‘Major lapses in bank operations’

Sugar co-operatives controlled by politicians account for as much as Rs 3,908 crore of the bank’s advances. “The bank’s lending to the sugar sector is a big issue,” the RBI official said.

The bank reported that 20.90 per cent of its advances turned into NPAs as on March 2010. The NPA ratio could have gone up further during the year ending March 2011. The bank registered a profit of Rs 1.03 crore during the period ending March 2010. Its capital adequacy ration had come down from 9.17 in March 2009 to 8.98 by March 2010. This has gone down further in the last fiscal year.

As per the RBI rules,each depositor in a bank is insured up to a maximum of Rs one lakh for both principal and interest amount.

The DICGC is liable to pay the money to each depositor through the liquidator,the amount of his deposit upto Rs one lakh within two months from the date of receipt of claim list from the liquidator. If a bank is reconstructed,amalgamated/merged with another bank,state-owned Deposit Insurance Credit Guarantee Corporation is be liable to pay to every such depositor,in accordance with the provisions of section 18 of DICGC Act,an amount equivalent to the difference between the amount so paid or credited and the original amount,or the difference between the amount so paid or credited and the specified amount,whichever is less.