The Hindu : Tamil Nadu / Madurai News : Madurai Urban Bank closure `shocking'

Online edition of India's National Newspaper
Monday, Jan 10, 2005

Tamil Nadu

Tamil Nadu - Madurai

Madurai Urban Bank closure `shocking'

By J.V. Siva Prasanna Kumar

MADURAI, JAN. 9. Depositors and staff of the Madurai Urban Cooperative Bank Limited and also trade unions in Madurai are shocked over the closure of the bank. The bank's premises was officially sealed on January 7 by the authorities, saying that the bank could not be operated following the cancellation of licence by the Reserve Bank of India.

The employees, who came to know of the closure, staged a demonstration in front of the office urging the authorities to reconsider the decision and initiate measures to revive the bank, which has six branches in the Temple City.

The urban unit of the Communist Party of India (Marxist), which has long been advocating the revival of the MUCB, had expressed shock over the `sudden move'. The district secretary, R. Jyoti Ram, told The Hindu here today that he had convened an urgent meeting tomorrow to discuss the future course of action.

The Madurai M.P., P. Mohan, who had been urging the State Government to take steps to reopen the MUCB in the interest of the depositors, claimed the bank was the oldest and had been functioning from 1906. It became defunct following `embezzlement by certain office-bearers' and immediately after this, the RBI directed the bank to desist from accepting deposits from the public.

Hence, the functioning of the bank was affected and later the licence was cancelled leading to its complete closure. The closure affected the customers the most, he said and claimed the bank's deposits accounted for Rs.46 crores and interest on it amounted to Rs.12 crores. The immovable assets were worth Rs.12 crores and the liabilities amounted to Rs.42 crores during closure.

Had a financial assistance of Rs.10 crores as loan on MUCB's net assets, amounting to Rs.70 crores, been provided, the bank could have averted the downfall, Mr. Mohan said.

He even called upon the Union Finance Minister, P. Chidambaram, recently to revive the MUCB.

The members of the United Janata Dal had observed a fast, recently, demanding the reopening of the MUCB.

A notice hung in front of the office has stated that measures have been initiated to repay the depositors through the Deposit Insurance and Credit Guarantee Corporation.

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