RBI revokes restrictions on Sivaganga bank

Chennai, May 29 (UNI) In a major decision, the Reserve Bank of India (RBI) today revoked Sec 35 (A) of the Banking Regulation Act, imposed on the controversial Sivaganga District Central Cooperative Bank (SDCCB) in Tamil Nadu.

The revocation of Sec 35(A), imposed in April 2005 due to alleged erosion in its networth by about Rs 19 crore, comes after the Tamil Nadu Government decided to write off the entire short term loan outstanding of all the agricultural borrowers.

Despite the financial assistance of Rs 12.50 crore by the previous government, the bank could not reach to the positive net-worth.

''The present state government has decided to write off the entire short-term loan outstanding of all the agricultural borrowers. The SDCCB would be in a position to reach the positive net-worth status'', according to information received here.

Reacting to the new development, Tamil Nadu Cooperative Bank Employees' Association General Secretary R Balakrishnan told UNI that the Association thanked Chief Minister M Karunanidhi and Union Finance Minister P Chidambaram for having enabled revocation of 35(A) of the BRA.

The section imposed operational restrictions on the bank and more particularly for withdrawals by not more than Rs 25,000 per account.

''With the revocation, these restrictions are removed'', he added.

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