The Cooperation Department has decided to shut down operations of the Bhubaneswar Urban Cooperative Bank permanently. A circular to this effect has been issued to all employees of the bank, and its top management has been asked to initiate closure process as mandated in the RBI guidelines. The Government, however, is yet to take a final call on compensating the 70 employees who would lose their jobs, action to be taken on loan defaulters and the process to refund of money to depositors.
Cooperation Minister Damodar Rout had earlier assured the State Assembly that complaints would be lodged against loan defaulters and their mortgaged property would be seized. As per the Minister, 13,797 depositors are yet to receive Rs 30 crore they deposited in the bank. Also, Rs 17.82 crore of loan amount is yet to be collected from 1,760 customers. The RBI had earlier asked the cooperative bank to stop receiving deposits back in 2006 after it became bankrupt in 2000. The RBI had cancelled the registration licence of the bank in February 17, 2014.
The Government attempted to bring the bank back to business many times and infused Rs 6 crore in 2006, but it made no changes to the fortunes of the bank. The Government even attempted a merger of this bank with the Cosmos Cooperative Bank of Pune and the Cabinet Committee approved the proposal in June 2012. The Cosmos bank, however, turned its back on the move after six months.
Another such attempt was made in September 2013 when the Cooperation Department submitted a proposal to the RBI seeking its approval for the merger of the bank with Government- elecommunication Emp Coop Society of Chennai. The RBI, however, rejected it citing many reasons. The last such attempt was made by the Cooperation Department by trying to merge it with the Cuttack Urban Cooperative Bank and the file was moved to the Chief Minister’s Office (CMO) for clearance. However, the Chief Minister’s decision, if any, was not known.
As the curtains come down on the ailing bank, questions arise on the sincerity of the Cooperation Department in reviving its fortunes and the efficiency of its employees, who failed thrice in the last eight years to get a successful merger done. The future of the employees, unpaid since past one year, also remains uncertain along with the depositors who invested their money in the bank.