PANAJI: Mapusa Urban Co-operative Bank's (MUCB) board of directors on Tuesday gave its in-principle nod to a merger with Punjab and Maharashtra Cooperative Bank Ltd (PMC). Director of MUCB Ramakant Khalap said they are "hopeful of finding a workable solution" to save the bank.
"Talks are at an advanced stage with PMC. However, if it doesn't work out with PMC, merger may happen with some other co-operative bank," Khalap said.
He said that, besides a merger, another solution for pulling the bank out of its present crisis was by way of government infusing it with share capital. "Chief minister Pramod Sawant has worked hard during the last month to resolve the crisis. He has had several meetings with various groups during the last month," Khalap said.
"We expect some solution will be in place," he said.
Khalap said that while other stakeholders, like bank union leaders, have been presented with the merger proposal, they are yet to give their nod.
Relaxations offered by the RBI to MUCB ends on November 18. The MUCB has been in the red for the past few years. However, its financial situation accentuated during the past year, which led to RBI imposing curbs on it.
If MUCB misses the deadline, it will have no option but to face liquidation, an official said.
The officer said PMC has placed some conditions before MUCB for merger, which the bank's staff union leaders may not find acceptable. "The MUCB has been asked to cut down its staff liability from Rs 90 crore to Rs 30 crore," he said.
The target, the official said, cannot be achieved without layoffs.
Khalap refuted the claim of the staff liability being Rs 90 crore.
The cooperative bank has 193 employees and its total liability could be over Rs 1,000 crore, the official said. The liability amount has accumulated over a few years due to bad decisions, he said.
The official said that despite efforts by bank management and the government, pulling the bank out of the financial crisis has been difficult.