Financial Daily from THE HINDU group of publications
Tuesday, Aug 10, 2004
Financial Daily from THE HINDU group of publications Tuesday, Aug 10, 2004 |
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Money & Banking
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Co-operatives South Indian Co-op Bank: Loyal depositors feel betrayed Rukmani Vishwanath
Agitated customers at the The South Indian Co-op Bank Ltd's headquarters in Matunga, Mumbai, after hearing the news that the bank was in trouble. - - Paul Noronha
Mumbai , Aug. 9 THE South Indian Co-operative Bank, which had to bear a run on its deposits on Monday, has seen better days. The bank, tucked away in the bylanes of Matunga suburb, the stronghold of the South Indian community in the city, was once a prestigious bank, according to senior citizens in the area. Among those who rushed to withdraw their savings as soon as television reports flashed the bank's weak financial status was Mr Venkatnathan, an elderly gentleman whose relationship with the bank spans over four decades. Distressed by the recent turn of events and torn by his own loyalties to the bank, Mr Venkatnathan hesitantly shared with Business Line his sense of betrayal . "How could they have allowed things to degenerate to this extent in the span of one year," he said. "This is one of the oldest banks in the area, set up by the South Indian community and was highly regarded as a trustworthy bank. My father worked in this bank for 34 years. It is unfortunate that such a thing should happen. I have to withdraw my savings because the balance-sheet shows the bank is in dire straits." Mr Venkatnathan echoed the sentiments of many depositors swarming the corridors of the bank's headquarters at Matunga, most of whom senior citizens who had parked their "life savings" in the bank post-retirement on account of attractive interest rates. Another depositor, who seemed to get more agitated by a bank official's animated attempts at reassuring him that his money was safe and that there was no cause to panic, angrily said rumours about the bank's deteriorating financial health had been doing the rounds a few days earlier, based on some reports in a couple of regional language papers. He said, "Co-operative banks mein tho hamesha politics ka lafda hai." (A lot of the trouble in co-operative banks is usually politically related.) If the depositors were angry, the employees at the bank seemed harried by the sudden invasion of hordes of customers, all reclaiming their deposits. The troubled expressions behind the counters betrayed the plastered smiles many bank officials had on their faces even as they briskly fielded customer queries and responded earnestly to dispel apprehensions. Meanwhile, the bank itself had issued a statement, which was plastered on the walls of its headquarters to assuage customer sentiment. It said, "Enhancing the area of disclosures so as to have greater transparency of the financial position and risk profile of banks and also improving the level of corporate governance standards in banks has been the mantra which has been religiously followed. "The bank has strictly abided by guidelines on macro issues, regulatory perspectives and risk management challenges relating to Basel II," it said.
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