Over the past few years about 1000 co-operative banks have failed.
Over the past a few thousand chit fund companies have failed
A few Nbfc have failed. May be say 1000?
Plantation schemes, brokerage houses………the list is far too long.
depositors are lucky that ILFS did not accept public deposit..
NSEL money lost…Rs. 12000 crores……..
One thing common to all. The equity holder gets nothing in such cases and the depositor also gets nothing – if you adjust for inflation…
Well when a bank fails what happens?
Well the Smart, agile, brilliant RBI puts one baboo(n) as an administrator…and he is like a funeral director. He makes sure that the corpse does not suddenly get up. He gets a nice salary from the depositors money (jal rahi hai kya?). The employees are paid a salary, appraisals happen regularly, landlords of branches, atm, etc are all paid rent…yes yes you guessed it right, all this come from the depositors money. Lovely.
This is happening in CKP co-operative bank. The depositor can withdraw Rs. 1000 per month. The cashier gets an appraisal of Rs. 20,000 per month. Ironic is it not?
Cut to Punjab and Maharashtra Bank. 16L families impacted. Huge no? well to see the perspective CKP had 1.5L depositors. Depositors are like to get “Babbji ka Tullu”. Why is the media not keen to help CKP? Well let us be charitable – a) nobody told them b) their PR team was superb.
So what will happen in PMC?
One baboo(n) who cannot run any business will be appointed as an ADMINISTRATOR. He will get a salary -like all other employees, landlords, etc IN the year 2030 he will submit a report saying that no more recoveries can be made. Then sometime in 2035 the Depost corporation will pay your heirs (you will be dead by then) a princely sum of Rs. 100,000 as a full and final settlement. Your next of kin will happily go out for dinner and use up this amount to pay the bill. Burp.
The following lessons are worth learning and repeating…
a) Cooperative banks are risky: stop asking stupid questions like “when should I remove the money”. Today,..NOW.
b) your money in the public sector looks to be safe BECAUSE every fm has a bail out budget. AJ paid Rs. 210,000 crs and NS has paid Rs. 70000 crs so far.
c ) Namo is capable of saying we will no longer bail out psu banks…if he estimates that the votes lost will not matter till the next elections. All the best.
d)if this post goes viral…your cooperative bank may not have enough money to pay ou.
e) remember Pmc will get paid AFTER all this tamasha….
What will the PmC deposit holders get?
Babbaji ka thulla…sorry for being blunt, but these are the facts.
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