Buldhana District Central Cooperative Bank (BDCCB) in Maharashtra has not coped well in a crisis as it has failed to carry out its basic financial obligations towards account holders. What is worse, the RBI and the state govt have let the bank’s crisis slide. However, observers attribute the DCCBs’ current difficult situation to what they call irresponsible politics that views cooperative banks as its fiefdom.
The BDCCB’s crisis deepened when the RBI in 2012 barred it from accepting fresh deposits. The bank was left with merely Rs. 14 crore of liquid as against deposits of Rs. 512 crore. The bank’s account holders are ordinary people including village school teachers and poor farmers. Some depositors could withdraw some amount only when they were able to establish their urgent need of money.
It is worth mentioning that the crisis-ridden bank has paid back nearly Rs. 300 crore to account holders. Its loans have gone beyond deposits by about Rs. 10 crore. Now the bank’s existential crisis could ease only if it could substantially recover old loans.
The bank’s board through mismanagement and financial irregularities caused the bank to lose a lot of money. For example, a ginning factory has defaulted on a loan of Rs. 32 crore. The bank’s former chairman had high stakes in the factory. As per an estimate, revival of the bank requires about Rs. 150 to 200 crore.
Official sources say the govt. is seriously considering helping out the cooperative organizations facing difficult situation in the Vidarbha region in the next days.