The Urban Co-operative Bank in Bhubaneswar. Picture by Ashwinee Pati

Bhubaneswar, Aug. 17: The Bhubaneswar Urban Co-operative Bank is up for sale. Some prospective buyers, including the Cuttack Urban Co-operative Bank and a cooperative bank from Maharashtra, have shown interest in taking over the financial institution that is saddled with huge liabilities.

The bank’s current losses are pegged at around Rs 16 crore while its liabilities have touched Rs 28 crore. The bank has to collect nearly Rs 36 crore from its customers as outstanding loans and interests.

The collection drive has come to a standstill with employees lacking the zeal to work. “How can we work without salary? We have not been paid for June and July. Even in 2009, we did not get salary for months together,” said an aggrieved employee.

Established in 1988, the bank was making profits till 2001. However, with the government evincing little interest in its promotion, the organisation started incurring loss. Following intervention of the Reserve Bank of India, business transactions have now been stopped.

The sudden downturn in the bank’s fortunes has left 18,000 depositors high and dry. Worried about the safety of their deposits, they have been running from pillar to post to withdraw their money. Officials said the bank had been under RBI direction since January 2004. Restrictions had been placed on the tapping of further deposits, sanctioning loans and allowing withdrawal of more than Rs 3,000 per account. Only on emergency grounds — such as for medical purposes — can one withdraw Rs 1 lakh.

Even this directive was not followed. Reacting sharply to the goings on in the bank, a retired government official Chaitanya Mishra said: “After my retirement, I deposited savings worth nearly Rs 20 lakh in the bank. The deposits include money from the maturity of LIC policies and savings in the GPF account. The bank did not allow me to withdraw the money. Because of this I am unable to get my daughter married. The government should adopt a positive approach in the matter.” Mishra almost broke down as he narrated his plight.

“How will I survive if all my savings remained locked in the bank? My daughter is now past 30,” he said. Similarly, local business Ashish Kumar Rath said: “I have made a deposit of nearly Rs 10 lakh. But I am unable to withdraw the money. The bank has released only Rs 75,000. I suffered a lot because of the bank’s inaction. The government should immediately take steps for the bank’s revival.”

Earlier, the RBI had cautioned the state government that the bank would be liquidated and had said it was the government’s moral duty to revive it. The RBI had said: “It is the moral duty of the government to help the bank for its solvency by infusing required capital, as mismanagement by the government appointed board is solely responsible for deterioration in the financial health of the bank.”

The state’s secretary, cooperation, Mona Sharma, said, “ The bank is in the red. We have already issued advertisement for the bank’s merger with a financially viable organisation. We have got two to three proposals in this regard. We are examining the viability of the proposals.”