5,000 MMCB depositors may lose their cash

More than 5,000 depositors may have to lose their hard-earned money in case the Madhavpura Mercantile Cooperative Bank (MMCB) goes into liquidation.

The depositors have lost their hopes as many other co-operative banks are likely to face the heat. However, the Gujarat Urban Cooperative Banks Federation (GUCBF) seems to be a bit optimistic here as the management plans to educate the banks on handling situations without negatively affecting the

depositors and investors.

Out of 13,000 depositors of MMCB, more than 5,000 depositors had deposited above Rs1 lakh in the bank in 2001. As per cooperative banking norms, deposits up to Rs1 lakh are insured and the amount is paid by Deposit Insurance and Credit Guarantee Corporation (DGCIC) in case the bank faces liquidation.

MMCB owes more than Rs400 crore to DGCIC and has only `275 crore reserves with it. Once the DGCIC gets it dues back from MMCB, the depositors will be able to receive their money back.
Meanwhile, a few depositors have become desperate.

Rajkot based businessman Purushottam Agarwal, 64, said, “Out of Rs24 lakhs deposited 11 years back, I have received only Rs16 lakh till date. Now I am even ready to forego the interest and more than happy to get the remaining amount Rs8 lakh.”

If the bank goes into liquidation, the depositors of MMCB along with other weak Urban Cooperative Banks (UCBs) will be in trouble, said president of All Gujarat Co-operative Depositor’s Association, Prakash Gurjar.

He added, the association has lost all hopes and has also stopped protesting. But, since it involves the money of innocent people, the association will again protest.

On the other hand, the apex body of all UCBs in the state, GUCBF, has taken proactive measures to save its member banks from any kind of negative impact. It includes improve recovery, diversifying reserves and increasing share capital among others. “We will invite each bank and educate them on case-to-case basis,” said chairman of GUCBF, Jyotindra Mehta.
courtesy : www.dnaindia.com