10 more co-op banks face run on deposits

10 more co-op banks face run on deposits
ENS ECONOMIC BUREAU

AHMEDABAD, MAR 14: The Madhavpura Mercantile Co-operative Bank deposit withdrawal syndrome seems to have struck more 10 co-operative banks and long queues of desperatedepositors were seen outside these banks. To stop the Madhavpura Bank's case repeating in other banks, the Reserve Bank of India is considering to impose a temporary ban on premature withdrawal of deposits from the co-operative banks.

In another major step, the RBI has also filed a criminal complain against the chairman and managing director of Madhavpura Bank under Section 46 of Banking Regulation Act for making wrong disclosures regarding banking transactions.

Briefing mediapersons, RBI chief general manager VS Das said that the central bank has also requested all the co-operative banks to stick to their routine banking hours and not to work overtime in repaying the deposits. The RBI also directed these banks not to sanction additional credit facilities so that they can maintain the liquidity level within manageable limits.

Regarding steps on premature withdrawal of deposits, Das stated that we are expecting such directives from our head office. He informed that the RBI has held a meeting with the state government to review the entire situation and sought police protection for other co-operative banks to prevent any untoward incident. He told that the co-operation minister of the state government has been informed that pulling down of shutters by Madhavpura Bank has increased the panic.

He also informed that operations of the clearing house has been restored and a total of Rs 1,146 crore high value cheques have been cleared. He also requested the depositors not to rush to the bank to withdraw their deposits prematurely.

Today, Textile Traders Co-operative bank, Ahmedabad District Co-operative Bank, Kalupur Commercial Bank, Nutan Nagrik Bank, Ahmedabad Mercantile Bank, Visnagar Bank, Charotar Nagrik Bank, Mahila Utkarsh bank, Manekchok bank and Pragati Bank have also witnessed panic withdrawal of deposits.