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Odisha Govt shuts down Bhubaneswar Urban Bank

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Odisha Sun Times Bureau
Bhubaneswar, May 19:

The Co-operative Department of Odisha Government has decided to shut down operations of Bhubaneswar Urban Bank permanently.

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A circular to this effect has been issued to all employees of the bank and its top management has been asked to initiate closure process as mandated in RBI guidelines.

The government, however, is yet to take a final call on compensating the 70 employees who would lose their jobs, action to be taken on loan defaulters and the process to refund depositors.

Cooperation minister Damodar Rout had earlier assured the state assembly that complaints would be lodged against loan defaulters and their mortgaged property would be seized.

As per the statement made by Rout in assembly, 13,797 depositors are yet to receive Rs 30 crores they deposited in the bank. Also, Rs 17.82 crores of loan amount is yet to be collected from 1760 customers.

It may be noted that RBI had earlier asked the bank to stop receiving deposits back in 2006 after it became bankrupt in 2000. RBI had cancelled the registration license of the bank in February 17, 2014.

The State Government attempted to bring the bank back to business many times and infused Rs 6 crores in 2006, but it made no changes to the fortunes of the bank. The Government even attempted a merger of this bank with the Cosmos Co-operative Bank of Pune and the cabinet committee approved the proposal in June 2012.  Cosmos, however turned its back on the bank after six months.

Another such attempt was made in September 2013 when the state Cooperative Department submitted a proposal to the RBI seeking its approval for the merger of Bhubaneswar Urban Bank with Government-Telecommunication Emp Coop Society of Chennai. RBI, however, rejected it citing many reasons.

The last such attempt was made by the Cooperative Department by trying to merge it with Cuttack Cooperative Bank and the file was moved to the Chief Minister’s Office (CMO) for clearance. The file, however, sat there and the Chief Minister’s decision was not known.

Failing to revive it, the Cooperative Department finally took a call last week to close the bank permanently.

As the curtains come down on the ailing bank, questions arise on the sincerity of the Cooperative Department in reviving the fortunes of the bank and the efficiency of its employees, who failed thrice in the alst eight years to get a successful merger done. The future of the employees, unpaid since past one year, also remains uncertain along with the depositors who invested their hard-earned money in the bank.