The Madras High Court has recently given a landmark ruling while allowing a writ petition filed by deposit insurance and credit guarantee corporation (DICGC) demanding arrears from the liquidator of the defunct Madurai urban cooperative bank.
The court has asked the liquidator to pay Rs. 9.18 crore to depositors and Rs. 15.16 crore to DICGC. The court order has meant recollection of a major amount from loan defaulters.
According to the judges, except the dairy cooperatives as in the case of every cooperative institution, the Madurai urban cooperative bank was pillaged by the elected management and bank employees.
The Madurai urban cooperative bank incepted scores of years ago as an institution of cooperative micro-financing and worked until 2001. Later the bank stopped making payment to its account holders including poor farmers and retired people, the court said.
The Reserve Bank of India cancelled the bank’s licence on August in 2003, and restrained it from carrying on banking business. Later the Joint Registrar of Cooperative Societies–Madurai Region ordered liquidation of the bank in 2005.
Sources say the bank had to recover 147 mortgage loans, 187 self-employment scheme loans, 18 housing loans and 35 hire purchase loans.