Pleonexia and Politics over Professionalism: Collapsing Cooperative Banks

Abstract

The Cooperative movement in India has its own status, role and impact in the socio-economic development, especially for providing organizational and financial support to give impetus to income generating activities for weaker sections, such as small and marginal farmers, artisans, weavers, landless agriculture labours, fisherman and urban poor (Sapovadia, 2004). Cooperative banks and credit cooperative society played important role in socio-economic development of India. Administrative restrictions were imposed by Reserve Bank of India on one of the leading cooperative bank operating in western India (September 2019). Another cooperative bank failed in 2001 shadowed several small cooperative banks. Recent directives issued by Reserve Bank of India (RBI) on Punjab and Maharshtra Cooperative Bank (PMC) exposed undercurrent in urban cooperative banks. This paper investigates reasons of cooperative bank failures.

Keywords: PMC, Punjab Maharashtra Cooperative Bank, Madhupura, Bank Fraud, Failure, Investor trust

JEL Classification: A00, G01, G21, P13