Four Years After RBI License Cancellation, 800 Madgaum Bank Depositors Still Await Rs 40 Crore
In a prolonged financial saga, more than four years after the Reserve Bank of India (RBI) revoked its operating license, at least 800 depositors of the defunct Madgaum Urban Co-operative Bank continue to wait for the recovery of approximately Rs 40 crore in savings. There is no clear timeline in sight for relief, leaving many pensioners, small business owners, and ordinary citizens in distress over their life savings.
Liquidation Proceedings and Partial Settlements
The RBI cancelled the bank’s license in July 2021, which triggered liquidation proceedings in 2022. While the bulk of smaller depositors have since been refunded, those with larger deposits remain in limbo. The Deposit Insurance and Credit Guarantee Corporation (DICGC) sanctioned Rs 136 crore for claims up to Rs 5 lakh, of which Rs 114.9 crore was disbursed as of July 2023.
Cooperation minister Subhash Shirodkar informed the assembly in July 2023 that 11,282 depositors with amounts up to Rs 5 lakh were settled to the tune of Rs 127.2 crore. However, the total liability to high-value depositors stood at Rs 42 crore, a figure that has remained largely unchanged since then.
Bottlenecks in Asset Liquidation
Sources associated with the Madgaum Urban Cooperative Bank revealed that the primary bottleneck is the inability to sell the bank’s properties. The bank holds assets, including its own and seized properties, valued at approximately Rs 30-40 crore across the state. This delay in liquidating assets has stalled the full recovery process for depositors.
To address the mounting discontent, a proposal has been sent to the DICGC to temporarily disburse up to Rs 5 lakh each to the 800 large depositors, with the remaining balance to be paid later. If approved, this measure would provide at least partial relief. However, it remains uncertain when the DICGC will act on the proposal.
Depositors' Demands and Future Outlook
With frustration growing among those still awaiting their money, depositors are demanding that the liquidation process be expedited. They call for faster decisions on property sales and the disbursal of pending amounts to alleviate their financial hardships.
The situation highlights the challenges in resolving co-operative bank failures, especially when large sums are involved. As the wait continues, the 800 affected individuals hope for swift action from authorities to recover their hard-earned savings.
