Political Battle Over Gujarat’s Banking Crisis

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Ahmedabad: More than 10 lakh people across Gujarat have been affected by the collapse of the cooperative banking sector.

It’s been a year since SC Nayak, a retired government officer, started doing the rounds of the Visnagar Co-operative Bank in Ahmedabad to recover his life savings. But with the bank having gone bust from the state’s banking crisis, Nayak has had no luck so far.

“I have been making rounds here for one year now. I had saved money for my son’s wedding. I even have a letter from RBI saying that I have not got my money back,” he said.

Nayak is only one of the nearly 10 lakh depositors in Gujarat who have lost their savings. Starting with the Madhopura Bank scandal last year, 15 co-operative banks have gone bust because of corruption and irregularities in giving out loans.

With total losses already amounting to about Rs 3.751 crore, nearly 1/3 of the entire cooperative banking sector has been affected with another 60 co-operative banks believed to be potentially sick.
With bank branches closing in as many as 63 assembly constituencies the scandal can have serious political ramifications.

The collapse of the co-operative banking system in Gujarat has affected lakhs of people particularly from the middle classes.

While the names of both Congress and BJP leaders have figured in the scam, the Opposition has certainly got a ready-made election issue with lakhs of people still waiting to get their money back.

“This will be a very big issue in the elections. For those who have lost their money, the Hindutva campaign will not work. Nearly 20 lakh people have money in co-operative banks and for them this will be a big issue,” said Prakash Gujjar, Gujarat Co-operative Bank Account Holders Association.

Conscious of the impact on its traditional middle class vote bank, the BJP is already promising compensation to all those who have lost their money after the elections.

“After the elections when the model code of conduct is lifted, we will pay back all the money from the insurance schemes the banks have,” said Amit Shah, BJP MLA and Chairman, Ahmedabad District Co-operative Bank.

With many of the victims campaigning vigorously for compensation the political blame game has already begun with both parties eager to capture this large vote bank.


By Nalin Mehta (With Sanjeev Singh) in www.ndtv.com - November 28, 2002
http://www.ndtv.com