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Co-op bank depositors wooed by PSU and private banks

K Ram Kumar

Make hay while the sun shines, so goes the saying. A few state-run as well as private sector banks in Ahmedabad are going all out to woo the depositors of co-operative banks who are queuing up to withdraw their money on reports of the banks being in trouble.

"There is no smear campaign openly. But these banks are tacitly encouraging depositors to leave the fold of co-operative banks and join them. They are quietly harping on the `dubious reputation' of these banks," said a source.

A similar situation was witnessed in Madras a few years back when Indian Bank was in trouble with the net worth being wiped out by its accumulated losses.

At that time, some banks told depositors to desert Indian Bank and come to them. The issue was even discussed at the Indian Banks' Association.

"Officials of private sector banks mingled with the depositors of beleaguered co-operative banks and precipitated the fear psychosis by spreading all sorts of canards about the co-operative banking system," said a witness to the incident from the co-operative banking sector.

"The Madhavpura incident was a God-send, particularly for the private sector banks, and their officials played up the incident to the hilt and to their advantage," he said.

He pointed out that this incident had to some extent shaken the confidence of depositors and also undermined the functioning of the co-operative banks in Gujarat.

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