As many as 12 cooperative banks have been liquidated since September 2021 after payment to depositors by Deposit Insurance and Credit Guarantee Corporation (DICGC). Till 30 November 2022, DICGC settled deposit insurance claims worth Rs4,055.10 crore of over 30.6K (thousand) depositors from 35 banks under the Reserve Bank of India (RBI)'s all-inclusive directions (AIDs). Over the past 10 years up to 2021, a total of 91 banks, mainly cooperative banks, were liquidated, amalgamated or reconstructed, the Union government says.
In a written reply in the Lok Sabha, Dr Bhagwat Karad, minister of state for finance, says, "DICGC has to settle claims within the statutory timelines of 90 days after imposition of AID. From 1 September 2021, the date from when the DICGC (Amendment) Act, 2021 came into effect to 30 November 2022, DICGC has settled deposit insurance claims of 3,06,146 eligible depositors of 35 banks under AID, amounting to Rs4,055.10 crore. Twelve banks have since gone into liquidation after the deposit insurance amount was paid to the depositors of the banks in terms of Section 18A of the DICGC Act, 1961 during the same period."
Banks that were liquidated over the past 15 months are: Mudhol Co-op Bank Ltd, Mantha Urban Co-op Bank Ltd, Independence Co-op Bank Ltd, Deccan Urban Co-op Bank Ltd, Peoples Co-op Bank Ltd, Shri Anand Co-Op Bank Ltd, Millath Co-Op Bank Ltd, Sarjeraodada Naik Shirala Sahakari Bank Ltd, Seva Vikas Co-Operative Bank Ltd, Babaji Date Mahila Co-Operative Bank Ltd, Laxmi Co-op Bank Ltd, and Rupee Co-op Bank Ltd.
Five members of Parliament (MPs) Dr Jaisiddeshwar Shivacharya Mahaswamiji, Umesh G Jadhav, LS Tejasvi Surya, Prathap Simha and Sanganna Amarappa Karadi have asked about banks liquidated and claims settled by DICGC.
Dr Karad, the minister of state, informed the lower house that the amended DICGC Act enables depositors to get time-bound access to their deposits up to Rs5 lakh through interim payments within 90 days of the imposition of AID by RBI on banks. "Banks placed under AID are required to furnish a list of depositors showing the net outstanding deposits to the credit of each depositor in the same capacity and in same right within 45 days of the imposition of AID."
According to information provided by the minister, 35 cooperative banks submitted claims from 306,143 depositors. DICGC paid Rs4,055.10 crore to these depositors.
There are 91 banks which have been able to settle the insurance amount back to the DICGC. Out of these, 18 banks have repaid the entire money to DICGC through 100% recoveries. One lender, Memon Co-operative Bank Ltd from Maharashtra, also recovered the entire Rs23.75 crore and then it was taken over by Bank of Baroda.
The maximum amount of claim settled by DICGC is for depositors of Karad Janata Sahakari Bank Ltd, liquidated in 2021. While DICGC paid Rs343.67 crore to depositors, it received repayments of just Rs112.13 crore, leaving a balance of Rs231.57 crore. This Bank's recovery percentage is also the lowest among all banks at 32.63%.
Information shared by the finance ministry also shows that out of the 91 cooperative banks, two lenders have less than or about 1% recovery. This includes: Karnataka-based Sri Mouneshwara Co-op Bank Ltd, Karnataka (2011), where DICGC settled claims worth Rs25.70 lakh. However, the Bank repaid only Rs17,000, leaving Rs25.53 lakh as a balance with DICGC. Its recovery percentage is 0.66%. Similarly, DICGC paid Rs11.29 crore to depositors of Maharashtra-based Hina Shahin Nagrik Sahakari Bank Ltd. However, the lender could repay just Rs11.86 lakh to DICGC, leaving Rs11.18 crore as a balance. Its recovery percentage is 1.05%.
According to the government, the number of fully protected accounts in end-March 2022 constituted 97.9% of the total number of accounts. In terms of amount, the total insured deposits as of end-March 2022 stood at Rs81,10,431 crore and constituted 49% of assessable deposits worth Rs1.65 lakh crore.
(UNSTARRED QUESTION NO. 722 Date: 12/12/2022)