state government's move to sack the board of directors in MSCB may not have any direct impact on the individual depositors. Individuals do not hold more than Rs 1,000-1,500 crore in this bank, which has total deposits to the tune of Rs 27,000 crore. Given its quantum of transactions the bank at any point of time has as much as Rs 1,000 crore or even more in hand. This money can be used to pay-off the depositors in case of a run, say insiders as well as experts in the cooperative sector.
A chunk of deposits are from Mumbai region and those in Nagpur range from Rs 170-200 crore say sources. The bank has 46 branches in Mumbai and 11 in Nagpur. There are administrative offices in other parts of the state which do not accept deposits.
At any given point of time the bank has enough funds received from the NABARD for refinancing purposes. In case of an emergency the same money can be used to pay the depositors and adjusted later. "It is only the individual depositors who would panic and not the banks and big cooperative societies, which have a larger stake in the MSCB," said BJP MLA Devendra Fadnavis, who raised the bank's issue in the state assembly. The government too would ensure that it is bailed out in case of a crisis by providing enough funds, he added.
Depositors should rather desist from panic withdrawals as it would lead to a larger crisis. 572 urban cooperative banks (UCBs), 33 district central cooperative banks (DCCBs), 1,873 agricultural cooperative credit societies and 1,009 other cooperative societies have parked their funds in MSCB. "Large-scale withdrawals would certainly hit these institutions and in turn, hamper the interest of their respective depositors," said Fadnavis.
Former director of MSCB Ravindra Durugkar said the bank apprehending a panic run on Monday has kept as much as Rs 1,000 crore ready. He explained that MSCB is mainly a bank for cooperatives. UCBs and DCCBs park their funds here to maintain the statutory liquidity ratio (SLR). Their deposits are counter-guaranteed by the state government and individuals who only have a small portion need not worry.
The main borrowers are sugar cooperative and spinning mills and there have been large scale defaults by them, but the loans are backed by a state government guarantee. Which means the money is safe even in case of a default.
The current director Dr Baban Taywade said, "The directors have been sacked because of a dispute between the state government and the bank's management. It will not affect the safety of depositors' money."
MSCB claimed around Rs 1800 crore as the guarantee but the government agreed to pay only Rs 800 crore of the principal amount refusing to foot the bill for the defaulted interest which led to the dispute.
Chartered accountant Julfesh Shah said appointing an administrator would improve the bank's condition as the officer would stress on better recovery. B C Bhartia, also a chartered accountant, however, said that the administrator would have a conservative approach and a democratically elected board should be established soon.
A chunk of deposits are from Mumbai region and those in Nagpur range from Rs 170-200 crore say sources. The bank has 46 branches in Mumbai and 11 in Nagpur. There are administrative offices in other parts of the state which do not accept deposits.
At any given point of time the bank has enough funds received from the NABARD for refinancing purposes. In case of an emergency the same money can be used to pay the depositors and adjusted later. "It is only the individual depositors who would panic and not the banks and big cooperative societies, which have a larger stake in the MSCB," said BJP MLA Devendra Fadnavis, who raised the bank's issue in the state assembly. The government too would ensure that it is bailed out in case of a crisis by providing enough funds, he added.
Depositors should rather desist from panic withdrawals as it would lead to a larger crisis. 572 urban cooperative banks (UCBs), 33 district central cooperative banks (DCCBs), 1,873 agricultural cooperative credit societies and 1,009 other cooperative societies have parked their funds in MSCB. "Large-scale withdrawals would certainly hit these institutions and in turn, hamper the interest of their respective depositors," said Fadnavis.
Former director of MSCB Ravindra Durugkar said the bank apprehending a panic run on Monday has kept as much as Rs 1,000 crore ready. He explained that MSCB is mainly a bank for cooperatives. UCBs and DCCBs park their funds here to maintain the statutory liquidity ratio (SLR). Their deposits are counter-guaranteed by the state government and individuals who only have a small portion need not worry.
The main borrowers are sugar cooperative and spinning mills and there have been large scale defaults by them, but the loans are backed by a state government guarantee. Which means the money is safe even in case of a default.
The current director Dr Baban Taywade said, "The directors have been sacked because of a dispute between the state government and the bank's management. It will not affect the safety of depositors' money."
MSCB claimed around Rs 1800 crore as the guarantee but the government agreed to pay only Rs 800 crore of the principal amount refusing to foot the bill for the defaulted interest which led to the dispute.
Chartered accountant Julfesh Shah said appointing an administrator would improve the bank's condition as the officer would stress on better recovery. B C Bhartia, also a chartered accountant, however, said that the administrator would have a conservative approach and a democratically elected board should be established soon.
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