How 2 RBI directives crippled MUCB

the goan I network
MAPUSA
Two directives from the Reserve Bank of India (RBI) are being linked to the precarious financial condition of Mapusa Urban Cooperative Bank of Goa (MUCB).  
MUCB Chairman Gurudas Natekar said the RBI in its first embargo in 2002 had restrained the MUCB from accepting fresh deposits, except saving and current deposits.  
Stating this in a recent letter to Deputy Registrar of Cooperative Societies, Natekar said the RBI had also restrained the bank from incurring fresh liabilities including borrowing of funds and granting fresh advances except against tangible securities.  
These directions were later relaxed by the RBI after the coop bank improved its financial position. However, RBI’s fresh restrictions in 2015 shocked the management of MUCB.  
In the 2015 order, in spite of sound financial health of the coop bank, the Apex bank took away all the relaxations already granted and imposed curbs on accepting any fresh deposits, granting as well as renewing loans and advances and restricted withdrawals to only Rs 1000 from every savings bank and current accounts or any other deposit.  
“The impact of Section 35 (A) restrictions and partial relaxations of the HC affected the financial position of the bank, which is deteriorating day by day and as such it is unable to carry on the banking business activity,” Natekar wrote to the deputy Registrar of Coop Societies.  
The RBI then issued an embargo on MUCB in July 24, 2015, issuing a series of stiff directions which severely crippled its banking activities.  
That the RBI order came soon after Congressman Ramakant Khalap’s panel was elected as BoDs of the bank on July 12, 2015 had raised political hackles in the State.  
The MUCB had then approached the Bombay HC in Goa and got some relief, but the bank could never come out from the curbs imposed on it by the Apex bank.