20 June 2001
MADHAVPURA BANK TO BE REVIVED WITH RS 1900-CRORE INVESTMENT
From Jal Khambata
NEW DELHI: Ahmedabad's Madhavpura Cooperative Bank that collapsed following Mumbai broker Ketan Parekh's fraud will be revived within one month with a package of over Rs 1930 crores under a new management and repayments of small depositors up to Rs one lakh may begin within a fortnight.
A decision in principle to revive the bank was taken Wednesday evening at a high level meeting convened by Home Minister Lal Krishna Advani in his chamber and attended by Union Finance Minister Yashwant Sinha, Union Agriculture and Cooperation Minister Nitish Kumar, Union Textiles Minister Kashiram Rana, Gujarat Chief Minister Keshubhai Patel, Reserve Bank of India officials and leaders of the cooperative movement in Gujarat.
The decision is based on the recommendation of both the RBI that the revival is commercially viable and a committed appointed by the Central Registrar of Cooperatives that it is possible to revive the Madhavpura Bank if funds are inducted by other cooperative banks of Gujarat as also from the Depositors' Insurance Scheme.
Emerging from the 80-minute long meeting, Chief Minister Keshubhai Patel told reporters that the state's cooperatives would invest Rs 800 crores in the bank and would also not withdraw Rs 600 crores they had previously placed with the bank for the next six years. Yashwant Sinha, who briskly walked away without replying to any questions, agreed at the meeting that the Centre would give guarantee for 70 per cent of Rs 800 crores to be invested by the cooperative banks while the state government would give guarantee for the rest. The bank would get another Rs 464 crores from the Depositors Insurance Scheme
Ahmedabad District Cooperative Bank Chairman Amit Shah, a BJP MLA, later corrected that the actual investment by the cooperative banks would be to the tune of Rs 870 crores and thus the total package would be of about Rs 1930 crores. He hoped that the bank would be revived within a month and the small depositors would be able to withdraw their money from the sunk bank in another 15 days.
Keshubhai told this correspondent that the Central Cooperative Registrar and the State Cooperative Registrar would sit with the RBI officials on Friday or Saturday to finalise a proper restructuring of the management of the bank with a new set of Board of Directors who can ensure restoration of investors' confidence. He could not give any firm time frame for resumption of functioning of the bank but said it would be "very soon" in the light of the positive outcome as the only other alternative was the bank's liquidation. The new structure and other details would be finalised by the two registrars and RBI in consultation with Additional Solicitor-General of India Kirit N Raval.
Ahmedabad Urban Development Authority Chairman Surendra Patel, who also participated in the discussions, exuded confidence that it should not take even one month to restart the bank and the depositors' confidence would be also restored when all the cooperative banks of the state are coming forward to invest in it and that too with the twin guarantees of the Centre and the State Government.
The meeting also decided that the new management shall take "effective steps to ensure recovery of advance made to the various debtors of the bank including Ketan Parekh and no one should be spared in the effort," a statement issued by Advani's office after the meeting said. It said "top priority" would be given to repayment of small depositors having deposits of Rs one lakh.
The Chief Minister, who would be flying back to Ahmedabad Thursday morning, was quite happy at the decision of revival was taken by a consensus. He pointed out that the cooperative movement in Gujarat is quite strong and the depositors investing in cooperative banks have never lost their deposits. He said such situations have been faced in the past by as many as 43 cooperative banks of the state but the people never lost their money.
Ahmedabad Urban Development Authority Chairman Surendra Patel pointed out that liquidation would have otherwise resulted in the loss of Rs 2000 crores to the Centre and the cooperative banks would have lost their Rs 600 crores or so still lying in the closed Madhavpura Bank as it would have got last priority in recovery from a bank under liquidation.
The revival decision was first taken politically by only the political leaders holding meeting for nearly 30 minutes and the officials were called in only thereafter. Among those who participated in the political-level discussion included Gujarat Cooperative Minister Ramanlal Vora, Mumbai BJP MP Kirit Somaiya, Union Minister of State for Industries Dr Vallabhbhai Kathuria, BJP MP Harin Pathak, former Gujarat Minister Ashok Bhatt, and BJP MP Lalit Mehta.
The Chief Minister said a decision about the bank's revival would have been taken at least a fortnight ago but it was held back since Finance Minister Yashwant Sinha had to go abroad for medical treatment. He said the matter was hanging for the past three months despite the cooperative banks coming forward to help out Madhavpura Bank in difficulty and as such he was happy with the outcome. END