The BoD at the crises-ridden Mapusa Urban Co-operative Bank has unanimously resigned to allow the government to take over the bank’s affairs

By Ramrai Naik

Crisis after crisis have hit the Mapusa Urban Cooperative Bank of Goa Ltd (MUCB), more so after the Reserve Bank of India (RBI) imposed restrictions on the bank. Unable to provide a solution, the Board of Directors resigned, leaving the government to put things in order.

Stakeholders protested against inaction during this difficult phase at the head office in Mapusa, with the brunt of their ire being directed at MUCB Chairman Gurudas Natekar. The 13-member board, including Natekar, then tendered their resignation to Shailesh Sawant, general manager at the head office. Copies of their resignation letters have been sent to the state government, RBI and other authorities.

RBI had issued a series of restrictions on the bank since July 2015 as its cash reserves ratio was found to be in the negative. RBI had instructed bank authorities not to grant new loans, incur liabilities, make investments, or sell assets without their permission.

In its latest embargo, RBI restricted withdrawals to ₹1,000. Further, if the depositors have any liabilities to the bank as a borrower or surety, then these have to be cleared before withdrawing the ₹1,000. However, renewal of fixed deposits is permitted as well as loan recovery payments.

The RBI order has impacted shareholders, ECS transfers, beneficiaries of various government schemes and even those who pay their electricity and water bills at MUCB branches across the state. Bill payments haven’t been transferred to the water and electricity departments and are still blocked with the bank. As a result, the bills will be considered “unpaid” and consumers who have made payments here will have to pay further arrears.

The RBI order has impacted shareholders, ECS transfers, beneficiaries of various government schemes and even those who pay their electricity and water bills at MUCB branches across the state

Members of Mapusa Urban’s employees’ association have threatened to protest if the emerging crisis is not resolved. Employees believe that government should take control of the bank and, if necessary, merge with another bank rather than shut down operations.

As the festive season is around the corner, the Board of Directors made several efforts to mitigate the existing situation, but in vain. Shareholders, depositors, staff and other well-wishers of the bank formally met on September 8, following the mass resignation of the Board members. They have requested the government and RBI to intervene on priority basis and lift sanctions so that depositors can withdraw money for Ganesh Chaturthi. It was also discussed to file criminal complaints against those responsible for leading the bank to its current unhealthy financial condition.

Business Goa spoke to Ramakant Khalap, former chairman of MUCB and a long-standing director of the board. Khalap has been at the centre of the controversy for more than two decades. Several panels under his leadership have served the bank in the history of its operations. Khalap, including his wife Nirmala and son Ashwin, were among the 13 directors who tendered their resignations in the recently heated episode.

Khalap stated, “We have released a statement that we will cooperate with the government to resolve this crisis. Although all of us have resigned, we will have to see whose resignations will be accepted. The government might ask some directors to stay in order to ensure continuity in operations. Apart from that, the government might induct additional directors. However, I will be not continuing as director.” Khalap added that the BoD won’t pursue the matter in court as they foresee no immediate solution through judicial means.

Gurudas Natekar had earlier alleged that the stern directives from RBI have adversely affected the co-operative banking sector in the country while funds have been pumped into the nationalised banks to cover their NPA losses. “Our sector has no such cover or support. We are victims of a biased and discriminatory framework. Banking licences of a few banks have been cancelled, while some are on watchlist; others are advised to merge with stronger banks,” stated Natekar in an earlier release.

The bank had earlier challenged the RBI order before the Bombay High Court. The union and state government was also approached and asked to infuse share capital. As no relief was forthcoming, the BoD decided to resign and hand over control to the government. It has to now be seen what measures the government puts in place to restore the bank to good financial health

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