The Hindu Business Line : `Urban co-op banks facing tough time in AP'

URBAN co-operative banks in the country, especially those in Andhra Pradesh, are starved of deposits due to a crisis of confidence , said Mr M. Anjaneyulu, President of the Andhra Pradesh Urban and Town Co-operative Banks' Association. The deposit growth rate of the banks is less than two per cent.

At a press meet here on Tuesday, he said the tenth State-level conference would be organised here on January 8 to discuss the problems plaguing the banks.

Mr Anjaneyulu said there are in all 170 urban co-operative banks registered in the State, of which 44 are under liquidation.

"At present, 125 banks are functioning in the State, with the total deposits amounting to Rs 2,650 crore and the advance Rs 1,740 crore. Most of the banks, which have gone out of business, are based at Hyderabad. They have suffered that fate due to mismanagement besides laxity in supervision by the State Government as well as the RBI," he said.

He said the State Government had taken the right step in 2005 by constituting a taskforce committee along with the RBI for monitoring the functioning of urban co-operative banks. But that alone is not sufficient.

"It is necessary to extend insurance cover for all deposits in co-operative banks to instil confidence among depositors. Now, only the cover is limited to deposits up to Rs 1 lakh. The ceiling should be raised and, if necessary, the premium could be enhanced," he said.

He said the conference would focus on reviving urban co-operative banks.