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MMCB to sell defaulters' properties

Chairman blames system for low recovery of dues

Our Regional Bureau  |  Ahmedabad 

Even as serious doubts are being raised over the progress of recovery of dues by the beleaguered (MMCB), the bank on Tuesday announced that it will auction properties worth Rs 85.24 crore on November 3, 2004, in a bid to recover dues from defaulters of the bank.
The bank has over the past months, attached properties of the defaulters, and the auction will take place at the head office of Madhavpura Mercantile Co-operative Bank at Shahibaug area of Ahmedabad. Properties worth Rs 58.54 crore of the Jayesh Bhiman group are among properties that will go under the hammer on November 3.
Even since a revival package was chalked out for the bank in 2001, MMCB has been able to recover just over Rs 250 crore of the total outstanding of Rs 2,285 crore. While the bank has recovered a sum of around Rs 250 crore from defaulters over the past three years, it has not managed to recover a majority of the dues.
As far as dues of are concerned, MMCB has recovered just Rs 22 crore instead of the Rs 380 crore that he owes to the bank.
Jairambhai Patel, chairman, MMCB said that co-operative banks are faced with several hurdles in recovery of dues. "In the past three years, I have found that several obstacles have been brought in the way of recovery. Defaulters have also used their clout in the state government and other agencies to bypass the recovery process," he alleged.
Patel said that while defaulters of banks are going Scott-free and are roaming around, several bank directors are behind bars at present. "MMCB has filed cases both in Mumbai and in Gujarat for recovery of dues, but barring a few cases where progress has been made, very little help has come from agencies in recovering dues," he said.
Madhavpura Mercantile Co-opearative Bank ran into rough weather in March 2001 as the Reserve Bank of India withdrew it from the clearing house after a preliminary inquiry revealed that the bank was facing a major liquidity crunch and was in the eye of the pay order scam involving
It faced its worst crisis on March 8, 2001, when the depositors panicked and started withdrawing money from the bank, following reports that the bank had given a huge bank guarantee to and as a result the bank was left with very little cash.
The crisis forced the to step in and take some action to limit the damage. An inquiry by the showed that that the bank had a severe liquidity crisis. The recommended the Registrar of Co-operative Banks to supersede the board of the bank.

First Published: Wed, October 20 2004. 00:00 IST