Saturday 15 August 2020

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Rehabilitate Mapusa Urban, don’t annihilate (By Prabhakar Timble)

 

That such a ruthless killing of Goa’s oldest cooperative bank is accepted without a murmur of dissent by cooperators, shareholders and other stakeholders is an even more dangerous writing on the wall.



The Reserve Bank of India pulled the curtains on Goa’s oldest cooperative bank and the first urban cooperative bank of North Goa by cancelling the banking licence, thus commencing the process of liquidation. The Mapusa Urban Cooperative Bank was granted the status of the Scheduled Bank in 1998 by the RBI and was a deemed Multi-State Cooperative Bank. This was done on a review of its satisfactory performance and the financial indicators.

The bank ran into rough weather with its loans turning into non-performing assets (NPAs) and the mounting overdues signaled an impending financial crisis. Some loans were bad in themselves but the major chunk got landed into technical issues of whether the State Registrar can initiate legal proceedings of recovery due to the Multi-State status of the bank.

What fuelled the chain of collapse was the embargo imposed by the Reserve Bank of India in 2015 despite the bank registering a surplus of around 2 crore in the same year. The RBI purportedly acted based on the loss figures of 2014. As per the RBI restrictions the bank was permitted to allow withdrawals from individual accounts of not more than Rs. 2000/-. The bank was restrained from making any fresh loans and disbursements. Such an arrangement without a time-frame would make any financial institution to slide down.

This slow poison injected in 2015 led to further erosion of deposits and share capital. The sole task of loan recoveries with complete disablement in respect of disbursements and honoring the commitments  depositors is a path of eventual death. It would have been a business-like, had it been partial embargo within a time-frame. The RBI embargo actually became a warrant of slow death.

The state government is expected to hand hold a cooperative institution in such difficult times. This approach is natural and imperative considering that the Mapusa Urban Cooperative Bank had the standing of over 50 years. The bank had made lives of small traders, petty businessmen, self-employed, professionals, salaried and empowered the middle class.  However, it looks that political interests and calculations bull dozed any such rehabilitative attempts.

If the state government had come forward with a package of recapitalization, the RBI would not have moved with the death sentence. The bank management made all efforts to work out a merger with Punjab & Maharashtra Cooperative Bank (PMC). The management toyed with similar alternatives bringing on board Dombivli Nagari Sahakari Bank; Saraswat Cooperative Bank and NKGSB Cooperative Bank. However, all these negotiations could not come to a fruitful end.

It is no secret that former Chief Minister Manohar Parrikar had traded fillers of extending the required government assistance and lobbying with the regulatory apex authorities provided there is a change in the guard at the Mapusa Urban. Ramakant Khalap a very studied and vocal political opposition to the BJP and right-wing politics has been in the reins for over 30 years in the bank, so much so that for the common man it was ‘Khalap’s’ bank.  

A political party like the BJP will never lose the opportunity of discrediting the public image of a political opponent and that too if available on a platter. Probably, the end result could have been different for Mapusa Urban had Ramakant Khalap bartered his political and social independence and laid prostrate before the national leadership of BJP. Finally, the Mapusa Urban took the course of a leadership change with Dr. Gurudas Natekar taking over as the Chairman around 2015.

The state government under the leadership of the former Chief Minister and later made the bank management to dance from pillar to post. The RBI was in no mood to listen. Probably, the ruling political leadership had already pre-decided the fate of Mapusa Urban. The cards were kept close to the chest and the others were motivated to play with the options but keeping a full control on those options. It is a dirty political legacy to crush the opponent completely. Crush the opponent, not only in body but in spirit.

The RBI devised a rescue plan for Yes Bank as its financial position was on a decline due to failure to raise capital. The RBI proposes to draw up a plan for its reconstruction and amalgamation. The RBI has put strong curbs on the PMC bank after finding financial irregularities and wrong reporting of loans. It is going to work out a plan for bank’s recovery. The issue of Mapusa Urban is nowhere of the intensity of the above two banks. Basically, the bank has not kept anything hidden and away from the RBI gaze.

This is crushing an established institution in the cooperative sector when the public duty is to guide and be a friend of cooperative institutions. Hoping against hope, it will be prudent if the RBI and the state government rescue and rehabilitate Mapusa Urban Cooperative Bank through recapitalization and professional managerial services. That such a ruthless killing of Goa’s oldest cooperative bank is accepted without a murmur of dissent by cooperators, shareholders and other stakeholders is an even more dangerous writing on the wall.

There should be no qualms of cooperative sector leadership overlapping into politics or vice-versa as both are democratic instruments of social change and economic empowerment of the needy and less privileged. Both games need to be played without cutting each other’s throats.




The borrowers who are also shareholders of the bank are also responsible for this condition of the Bank. If they had to pay their loans regularly, the NPA of the Bank would not have increased, which I suppose is one the reason for this downfall

 
Sandhya |

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Prabhakar Timble

Mr Prabhakar Timble is an educationist and a legal expert. He has served several educational institutions, especially as the Principal of Government College at Quepem, Kare College of Law in Madgao as well as couple of Management Institutes. He was also the State Election Commissioner of Goa.

 

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