But now, the same bank is fighting to avoid liquidation and merger is what will keep the cooperative bank from downing its shutters. Merger is in the best interests of the sector and the State, as closing down would deal a severe blow to the cooperatives.
The history of the bank is interesting, it being the first urban cooperative Bank to be established in North Goa, in December, 1965, just four years after Liberation. It was granted Scheduled Bank status by Reserve Bank of India in January 1998, and was deemed as a multi-state co-operative bank in January of the same year. Later, there were sanctions imposed by Reserve Bank of India, even limiting the amount that account holders could withdraw from the bank. The bank, with a network of 24 branches spread across Goa, perhaps has the largest coverage by any cooperative bank in the State. But all that will be now history, if the merger that the bank’s shareholders have sought becomes a reality. There will be no Mapusa Urban Cooperative Bank.
But, as one of the bank’s directors said, merger is one option and there could be others that can be considered to shore up the cooperative sector in the State. The setting up of a Corporation on the lines of the National Cooperative Development Corporation (NCDC) for the development of state cooperative banks in the State is one such option. A corporation such as this can seek funds from NABARD, from the Government of India, from the State government, from NCDC or raise bonds, which can be utilised to stabilise the cooperative banks in Goa. Another option is to merge all the local banks into one entity creating one strong bank that would be financially stable and viable. Given that none of Goa’s cooperative banks have much financial strength, one of these two options could be considered by the government.
Looking at alternatives is important, as Mapusa Urban Cooperative Bank is not the only cooperative bank in the State that is in the throes of a financial mess. There have been restrictions imposed by Reserve Bank of India on Madgaum Urban Cooperative Bank, and the same bank that is in talks with Mapusa Urban Cooperative Bank for a merger, has also entered into talks with Madgaum Urban Cooperative Bank for the same purpose. It is quite possible, that this back, with its headquarters in South Goa too could merge with a bigger bank. Goa is actually staring at losing two of its larger cooperative banks – one from each district – in the coming months.
The cooperative sector is undoubtedly under a strain in Goa and needs a complete overhaul to survive in the era of technology and in competition with the private banks. There are a large number of people who still depend on the cooperative system for their banking needs, and feel more at home banking with these smaller banks. The sector needs to be strengthened, and political agendas dismissed. The biggest bane of the cooperative sector has been political interference, as the banks often turn into power bases for politicians. What it needs is strict rules that will hold the elected board of directors accountable and put a check on misuse of positions held in the board and of the finances of the banks. Only that may keep the banks in check.
