Nagpur bench of Bombay High Court has stayed the RBI order banning all operations of district central cooperative banks (DCCBs) of Nagpur, Wardha and Buldhana.
The court has given stay with a view to allowing the banks to pay the salary , compensation money and farm loans.
Sources say the stay will make it possible for the school teachers in Nagpur to withdraw their money now as well. The school teachers had been hit the hardest following the RBI order, according to sources.
The state govt. intends bailing out these banks with a cumulative fund of Rs. 319 crore as share capital. With the govt. financial support coming in, there is optimism that the banks can resume other activities as well.
However, experts say the banks may take roughly half a year to return to normal. The three banks have over 12-15 lakh depositors, mainly from villages, whose condition is worse than the teachers.
The banks will first stabilize by inviting enough fresh deposits so that older ones can be paid on demand. Funds shall have to be spared for doling out farm loans too. The biggest challenge faced by the banks is of winning the people’s confidence to get new deposits, said sources.
Centre should set up Special Cooperative Courts in each State to screen all cooperative bank directors and certify them to continue or send to jail. TIME HORIZON 2 YEARS. DRASTIC MEASURE IS REQUIRED TO PREVENT CHARACTER ERASON IN THE COUNTRY