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Cooperative Banks Paid Over Rs 505.4 Crore In Deposit Claims Over Five Years

DICGC data shows a fall in the share of insured deposits as compared to total assessable deposits.

A Punjab and Maharashtra Cooperative Bank  branch in Mumbai. (Photo credit: BloombergQuint)
A Punjab and Maharashtra Cooperative Bank branch in Mumbai. (Photo credit: BloombergQuint)

The restrictions placed on the Punjab and Maharashtra Cooperative Bank are a reminder of the troubles that frequently roil India’s cooperative banks.

Nearly Rs 505.4 crore in claims have been paid out to depositors of such institutions and the recoveries from such banks that were liquidated in the last five years amount to Rs 1,442 crore, according to data from the Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the Reserve Bank of India.

On a cumulative basis, while the claims amounted to Rs 4,822 crore, recoveries from these banks was Rs 2,607 crore since inception of the DICGC up until FY19.

India had 1,551 urban cooperative banks until March 2018 and 96,612 rural cooperative banks as on March 2017, according to RBI data.

In case of commercial banks, cumulative claims over the past five years remained at Rs 195.9 crore indicating that no new claims have been made in this duration. Cumulative recoveries received from commercial banks aggregated to Rs 151.2 crore, including Rs 2.1 crore received in FY19.

Fall In Insured Deposits

Though the number of protected accounts as a percentage of total accounts continue to rise, there has been a fall in the share of insured deposits as compared to total assessable deposits, according to DICGC data.

The total number of fully protected accounts stood at 177.5 crore, making up about 91.5 percent of all accounts. Insured deposits stood at Rs 32.7 lakh crore, constituting 29.2 percent of all assessable deposits.

The DICGC insures all deposits up to a maximum of Rs 1 lakh, which it’s liable to pay in instances like when a bank goes into liquidation.

Poor Health Of Cooperative Banks

The health of cooperative banks remains a concern, more so in the case of rural cooperative banks, many of which continue to record higher gross non-performing loan levels.

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