Madhavpura Set To Repay Depositors From Tuesday

The Deposit Insurance and Credit Guarantee Corporation has released Rs 461.30 crore against the insurance claim of Rs 464 crore submitted by the tainted Madhavpura Mercantile Cooperative Bank (MMCB) and the latter would start repaying its depositors and account holders from September 18.

This was revealed by the Ahmedabad District Cooperative Bank (ADCB) chairman Amit Shah, who as a member of the MMCB revival committee played an active role in formulating the bank's rehabilitation package.

Shah said that while 23 branches of MMCB situated in Ahmedabad would commence the repayment process exactly at 12.39 pm on Tuesday, the other branches including two in Mumbai and one each in Rajkot, Surat and Vadodara would start repayment from Thursday onwards.

 

Emphasising that the Reserve Bank of India (RBI) has on Saturday withdrawn its directive dated March 13, 2001 issued under section 35 (A) of the Banking Regulations Act, 1949 prohibiting MMCB from repaying more than Rs 1,000 per depositor, he said that around 3,92,000 MMCB depositors would benefit because of this development.

Revealing that the maximum repayment that would be allowed would be to the tune of Rs 1 lakh per depositor, Shah said that with a view to avert a stampede of depositors queuing up to redeem their deposits, a detailed repayment schedule based on a slab system has been worked out.

According to this schedule, on the first day deposits upto Rs 5,000 would be repaid. This redemption limit would be raised to Rs 10,000 on the second day and to Rs 20,000, Rs 25,000, Rs 50,000 and to Rs 1 lakh, on the subsequent days.

While an amount of up to Rs 5,000 would be paid in cash, any amount exceeding Rs 5,000 would be paid vide cheques drawn on ADCB. The deposits would be repaid with interest worked out till August 24, 2001.

Fixed deposit receipts above Rs 1 lakh would be repaid only to the extent of Rs 1 lakh and the balance amount would be transferred to new FD accounts in their name for a period of three years.

In case of MMCB pay orders that have remained unpaid after the scam came to light, the matter would be decided by the RBI authorities very soon.

Shah said that the balance Rs 800 crore envisaged under the MMCB revival package would be pooled in by the Gujarat-based cooperative banks within a month's time to enable MMCB to resume its normal full-fledged operations and day-to-day clearing work.

A governing board comprising banking professionals would be constituted shortly to take over charge from the current administrator, he added.

Rajni Shah is CEO

One of the senior most officers of MMCB, Rajni Shah has been appointed as the bank's new chief executive officer (CEO) by the Central Registrar of Cooperative Societies. He would remain in-charge and manage the day-to-day operations of MMCB till the new governing board is finalised by the state government.

Shah, a general manager of the crisis-hit MMCB, replaces Devendra Pandya, who was sacked after the scam was exposed and irregularities committed by him came to light.