Mumbai housing societies’ money in trouble?

The Maharashtra State Co-operative Bank, where housing societies have accounts, has declared 60 % of the loans it gave out in last year as NPAs

Mumbai housing societies' money in trouble?

The Maharashtra State Co-operative Bank, where housing societies have accounts, has declared 60 % of the loans it gave out in last year as NPAs

The Maharashtra State Co-operative Bank is facing a problem, and the first to be affected could easily be the co-operative housing societiesu00a0u00a0 both in Mumbai and the rest of the state. In fact, the problem is grave enough for the state government to appoint two administrative officers, one of whom is of the rank of a principal secretary, to investigate the matter and find a solution.

In the last fiscal year, the bank gave loans, the total amount of which is not clear, of which 60 per cent was termed as Non Performing Assets (NPA) earlier this month. On May 4, the government appointed two administrators to look into the matter. However, officials say there is no cause for alarm. A government statement issued on Saturday said, "The money stacked in the bank and saved by the account holders is protected and would remain in safe custody."

Account holders play it cool
Housing societies too, don't seem too worried. President of Maharashtra Societies Welfare Association RS Prabhu said, "People can deposit their society money in other district co-operative banks if they are worried. However, the government has assured us that our money is safe in the bank."

However, advocate Vinod Sampat, president of Cooperative Societies Users and Residents Welfare Association predicted some unrest. "People will want to withdraw money from the bank and I think at least in the initial days, things won't be smooth," he said.

Let's talk money
A Non performing asset, also called non-performing loans, are loans made by a bank or financial institution, on which repayments or interest payments have not been made on time, as stipulated by the guidelines of asset classification issued by The Reserve Bank of India. Once a payment becomes late (usually 90 days) the loan is classified as non-performing.