 41 crore.
Only 1,074 depositors have deposits more than Rs 1 lakh. The sum total of the deposits more than Rs 1 lakh is Rs 25.41 crore.
"If all the depositors give permission to convert 20 per cent of their deposits into equity, then we could get out of the mess," said Sanjay Shah, another BSS member.