Two more co-op banks see run on deposits

After South Indian Co-operative Bank in Mumbai and City Co-op Bank in Surat, two more co-operative banks in the country's financial capital faced panic withdrawals by depositors.

Depositors rushed to Maratha Mandir Co-operative Bank branches in Mumbai today to withdraw their savings on fears that the bank was crumbling under burden of huge non-performing assets (NPAs). The bank witnessed withdrawals to the tune of Rs 20 crore, said a senior official from the bank.

The bank's net NPA as on March 31 stood at 25.74 per cent against 33 per cent in the previous year. The bank's gross NPA at the year end was 40 per cent (44 per cent). The bank does not have any solvency problem as its capital adequacy ratio stood at 9.91 per cent on March 31 (7.24 per cent).

Total deposits of the bank were to the tune of Rs 278 crore and advances at Rs 139 crore. Its net profit for 2003-04 dipped to Rs 24 lakh from Rs 37 lakh in the previous year.

The rise in the non-performing assets was mainly on account of adoption of the 90-day accounting norm, said a bank official. The bank has recovered assets worth Rs 9.50 crore till March.

Punjab & Maharashtra Co-operative Bank also witnessed stray incidents of deposit withdrawals at select branches in Mumbai.

The bank witnessed withdrawals of Rs 5 crore, K Joy Thomas, managing director, said. The bank will function round the clock today to meet customers demand, he added.

The bank is financially sound with a capital adequacy ratio of 14.39 per cent, net profit of Rs 14.41 crore in June 2004.

Maratha Mandir Co-operative Bank has 11 branches, of which 10 branches are in Mumbai and one in Chiplun. Besides, it has one extension counter in Jogeshwari, a western suburb in Mumbai.

The bank has adequate liquidity to meet the requirements of depositors, said the bank official.

The bank has total liquidity of Rs 170 crore, of which Rs 60 crore is with Mumbai District Central Co-operative Bank and Maharashtra State Co-operative Bank in the form of fixed deposits and Rs 110 crore in government securities, he added.

An RBI team is in the bank assessing the liquidity condition and the central bank seems to be satisfied, said the bank official. However, depositors had a different story to tell. Hundreds of depositors queued up at bank branches today and some of them were asked to come next week to get their money back.