With almost one-fifth of Goa’s 1.5-million population straddled with no access to their own money, the stalemate in the two prominent local banks - Mapusa Urban Co-op Bank and Madgaum Urban Co-op Bank - is showing no signs of resolution and begging for the State government’s intervention.
Yet, there’s no sign of any urgency from the State government even as nearly 3-lakh people struggle with the thought of having their money parked in these banks and no way to access it.
On Friday, India’s Finance Minister Nirmala Sitharaman presented the projected income and expenditure statement of the Government of India and within hours Chief Minister Pramod Sawant led the charade to claim it is the blue print for unprecedented welfare of all and the foundation of ‘New India’.
Yet there’s no solace for these 3-lakh-odd customers of Mapusa and Madgaum Urban Co-operative banks and oddly, at that press conference held at his official Altinho residence where Sawant praised the Union budget, he also waxed eloquent about a plan his government has drawn up to have Goa’s co-operative sector shift gears and get into manufacturing and businesses never tried by it before.
A financial balm worth some Rs 650-crore, he said, is waiting to be pumped into Goa by the National Co-operative Development Corporation and the Registrar of Co-operatives through a panel of consultants will hand hold the sector to kick-start an economic upsurge through manufacturing and other business forays.
What Sawant did not dwell on however is the current state of rigor mortis that Goa’s Co-operative Sector finds itself in. And the urban banking sector is not the only aspect of it that’s maimed and crippled.
In the farm sector too, the Sanjivani sugar factory and Milk Unions’ Goa Dairy, are struggling for survival. Less spoken the better of the co-operative housing sector which accounts for a little more than half the registered co-operative societies in Goa.
Indeed, the co-operative movement in Goa is in doldrums, and if not already dead, is hurtling towards its demise. So, when Sawant enthusiastically gave journalists a glimpse of his government’s plan to push the co-operative sector into newer businesses with Rs 650-crore for seed money, the irony of his government’s insensitivity to the crisis is incomprehensible.
Of utmost concern in an all-pervasive climate of gloom and doom within Goa’s co-operative sector, however, is primarily the plummeted health of the half-a-dozen urban banks in whose coffers, lies some 1000-odd crores of rupees belonging to Goa’s common folk.
Most of this money lies frozen and out of bounds of those it belongs to as both Mapusa Urban Co-op Bank and Madgaun Urban Co-op Bank are debarred from transacting financial business by the Reserve Bank of India over the last one year.
The 30-odd branches of these two banks had mobilised approximately Rs 750-crore in deposits prior to the RBI-imposed curbs. Be it proceeds of property sales in some cases, lifetime savings in others or simply parking of excess funds by businessmen, nearly three lakh Goans are blocked from accessing their own funds and there’s no sign that this financial logjam will be resolved anytime soon.
Managements of both these banks had sent SOSs to the State government when former chief minister, late Manohar Parrikar was in the saddle. Not much headway was done. There is also no definite indication of any State government intervention, including infusion of funds in these two banks as share capital, since Sawant took charge in mid-March.
While many bankers blame it on factors related to the macro-economic scenario in Goa which plunged into turmoil with the 2012 ban on mining, the role of politics and the games politicians play cannot be ignored.
Ramakant Khalap, the Congress politician and the central figure in the saga of the Mapusa Urban Co-operative Bank, admits politics has its share of blame. He adds, nonetheless, that the genesis of the bank’s troubles, ironically dates back to Goa’s historic attainment of Statehood on May 30, 1987.
With statehood to Goa and delinking of Daman and Diu, technically, the bank got a ‘Multi-State Co-operative Bank’ tag. It buoyed dozens of defaulting borrowers facing ongoing quasi-judicial recovery proceedings to challenge the State Registrar’s jurisdiction.
The fact that Khalap was at that point in time Opposition Leader, and as leader of the MGP, the chief rival to then Pratapsing Rane-led ruling Congress, didn’t help the cause of the Bank in resolving the matter much.
“Many recovery proceedings were stuck as defaulting borrowers legally questioned the jurisdiction of the State Registrar and the then State government took an antagonistic stand. A legal challenge in the High Court was successful but the proceedings took years which led to most of these accounts collectively amounting to some Rs 100-crore turning into NPAs,” Khalap told The Goan.
So what of the many charges of corruption?
“Prosecute me. Hang me if you wish. But why hang the institution?,” Khalap shoots back.
The white-haired politician, who at the high point of his career rose to be Union law minister with independent charge, believes that over the decades Mapusa Urban Co-operative Bank and even the other struggling urban co-operative banks have been catalyst and share a significant part of the credit for Goa’s economic growth. Small businesses and individuals either faced cumbersome formalities or a non-co-operative administrative structure in nationalised banks while credit was easily available from the co-operative banks.
“If there are allegations of mismanagement and corruption for the failures what about hundreds of stories of businesses which have succeeded on the back of capital from our banks,” says Khalap, who vouches that there are abundant and true stories of Goans building business empires by starting off on Rs 5,000 and Rs 10,000 loans from the Mapusa bank in the 1980s.
“I had pleaded with successive chief ministers to salvage the bank. I will do the same before Chief Minister Pramod Sawant,” Khalap said, pointing out that the BJP-led dispensation had taken over the bank and run it for a good five years early this millennium.
He said the formal banking system too has faced trying times and the Union government has resorted to massive re-capitalisation of the Nationalised Banks and felt the local co-operative banks needed similar intervention of the State government. The Madgaum Urban Co-op Bank on the other hand is hoping to merge with the bigger Punjab and Maharashtra Cooperative (PMC) Bank.
Although much smaller than the Mapusa Bank in terms of authoirised share capital and customer base, it is hoping to achieve success in its negotiations with PMC Bank which is yet to come out with its findings on the financial health of both the banks in which it has shown interest.
Mapusa Urban Co-op Bank gets to adjust depositor accounts
