Sri Vijaya Puram: Amid swirling rumours and a high-profile investigation by the Criminal Investigation Department (CID), the newly appointed Chairman of the Andaman & Nicobar State Cooperative Bank, P.G. Paul, has assured the public that the bank remains stable, and there is no risk to depositors’ money.
Addressing the concerns during a public briefing, Chairman Paul, a retired government officer with experience in multiple administrative roles, including Assistant Commissioner, Sub-Divisional Magistrate, and District Jail Superintendent, reiterated that the ongoing inquiry has no impact on the operational security of the bank. He was elected chairman after serving as the head of the CCS society post-retirement.
Paul confirmed that four bank officials and four to five individuals who had taken loans are currently under judicial custody in connection with the investigation. However, he emphasized that they are “undertrial,” not convicted. “Judicial custody does not mean guilt. Until a court verdict is passed, no one should be treated as a convict,” he said, urging the public to refrain from vilifying those under investigation.
Rumours Spark Panic Withdrawals
According to Paul, widespread rumours on social media platforms have caused unnecessary fear among the public, leading to panic-driven mass withdrawals. This has strained the bank’s cash logistics, as cash reserves have to be regularly transported from Sri Vijaya Puram to branches across the islands.
“The inquiry is about why additional loans were issued in specific cases. It has nothing to do with the safety of the bank or its deposits,” Paul clarified. “I urge the public not to believe baseless propaganda. Such panic withdrawals are putting pressure on our physical cash-handling capacity.”
While the bank did temporarily impose a â‚ą25,000 limit on direct cash withdrawals, digital transactions through RTGS, NEFT, and online banking remain unrestricted. The bank has since relaxed the cash withdrawal cap, hoping to ease concerns.
The Root of the Crisis: NPA and Pandemic Fallout
Vice Chairman Nand Kishore provided historical context, reminding that the bank, established in 1966, has consistently served the public and has been recognized nationally for its performance. However, the current crisis stems from two core issues: non-performing assets (NPAs) and fallout from the COVID-19 pandemic.
Before the pandemic, loan issuance was robust. However, many businesses failed during COVID-19, turning those loans into NPAs. Moreover, a few shell companies that borrowed funds during that period are now under scrutiny following an FIR filed on May 15. Investigations into their financial conduct are underway.
Suren Singh, another board member, issued a straightforward appeal: “Loan takers must repay as per the rules. Recovery is essential to stabilise the bank.”
Bank Fundamentals Remain Strong
Despite the turbulence, the bank’s financial fundamentals remain intact.
- Total deposits: â‚ą1,079 crore
- Loan disbursement: â‚ą975 crore
- Current statutory reserve: â‚ą85 crore
- Capital Adequacy Ratio (CAR): 14.3% (well above the 9% RBI mandate)
- Deposit insurance: Backed by RBI’s Deposit Insurance and Credit Guarantee Corporation
Though the bank is facing a high NPA rate, 49% overall, it has begun aggressive recovery efforts. After the new board’s formation, recovery has increased to 57%. The bank is pursuing mortgage asset disposals and is in talks with asset reconstruction companies (ARCs) to expedite loan recovery. ARCs buy NPAs and convert them into liquid cash for banks, making recovery faster than traditional methods.
“The goal now is to rebuild confidence, reassure depositors, and get the bank back on track. We’re working branch by branch to recover loans and settle outstanding dues,” said Chairman Paul.
Public Support Essential
The leadership stressed that more than any financial obstacle, it is misinformation that poses the biggest challenge. “This bank is not shutting down. The enquiry is not a verdict. It’s a legal process we are fully cooperating with,” Paul reiterated. “Instead of spreading fear, help us regain public confidence.”
The message from the board is clear: the bank is not collapsing. It is in the process of strengthening its systems, addressing past lapses, and ensuring that depositors’ money is protected. Public support and patience will be critical in ensuring a smooth recovery phase for the Cooperative Bank.
