SUNDAY, MAY 19, 2024
Team Herald
PANJIM: Madgaum Urban Co-operative Bank Limited (MUCB) will be the second cooperative bank from Goa to be liquidated by Reserve Bank of India (RBI), that has issued show cause notice to the bank’s management asking them why the bank’s licence should not be cancelled and bank liquidated due to deteriorating finances.
The bank has been given 30 days to reply to the show cause notice.
When contacted, MUCB managing director Kishor Amonkar confirmed that the bank has been issued a show cause notice by RBI and admitted that it was the beginning of the liquidation process. The last three-month restrictions imposed on the bank ends on Tuesday, March 2.
Since April 2009, RBI has imposed various restrictions including directions not to accept deposits and restrictions on withdrawals of premature deposits beyond Rs 5000 per depositor. In October 2009, the withdrawal limit per depositor was increased to Rs 30,000.
For the last few months RBI was monitoring the liquidity position of the bank even as the latter was filing a daily liquidity report to the central bank. RBI officials recently conducted an annual inspection of the bank.
Following the latest development, the board of directors held an emergency meeting on Friday where all the bank staff approached them in a bid to save the bank. Amonkar said that there were only two options to save the bank – either the government should infuse money or merge the bank with the Goa State Co-operative Bank Limited.
As a last effort, it has been decided that all stakeholders should meet Chief Minister Dr Pramod Sawant and appeal to him to save the bank.
According to Amonkar, the bank can be salvaged if the government pumps in Rs 60 crore. “Of the Rs 234 crore outstanding loans, we recovered Rs 174 crore from defaulters and now Rs 60 crore was yet to be recovered,” he said.
The Bank’s performance suffered following a ban on mining activities and non-performing assets (NPAs) increased, which attracted restrictions from RBI.
Recently, RBI had the told the Bombay High Court at Goa that they were examining the feasibility of increasing the withdrawal limit of Rs 50,000 per depositor. The court has treated a letter from the residents of Curtorim, Macazana and Sao Jose de Areal into a petition and has posted the matter for further hearing on March 24.
