Initiating measures to revive the Bhubaneswar Urban Cooperative Bank (BUCB) ltd. which is defunct due to the large-scale irregularities and mismanagement, the State Government on Tuesday urged the Reserve Bank of India to extend the notice period to cancel the banking licence for another three months’ time.
A Chennai-based Government Telecommunication Employees’ Cooperative Society (GTECS) has evinced interest to take over the sick BUCB and to run it professionally. The State Government is examining the proposal of the GTECS and a formal decision would be taken soon to avoid the cancellation of the banking licence and protect the interests of the suffering depositors, said a senior official in the Cooperation Department.
Meanwhile, the Registrar of Cooperative Societies has already invoked the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act-2002 (Sarfaesi Act) for realisation of the outstanding loans by confiscating the properties of the loanees.
The BUCB, which started functioning in late 1987, closed its operation from January 2004 due to financial mismanagement and irregularities. The bank, which started with a Government equity share of `6 crore and shares of `65.76 lakh from individuals and other institutions, sustained an accumulated loss of `22.57 crore. The bank had a negative net worth value of around `16 crore.
The BUCB, which was operating through its five branches including its head office in Bhubaneswar, had collected deposits to the tune of `32.38 crore through 14,219 accounts holders.
Sources said the Government has already initiated legal action including invoking of the Sarfaesi Act against 390 defaulting persons for collection of `20.43 crore and the loan money and the overdue interest thereon. Notices have been served under the Sarfaesi Act on nine defaulters involving an amount of `1.82 crore.