Ahmedabad: The Madhavpura Mercantile Cooperative Bank (MMCB), which was under a veil of cloud after the Ketan Parekh-led stock market scam in March 2001 and had downed its shutters since then, is set to resume operations from 18 September 2001.

In March last, when the scam came to the fore, it was found that MMCB had, out of its total deposits of about Rs 1,200 crore, exposure of nearly 800 crore only to the Ketan Parekh group.

As the Ketan Parekh group companies defaulted in their payment commitments to the stock market, MMCB’s demand drafts, totalling in excess of Rs 130 crore, could not be honoured. This led to a panic run in all the branches, depositors could not be paid and operations had to be stopped.

In the interest of the banking system, the RBI, the cooperative sector and the Gujarat state government proposed to revive the bank instead of letting it go into liquidation. A revival committee was set up, which proposed that a sum of over Rs 1200 crore will be required to be infused. Out of the Rs 1200 crore, the Deposit Insurance and Credit Guarantee Corporation (DICGC) will release claim settlements of about Rs 450 crore and the balance will be brought in by other Gujarat-based cooperative banks.

DICGC has released Rs 461.30 crore and MMCB and will start paying its depositors and account-holders from September 18.

The maximum repayment per depositor will be Rs 1 lakh and a detailed repayment schedule has been worked out based on a slab system. According to the schedule, deposits of up to Rs 5,000 will be paid on the first day.

This will 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 subsequent days. Amounts up to Rs 5,000 will be paid in cash and amounts in excess of Rs 5,000 will be paid by means of cheques drawn on the Ahmedabad District Cooperative Bank. Interest up to August 24,2001 will be paid on the deposits.

For fixed deposits of above Rs 1 lakh, repayment to the extent of Rs 1 lakh will be made and the balance amount will be transferred to new fixed deposit accounts in the name of the depositors for a period of three years.

As regards the MMCB pay-orders that have remained unpaid since the scam, the RBI will decide the matter. The Gujarat-based cooperative banks will pool the additional amount of Rs 800 crore envisaged under the MMCB revival package in in a month’s time to enable MMCB to resume normal operations.

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