The trouble at Maratha Mandir Cooperative Bank brings to the fore, once again, the lack of corporate governance and financial irregularity at cooperative banks. These problems have plagued the cooperative banking system in India for long. The spate of scams that happened during the last three years, post-Madhavpura Mercantile Cooperative Bank crisis, has resulted in loss of crores of rupees for depositors. Against this backdrop, the need for effective reforms is greater today than ever.

Even as thousands of depositors across the country were spending anxious moments in the wake of the collapse of the Hyderabad-based Global Trust Bank, thousands of other depositors in Mumbai woke up to the rude shock that the city-based, Maratha Mandir Cooperative Bank, was put under "directives", by RBI. The apex bank froze the business of the bank and imposed a withdrawal ceiling of Rs. 5,000 per account, in the wake of run on the bank by panicky depositors on the concern about its liquidity position. Maratha Mandir Cooperative Bank is the second cooperative bank, after, South Indian Cooperative Bank, to be put under RBI directives in recent times.

Incidents like these and the recent run on several cooperative banks in the country raise the alarm bells once again, after the Madhavpura Mercantile Cooperative Bank crisis that rocked the country barely three years ago. Amid the rising concerns among depositors about the financial conditions of the cooperative banks, and rumor mills working over time to add to depositors' anxiousness, the need for effective and timely reforms is greater today than ever.