<b>Co-operative dons hope for Madhavpura revival

Co-operative dons hope for Madhavpura revival Friday, April 13, 2001

AHMEDABAD: Co-operative bankers in the state haven't given up hopes on Madhavpura even if reports suggest that the bank is doomed.

One among many, who is propounding the revival theory is the Gujarat Urban Co-operative Bank Federation vice-chairman Natwarlal Patel. In spite of being aware that the Statutory Liquidity Requirement (SLR) and cash reserve ratio (CRR) of the MMCB has been completely wiped out, he says that the bank could be revived if close to Rs 700 crore was infused into the bank by the state and central government, and co-operative banks.

Kalupur Commercial Co-operative Bank (KCCB), which has recorded a profit of Rs 43.34 crore this year and had lent Rs 30 crore to MMCB during the run, may not want to individually revive the bank but it may consider to contribute to the revival fund.

This, says a KCCB director could be done by both the state and central government pumping in finance through financial institutions as interest-free loan. Along with this, the co-operative banks could make contribution, which would be directly proportionate to the profits of the banks.

It is also being suggested that if the RBI raised the withdrawal limit to Rs 5,000 per depositor, the dues of close to 1,50,000 depositors would be completely repaid and this would lessen the liability of MMCB to great extent.

According to the KCCB director Dineshbhai M Amin if the MMCB is allowed to go into liquidation then the co-operative movement in the state will suffer a huge jolt.

It is this fear of blow to the co-operative banking sector that is spurring the move to bring the MMCB back to health, the interest of smaller banks is only spin-off factor. Of the 340 co-operative banks in the state, 168 co-operative banks have their deposits with the MMCB.

Of these 168 co-operative bank, on a conservative estimate, more than 60 banks would not survive if the MMCB was officially declared sick. This would inflict a major blow to the co-operative banking sector and would be detrimental to the image of the co-operative banks, in general.

The 340 co-operative banks in the state had close to Rs 13,276 crore deposit as on March 31, 1999, and the advances for that year was close to Rs 8,446 crore. The credit deposit ration was a healthy 64 per cent. Sources say that any impact on the co-operative banking sector would also affect the lending in priority sector, which is close to 84.5 per cent as against 43.5 per cent lending of the nationalised banks in this sector. These figures suggest that the bearing of the co-operative sector on the economy is immense.

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