MUMBAI: Two housing societies in Pune just got a nightmare when the news of Reserve Bank of India dismissing the Board of Shivajirao Bhosale Co-Operative Bank broke out, even before the Punjab and Maharashtra Co-Operative Bank (PMC Bank) crisis has settled down.
“We just heard the news. We have Rs 65 lakh in the bank, we plan to withdraw it. Where will we now keep the money? I hope there is no PMC Bank-like situation,” said a member of posh Pune Society.
When the Board of Pune-headquartered Shivajirao Bhosale Co-Operative Bank was dismissed for alleged irregularities, almost 1 lakh customers including several housing societies, were left in the lurch.
The regulations in Maharashtra stipulate that co-operative housing societies have to compulsorily hold an account with a co-operative bank.
As a consequence, a large number of housing societies are now struggling to get back the money they have parked with the PMC Bank and other co-operative banks.
Many societies also continue to keep their money in co-operative banks because they yield higher rate of interests and also give them tax breaks.
“Our society has more than Rs 4 crore with PMC Bank. There is also a Gurudwara here that has money with the bank,” said a Mumbai co-operative housing society member, who was not aware that they can also have a second account with a PSB along with the mandatory co-operative bank account.
“Our deposit with the PMC Bank had been large. Luckily, a couple of months ago our committee decided that we should move the money to a PSU bank; hence, we escaped the current situation,” said the office-bearer of a co-operative housing society in Wadala, Mumbai.
He said the society felt that the tax break on interest earned from deposits in a co-operative bank was not too lucrative a criterion to keep a large sum with them.
This is just the tip of the iceberg. Dozens of directives have been issued by the RBI this fiscal alone under Section 35A of the Banking Regulation Act 1949, restraining co-operative banks from renewing deposits and granting advances.
The numbers were high even for a single state like Maharashtra, but sadly, they missed the news headlines.
It was only post the PMC Bank crisis and RBI’s subsequent embargo on withdrawal of investors’ money that the issue hit the headlines.