PANAJI
The bifurcation of Goa State Co-operative Bank (GSCB) and the commencement of banking business by Daman and Diu State Co-operative Bank Limited have come to a standstill pending commitment by the State Government on the Rs 35 crore share capital, as mandated by the Reserve Bank of India.
Though the entire administrative work on the bifurcation has been completed by the Bank, to consider the request by Daman and Diu State Co-operative Bank Limited for commencement of banking business, RBI has asked for commitment from the State Government for financial support, if any, in the form of share capital contribution in case of need.
Additionally, RBI has asked for certification by the State Government to the effect that there is no objection from any quarter to the proposed bifurcation.
The GSCB had on January 21, submitted an application to the Central Registrar of Co-operative Societies seeking de-registration, which was supported by decisions of its special general body meeting as required under section 17 of the Multi-State Co-operative Societies Act, 2002.
Following this, an application was also made to the State Registrar of Co-operative Societies on February 3, for re-registration and restoration of the Bank as a society under Goa Co-operative Societies Act, copies of which were also forwarded to Daman and Diu Registrar of Co-operative Societies, NABARD and RBI, among others.
The RBI then, in its reply to the Bank, sought additional commitments from the State Government.
Though the Daman and Diu Government has complied with all the mandatory requirements as sought by the RBI, Goa Government is yet to do it.
Speaking to The Goan, highly placed sources at the bank informed, “Till these documents are submitted, RBI will not grant its in-principle approval for functioning of the Daman and Diu State Co-operative Bank. The Bank, however, cannot apply for new MICR and IFS code and also IIN which are important for operational aspects.”
Once the Bank is bifurcated, the GSCB will have to give away 24 per cent of its business on the actual day of bifurcation to Daman and Diu State Co-operative Bank Limited.
Moreover, apart from assets and liabilities on location basis, GSCB will also have to pay nearly Rs 110 crore held in call money and short term deposits.
Presently, GSCB has 70 branches including a service branch, of which 9 branches and two regional offices are in Daman and Diu. Only one branch in Daman and Diu is running into losses.
The total NPA of the Bank is 11.16 per cent and the net NPA is 7.44 per cent. Once bifurcated, Goa NPA is expected to reduce with a Net NPA being 6.84 per cent, while that of Daman and Diu is expected to be 10.93 per cent.
Another Bank official, when asked on the commitment of Rs 35 crore share capital by the State Government, informed that it was mainly due to mandated capital adequacy which presently stands reduced due to the NPA which is pegged at Rs 116 crore.
"If the NPA is reduced, may be to Rs 50 crore, definitely our condition will improve", the official said.
