A Cry For Professional Management

Cooperative banks need freedom from dual regulation and brought under RBI’s ambit

- Yagnesh Kansara

It is almost two months now, that the scam-hit Punjab and Maharashtra Cooperative (PMC) Bank’s normal functfioning has been suspended by the banking regulator - Reserve Bank of India (RBI). The issue of ₹6,500 crore fraud-hit bank’s case almost faded out of public memory but it resurfaced once again when the Economic Offences Wing (EOW) of Mumbai Police made its ninth arrest in the case. This time it was one more director Rajneet Singh, son of Mumbai-based BJP leader, Sardar Tara Singh, on Saturday November 16.

The investigation may take its own course but the fate of lakhs of depositors and their hard-earned money parked with the bank in the form of Fixed Deposits (FDs) exceeding ₹11,500 crore, is not yet known. The stress created by this scam has taken at least 10 lives and if the probe takes longer time, this toll may rise. We analysed the state of the sector across the country - why every few months, banks fall prey to some irregularity and depositors are left in the lurch.

“It’s not only the PMC Bank’s fate but all the other banks, who were earlier put under administrator by the regulator,” says Vishwas Utagi, Co-convener, Trade Unions Joint Action Committee and Convener, PMC Bank Depositors’ Association. “Kapol Cooperative Bank suffered the same fate on March 31, 2017 with withdrawal limit set at ₹3,000 per depositor. The day-to-day operations of the bank will remain under “administrator” till January 2020. Rupee Cooperative Bank came under administrator on February 22, 2013.

The depositors don’t have access to their money but the staff gets salary. Though, the RBI has allowed the bank to release some money for exceptional cases,” he says.