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February 5, 2001
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Banks propose loan rescheduling after quake

Indian bankers said they would seek central bank permission to reschedule the loans of borrowers unable to meet payments because of the earthquake in Gujarat.

K C Chowdhury, chief executive officer of the Indian Banks' Association, said a common policy on rescheduling would be worked out on Friday by a committee of officials from the central bank, state government, and commercial banks.

"The state-level banking committee (SLBC) is meeting on February 9 to thrash out all the issues about treatment of loans," he said.

"A final view about the treatment of loans will be taken at the SLBC meeting after which the central bank is likely to formulate a policy."

Banks have resumed reduced operations in Bhuj, Rapar and Anjar, the three most heavily affected districts of Gujarat. Several bankers are working from tents after their offices were flattened in the quake on January 26.

Some 30,000 people are estimated to have died in the disaster.

Indian authorities promised on Monday to erect tent cities for hundreds of thousands of homeless, but many survivors were throwing caution to the wind and returning to their crumbling homes.

The Gujarat government has put the cost of the damage at Rs 208.75 billion.

Senior officials from state-run Bank of Baroda, State Bank of India, Bank of India and Dena Bank are touring the state to take stock of the damage caused to banks.

All four state-run banks have significant loan portfolios in Gujarat, which is India's second most industrialised state and contributes about 56 per cent of the gross domestic product.

The state accounts for five percent of all loans by the banking industry and 5.6 per cent of total deposits.

Restoring full operations to take time

Bankers in Gujarat said a return to full banking operations in Rapar, Anjar and Bhuj would take at least three to four months.

"We have started small operations in these towns. We have made makeshift arrangements and are making payments to those who require money," R L Shah, assistant general manager in the Ahmedabad branch of BoB said.

"If pass books have been lost or misplaced we are telling our employees to use their judgement based on the relationship they have with the customer," he said.

Most state-run bank branches in small towns and villages are not computerised and banks issue passbooks that show statements of accounts.

Chowdhury said banks operating in these three districts were not accepting deposits due to lack of security.

The Complete Coverage | List of earthquake sites

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