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Rs 8-billion bailout package for MMCB cleared

Revival of the scam-tainted Madhavpura Mercantile Cooperative Bank was on Wednesday cleared, with the Centre and the Gujarat government agreeing to stand guarantee for the Rs 8-billion bailout package.

The revival package was finalised at a high-level meeting at Union Home Minister L K Advani's office which was attended by Finance Minister Yashwant Sinha, Agriculture Minister Nitish Kumar, Textile Minister Kanshi Ram Rana and Gujarat Chief Minister Keshu Bhai Patel.

Announcing the package, Patel said that the fund of Rs 8 billion for reviving MMCB would be pooled in by state co-operative banks which would deposit the money in government securities.

The Centre would stand guarantee for 70 per cent of the amount, the state would share the remaining 30 per cent, he said.

The decision follows the recommendation of the committee appointed by the Central Registrar of Co-operatives, which had suggested induction of funds.

The funds are to be inducted by other co-operative banks in the state as promised by them and also from the depositors' insurance scheme.

The Gujarat chief minister said that top priority would be given to repayment of small depositors with deposits less than Rs 100,000.

The bailout plan also stresses that the new management would take 'effective steps' to ensure recovery of advances made to the various debtors of the bank, including big bull Ketan Parekh, he said.

"None would be spared in this effort," he said.

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