Administrators of Ahmedbad based beleaguered Madhavpura Mercantile Cooperative Bank Limited have surprised depositors on the occasion of Janmastami and started distribution of their long pending dues.
Bank officials from Ahmedabad are camping in Rajkot city since Wednesday disbursing the first instalment comprising of 25 per cent principal along with interest.
The decision of the bank was welcomed by MMCB depositors, who have been told that the bank would pay the principal amount in four equal instalments.
Similarly, depositors of other co-operative banks also heaved a sigh of relief as MMCB was disbursing part deposits to bank apart from individual depositors.
MMCB will disburse about Rs 140 crore (Rs 1.4 billion) during these four to five days to individual and institutional depositors that are other co-operative banks.
Presently, it was paying one fourth of the principal amount and interest at the rate of three per cent.
Next installment of the deposits will be due next year according to the decision taken earlier. "MMCB is continuing its drive of recovering money from the defaulters," said BKR Maruti, CEO, MMCB.
In Rajkot alone, 310 depositors had deposits to the tune of Rs 5 crore (Rs 50 million) with MMCB.
In 2001, MMCB had collapsed with its chariman Ramesh Parikh, managing director Devendra Pandya and stock broker Ketan Parekh, being involved in the stock market scam.
It burnt a Rs 1800 crore (Rs 18 billion) hole in the accounts and ruined many investors.
MMCB would distribute Rs 1.39 crore (Rs 13.9 million) in Rajkot alone including Rs 1.29 crore principal and rest as interest.
In first two days of starting the disbursement, it distributed Rs 96 lakh (Rs 9.6 million) towards principal amount and Rs 600,000 towards interest among 162 investors, Jagdish Pandya, branch manager of MMCB, said.
MMCB's Rajkot branches' operations have been merged with the Ellisbridge Branch at Ahmedabad.
MMCB management has created a temporary distribution counter in parking lot of a one building in Collegewadi area of Rajkot.
Payments had been promised as part of the revival programme of the bank, Pandya said.
MMCB had promised investors that it would make payments in four instalments and each installment would be paid in a year's time disbursing entire payment in four years wherein interest at the rate of three per cent would also be paid on principal amount. It disbursed the first installment on occasion of Jamnastami."
Investors have started queuing up at various centres in the state to collect their first installment after the MMCB payment became known.
"When we heard the news for first time that bank had collapsed financially following the loss of funds in the Ketan Parekh Stock scam. We had lost our senses; but slowly and gradually all the investors in the city decided to demand our money and we feel pretty comfortable that we are able to sense the first installment comprising of our investment," said Ketan Vassa, a Rajkot-based depositor who had invested in MMCB.
While talking to Business Standard, Upenbhai Modi, convener of the Madhavpura Bank Customer Association, who had been instrumental in fighting for the rights of customers, said, "There has been a havoc in co-operative sector in last few years across the state and there were many financial scams by co-operative sector banks of which the amount involved was meager in comparison to MMCB's amount".
He said investors were happy that MMCBL had paid six monthly seven installments of interest at the rate of eight per cent and two installments at three per cent alongwith insurance of Rs 100,000 as sanctioned by the Reserve Bank of India.
MMCB paid 25 per cent amount of the principal amount. Investors would welcome this, he said."However, the fight for justice is on and we will keep on fighting till the guilty ones are punished and entire amount is recovered", added Modi.