| Call for new administrator for MMCB |
| Our Regional Bureau / Ahmedabad November 05, 2004 |
| The Ahmedabad-based legal consultants Devesh Bhatt Associates have asked the Reserve Bank of India (RBI) to invoke powers under the Banking Regulation Act and supersede the board of directors of Madhavpura Mercantile Co-operative Bank (MMCB), paving the way for the appointment of an administrator to run the bank. |
| Advocate Devesh Bhatt said on Thursday that considering the failure of the present board of directors to recover loans, it does not seem possible that the bank can be revived. |
| Other co-operative banks, too, have lost faith in the revival assurance of the board of MMCB and the bank has practically no function except recovering dues, which can also be done by an administrator that may be appointed by the RBI, Bhatt said in a statement. |
| He said the affairs of MMCB are being conducted detrimental to the interest of the depositors and it is in public interest that the board of directors of MMCB be superseded. |
| The RBI suspended MMCB from the clearing house in March 2001, after a preliminary inquiry revealed that the bank was facing a liquidity crunch and was in the eye of the pay order scam involving former stock broker Ketan Parikh. Parikh, who is expected to pay back Rs 380 crore to the bank, has so far paid back Rs 22 crore only. |
| The crisis-hit MMCB has received a fresh lease of life, with the Central government extending the time frame of its revival package by one year. |
| The original revival package period of the bank was scheduled to expire on August 24, 2004. |
| With its recovery of dues not too impressive and with several banks having deposited over Rs 250 crore with it as part of its revival package that was announced in 2001, MMCB faced the danger of being shut down, and with it several smaller co-operative banks would too have been hit adversely. |
