Housing Societies funds got blocked due to the PMC bank crisis.

By Abhay Shah, Realty Quarter

A number of housing societies whose funds are held in the PMC bank are confronted with a payment crisis along with the individual small depositors. Several household companies with funds held at the PMC Bank are facing a payment crisis, as well as individual small depositors. Management committees are distressed to find crores blocked in cooperative banks which are collapsing.

The Bye-Laws model provides that housing societies must open a bank account with the central cooperative bank in the nearest state or district. The rule forced societies to park lakhs or crores in failing institutions. A number of cooperative credit societies had parked deposits with PMC in addition to societies.

Urban cooperative banks have been in trouble over the past few years. These include banks like Rupee Bank, CKP Bank, and now Maharashtra State Cooperative (MSC) Bank, PMC, Karnala and City cooperative banks. It is reported that their number dropped from 1,926 in March 2004 to 1,551 in March 2018. The majority of cooperative banks are helmed by politicians and some fail after elections.

In Karnala Cooperative Bank, a well-known Kharghar housing company has deposits of Rs 1 crore, which is said to “reject to honour its commitment.” All the top (bank) officials are allegedly on medical leave. So the access to funds is prohibited, said a resident.

The management committees are in the discussion whether the registrar of housing companies should be moved and open an account somewhere else to tide over its payment crisis.

Another housing society located in Bandra with deposits in PMC Bank urged members to pay maintenance bills in cash before opening another account. One member said, “Once it is done, they will accept cheques.”

Maharashtra Societies Welfare Association mid-level advisor, Sanjay Kudwalkar said that Rule 113 of Model Bye-Laws (2014) provides for the requirements to have a cooperative bank account for all housing societies.

“In their AGM, however, individual societies may adopt a resolution and seek the registrar’s permission to open an account with a nationalized or private bank. They have to give reasons as if the cooperative bank is far away or inconvenient for them. Then they’re permitted to do that.”

“How many NPAs can the banking system tolerate? Says an officer in the office of the joint registrar of housing societies in Fort.” The number of cooperative banks whose financial health has deteriorated has increased over the last four or five years. Since the crisis in PMC Bank took place on Tuesday, we have been warned that there could be more banks along that path.