Cooperative banks. Will all fall down?

Cooperative banks are in serious trouble. Last week Jai Hind Cooperative Bank in Mumbai defaulted in its fixed deposit repayments to deposit...

Cooperative banks are in serious trouble. Last week Jai Hind Cooperative Bank in Mumbai defaulted in its fixed deposit repayments to depositors. The bank had selectively given soft loans to its own directors and promoters and now thousands of its small depositors are running from pillar to post to get back their money.

This is not the first time that a cooperative bank has failed. Early this year, Vasavi Cooperative Bank in Hyderabad went under, as its promoters made risky investments in real estate. In Ahmedabad, Madhavpura Bank shut shop as its Chairman was found close to the scam-accused Ketan Parekh. At a national level, Home Trade went on its multi-crore advertising binge, shovelling funds from a string of cooperative banks across the country. The stories go on, but the fact is that there are over 2,000 cooperative banks in India with deposits of a huge Rs 95,000 crore, making it a regulator’s nightmare. The Reserve Bank of India (RBI) officials privately admit that it is impossible for them to detect frauds.

Given the shakiness of cooperative banks in India today and the lack of policing, what should you do if you happen to be a co-operative bank depositor? First, do not deposit more than Rs 1 lakh in any bank, cooperative or otherwise. The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits only upto Rs 1 lakh in one bank. Second, do not get lured by the high interest rates offered by some cooperative banks. Remember that higher return will come only with higher risk, and here the risk is of the bank going under along with your money.

Dev Chatterjee

Tell tales to Sebi ombudsman

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With the Government nod about to come, Sebi is closer to kicking off its ombudsman plan to take care of investor complaints. Sebi wants a redress mechanism that is ‘cheap, efficient, fast and informal’. An investor can approach the ombudsman only after a written representation to a listed company or intermediary is rejected or when the investor does not receive any response from them within a month.

Regulator gets new gizmo to patrol the street

With the Sebi Board clearing the integrated surveillance system, the market regulator is one step closer to real-time on-line market patrol. Said Sebi Chairman G N Bajpai: “I want to carry out the surveillance real time and not be dependent on external sources for information”. He said that the installation of such a system will take a “couple of years”. For the investor this means a more robust system that is less susceptible to manipulation.

In Odisha, Modi mounts ‘loot tantra-vs-bachat utsav’ attack on Congress over GST

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Prime Minister Narendra Modi Saturday hailed the revised Goods and Services Tax (GST) structures, saying the era of “double bachat (saving) and double kamai (income)” has arrived under the Bharatiya Janata Party rule. Addressing the ' Namo Yuva Samabesh' in Jharsuguda, Modi accused the Congress of indulging in “loot tantra (tactics)” while in power.

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