MMCB seeks to cut interest rate

Yet another blow is awaiting the depositors of the crisis-ridden Madhavpura Mercantile Cooperative Bank (MMCB) as the bank has decided to seek the Reserve Bank of India's (RBI) approval to slash interest rates on deposits to 4.5 per cent from eight per cent.

MMCB is also planning to ask the apex bank for more time to repay depositors.

"We are planning to seek two more years time to repay depositors. Moreover, we will request the RBI to reduce the interest rate on deposites to 4.5 per cent as against eight per cent at present," said B K R Maruthy, chief executive officer, MMCB.

The bank is supposed to pay an 8 per cent interest on public deposits worth Rs 200 crore and a 7.5 per cent interest to banks and other financial institutions for deposits of around Rs 800 crore.

So far the bank has paid Rs 235 crore as interest to depositors, while it has recovered Rs 208 crore from defaulters. The bank has deposits worth Rs 1,000 crore.

The bank has closed down 18 branches and now operates 10 branches. These branches are at Shahibaug, Navrangpura, Ratanpol, Vastrapur, Ellisbridge, and Sola Road, in Ahmedabad and one each at Mumbai, Rajkot, Surat and Vadodara.

MMCB has also reduced its manpower to 172 from 321 in the last two years and is planning to further reduce it by 50 in the next few months.

"We have implemented drastic cost cutting measures. Our administrative expenses have been reduced to Rs 3.5 crore per annum from Rs 10.5 crore per annum which will help save Rs 7 crore per annum," said Jairambhai Patel, chairman, MMCB.

The bank has to pay depositors Rs 200 crore by August this year, while it expects to receive Rs 380 crore from stock broker Ketan Parekh by August 24. MMCB was supposed to repay Rs 200 crore worth deposits in August 2002, but received a two-year extension from the RBI. But the bank is not yet in a position to repay depositors.

Bank CEO resigns

BKR Maruthy, the chief executive officer of MMCB, has put in his papers. The chairman of the bank, Jairam Patel, will now table the letter before the bank's board for a final approval.

Maruthy has been on charge of the bank since March 2002 after RBI declared a revival package for the bank.

During his tenure the bank succeeded to recover Rs 208 crore, while it has also taken initiatives to take possession of properties of various defaulters under the provisions of the Securitisation Act, 2003.