​The decision to "downgrade" the Mapusa Urban Coop Bank of Goa Ltd (MUCB) into a credit society throws up interesting questions on what ails the Coop banking space in Goa. This is against the backdrop of the severe financial crisis the cooperative banks are in even as a debate continues on why nationalised banks have shown steady progress despite the increasing NPAs (Non-Performing Assets) they have reported.
While cooperative banks continue to remain under stress in the State, the MUCB, which reported a loss of around Rs 67 crore in March 2016, is caught in a cross-fire amid moves to downgrade it to a credit society. Last week, the Madgaum Urban Coop Bank was asked to set in motion a revival plan citing its poor financial position. A Pune-based agency was subsequently roped in to put a proposal in place by October 8. Non-payment of loans has been a major issue with the Madgaum Coop Bank with non-implementation of the One Time Settlement scheme for loans being the stumbling block. The financial condition of Goa State Co-operative Bank, the state's apex cooperative bank which posted a Rs 67.83 crore loss for the year ending March 2016 has been dismal too with chief minister Manohar Parrikar scouting for a new administrator and a managing director. Here again, the management has suggested a roadmap.
Going back in time, cooperative banks were in full flow with the real estate boom during 1998 to 2003. This era saw builders bloom with even bank directors chipping in with projects. However in 2005, the cooperative sector started feeling the heat of the real estate slump. The downfall had just begun. A few years later, the mining ban hit some of the banks - Madgaum Urban, Goa Urban and Goa State Cooperative Bank. Skeletons of the peak period started to fall out. Recoveries became a major issue with the banks not having adequate recovery mechanisms. Mismanagement of the board of the directors became another drawback with glaring discrepancies found in loan approvals.
The base of cooperative banks revolves around the common man, with deposits from the people and loans forming the core. The slump in the cooperative sector is directly equated to a picture of society going downhill and reflects the uncertainty in the private sector. The board of directors should not get into political leanings and interest of the bank should not be compromised. One closure of a cooperative bank can be a trigger for others to follow. There can't be comparisons of these banks to nationalised banks. Nothing will change significantly by appointing an administrator or doing administrative changes. Goa Cooperative Society should come to the rescue and work out a package. There are other ways where the government can offer a helping hand. Option of shifting salary accounts to cooperative banks should be explored besides extending them a share capital. Cash-strapped cooperative banks await one big push.
While cooperative banks continue to remain under stress in the State, the MUCB, which reported a loss of around Rs 67 crore in March 2016, is caught in a cross-fire amid moves to downgrade it to a credit society. Last week, the Madgaum Urban Coop Bank was asked to set in motion a revival plan citing its poor financial position. A Pune-based agency was subsequently roped in to put a proposal in place by October 8. Non-payment of loans has been a major issue with the Madgaum Coop Bank with non-implementation of the One Time Settlement scheme for loans being the stumbling block. The financial condition of Goa State Co-operative Bank, the state's apex cooperative bank which posted a Rs 67.83 crore loss for the year ending March 2016 has been dismal too with chief minister Manohar Parrikar scouting for a new administrator and a managing director. Here again, the management has suggested a roadmap.
Going back in time, cooperative banks were in full flow with the real estate boom during 1998 to 2003. This era saw builders bloom with even bank directors chipping in with projects. However in 2005, the cooperative sector started feeling the heat of the real estate slump. The downfall had just begun. A few years later, the mining ban hit some of the banks - Madgaum Urban, Goa Urban and Goa State Cooperative Bank. Skeletons of the peak period started to fall out. Recoveries became a major issue with the banks not having adequate recovery mechanisms. Mismanagement of the board of the directors became another drawback with glaring discrepancies found in loan approvals.
The base of cooperative banks revolves around the common man, with deposits from the people and loans forming the core. The slump in the cooperative sector is directly equated to a picture of society going downhill and reflects the uncertainty in the private sector. The board of directors should not get into political leanings and interest of the bank should not be compromised. One closure of a cooperative bank can be a trigger for others to follow. There can't be comparisons of these banks to nationalised banks. Nothing will change significantly by appointing an administrator or doing administrative changes. Goa Cooperative Society should come to the rescue and work out a package. There are other ways where the government can offer a helping hand. Option of shifting salary accounts to cooperative banks should be explored besides extending them a share capital. Cash-strapped cooperative banks await one big push.
