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TALL ORDER: MMCB REVIVAL HINGES ON CENTRE GUARANTEE Wednesday, May 16, 2001

Gandhinagar, May 15: After much speculation about the future of the beleaguered Madhavpura Mercantile Cooperative Bank, the committee constituted to look into its revival has worked out a Rs 700-crore plan.

As per plan, all state cooperative banks will need to contribute to the extent of four per cent of their deposits for the purpose of revival while a request will be made to get the rest of the monies from the National Deposit Insurance Guarantee Corporation.

A counter guarantee will be sought from the Centre and the Central Registrar against the money contributed by the banks. Mr Vora said the revival committee report will be sent to the RBI for seeking funds from the Deposit Insurance Guarantee Corporation and thereafter a delegation led by state finance minister will represent at the Centre for approval of the plan.

A report of the revival committee is expected to be ready in a couple of days, which will be presented to the RBI and then sent to the state government for its approval. The revival plan was worked out at a meeting of the MMCB revival committee chaired by minister of state for cooperatives Raman Vora and attended by chairman of the Gujarat State Cooperative Bank Jairam Patel, Hiralal Bhagwati, chairman of the City and District Urban Cooperative Banks Association Natu Patel, vice-chairman of the Gujarat Urban Banks Federation, representative of the National Federation of Urban Cooperative Banks D. Krishnan and chairman of the Ahmedabad District Cooperative Bank Amit Shah.

The meeting was also attended by office-bearers of the scheduled cooperative banks of the state. Chairman of the Ahmedabad District Cooperative Bank Amit Shah told reporters here that all deposits of MMCB depositors will be disbursed with interest once the bank commences business again.

“A total of Rs 1,000 crores will be required to revive the MMCB,” Mr Shah said. He said a total of 16,000 crores worth of deposits are lying with various state cooperative banks and four per cent of the deposits come to around Rs 1,200 crores.

“However, with several cooperative banks not in a position to contribute and with others whose monies have been blocked, the state cooperative banks are expected to bring in only Rs 700 crores,” Mr Shah said.

Mr Shah said while the state cooperative banks will contribute Rs 400 crores, district banks have shown their readiness to contribute Rs 200 crores and the Gujarat State Cooperative Bank itself has agreed to pump in Rs 100 crores.

The Ahmedabad District Cooperative Bank chairman said the National Depositors Insurance Corporation will be requested to release Rs 400 crores for the revival. “We expect to collect Rs 1,100 crores in this manner to save the bank and then get a new board that will also comprise government officials,” Mr Shah said.

Mr Shah said a guarantee for the monies contributed by the cooperative banks will be sought from the Centre and we expect that the Central Registrar and the Centre will give a guarantee.

When asked about other options in case the Centre refuses to give the guarantee, Mr Shah said, “In that case, we will consider other options or may ask the state government to give us a guarantee for the monies invested to prop up the bank.” “I am positive that the RBI will consider the proposal for releasing the monies from the insurance corporation in the interest of the bank and the depositors,” Mr Shah said.

News Source : The AsianAge Ahmedabad Edition [ The coolest Newspaper for city ]

 

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