Madhavpura Mercantile Cooperative Bank (MMCB) has been in deep trouble ever since it got entangled as victim of the well known Ketan Parekh scam.

Banking regulator, Reserve Bank of India has directed all urban cooperative banks which have their money deposited with MMCB to make prudential norms against them. This is expected to be the first step towards liquidation of Madhavpura.

The bank currently owes around Rs 415 crore to more than 165 UCBs which had planted deposits with it.

"The RBI decision could prove to big blow to small UCBs which had deposited money with MMCB as its liquidation may impact their balance sheets negatively," said a veteran cooperative leader.