Shree Laxmi Bank closes shop
By Our Banking Bureau | 11 Oct 2001
Ahmedabad: The city-based Shree Laxmi Cooperative Bank has closed all its five branches here since 9 October. In a notice put outside the premises of its branches, the banks management said the branches are closed because the employees are on strike.
But, in its immediate inspection report following the closure of the branches, the Registrar of Cooperative Societies said huge erosion of funds had taken place due to poor recovery of loans, which has forced the bank to close down its branches.
The bank has also not participated in clearing house activities conducted by the RBI since the last two days. The bank management has informed the RBI that it will not be able to participate in clearing house activities.
The bank has about 40,000 depositors who have been left high and dry and many depositors have been seen gathering around the branches.
Shree Laxmi has been classified as a weak bank since 1991. The bank has a deposit-base of Rs 19.4 crore as on 31 March 2001. The total advances of the bank as on that date stood at Rs 20.8 crore and the paid-up capital and reserves were Rs 1.4 crore and Rs 4.5 crore respectively.
Apart from fixed deposits from customers, the bank also enjoyed a cash credit facility of Rs 12.3 crore from the Ahmedabad District Bank. It is not known to what extent the deposits of the bank are guaranteed by the Deposit Insurance and Guarantee Corporation of India.
