Bhubaneswar, May 20: The state government has asked the Registrar Co-operative Society to recover loans from customers of Bhubaneswar Urban Co-operative Bank within three months.

Secretary, co-operation, Bishnupada Sethi said: “We have issued the instructions. The Registrar Co-operative Society can take the help of police to collect money from the defaulters.”

“The bank has to recover Rs 36 crore from nearly 14,000 customers, mainly from Bhubaneswar. But we have told the officials to collect at least Rs 12 crore, one third of the total amount, over the next three months. It will be a test case for the employees,” said a senior government official.

Sources said the government had taken the move to collect the outstanding dues after Pune-based Cosmos Co-operative Bank Society firmly told the government that steps should be taken to minimise the liability of the bank, else it would not take over the financial institution.

The state cabinet last year had approved the merger of Bhubaneswar Urban Co-operative Bank with Cosmos. After the merger, Cosmos raised the issue of debt recovery.

To collect the money, it had asked the government to appoint an administrative committee till the merger took concrete shape with RBI approval.

According to the plan, the administrative committee would consist of three persons — the chief executive officer of the Bhubaneswar bank and two Cosmos nominees. However, till date, no committee has been formed.

Sources said the government did not take any initiative as it felt Cosmos seemed to have developed cold feet on the issue of taking over the bank. “If we are able to realise the outstanding dues, it would only pave the way for the merger of the bank,” said an official.

However, the bank officials said it would not be easy to collect the dues.

Almost echoing the officials, an employee said: “We are now collecting Rs 5 lakh to Rs 8 lakh a month. How will we be able to collect Rs 4 crore in a month?”

Officials in the department also believe that it would be a tough task to collect the money from the depositors. Joint registrar, co-operative society, Himanshu Sekhar Panda, who had headed the bank in 2004, said: “The bank had given loans without taking sufficient mortgage. Many cases are now in the vigilance court. It will not be possible to recover the entire dues.”

Established in 1988, the bank was making profits till 2001. However, with the government evincing little interest in its promotion, the institution started making losses. The RBI stepped in and stopped the bank’s business transactions.

The bank has to return Rs 28 crore to its depositors. As no move was being taken to revive the bank, it has left depositors high and dry.

Restrictions have been placed on tapping further deposits, sanctioning loans and withdrawing amounts exceeding Rs 3,000 per account. Only on emergency grounds, such as for medical purposes, can a customer withdraw Rs 1 lakh.

Retired government official Chaitanya Mishra said: “After my retirement, I deposited all my savings worth nearly Rs 20 lakh in the bank. Now the bank is not allowing me to withdraw the money. The government should adopt a positive approach in the matter.”