It began business within a fortnight, on 10 October, in Ahmedabad's Madhavpura spice-market area dealing with grocery traders.
The MMCB had issued pay orders worth ₹1,200 crore (US$140 million) to stock broker Ketan Parekh, which he discounted at Bank of India.
On 8 March 2001, the news broke out that the bank had given a huge guarantee to Parekh which he lost in the stock crash.
[9] Further investigations revealed that after chairman Ramesh Chandra Parikh's son Vinit had lost ₹50 crore (US$5.8 million) in the stock-market crash, his losses were paid for through the bank's funds.
[10] He was arrested that August, and in December a special Central Bureau of Investigation (CBI) court set up for the case cancelled Parekh's conditional bail after he failed to pay the promised ₹380 crore (US$44 million).
[11] In June 2003, a New Delhi court granted the CBI a five-day remand of the two Maniar Group stockbrokers – Shirish Manyar and Mukesh Babu.
[12] Chargesheets were filed against MMCB chairman Parikh, its CEO Devendra Pandya, Ketan Parekh and his associate Dharmesh Joshi.
[8] On 4 January 2012 the Central Task Force for Cooperative Urban Banks also gave the same advice to the Government of India.
[8] After the scam cooperative banks found it difficult to win back the trust and confidence of their customers.
The regulator, too, has taken a note of the operations of UCBs,[8]The Bank filed a large number of cases against various defaulters.
[8] Government bodies like Bank of India and Deposit Insurance & Credit Guarantee Corporation were given priority for due recovery.
[21] After the scam Securities and Exchange Board of India, the regulatory body for the Indian stock markets was given more power in investigating cases against manipulation and insider trading and to impose heavy penalty and initiate criminal proceedings.
A lower court granted him bail on the condition that he will pay back ₹380 crore (US$44 million) to the bank in three years[26] ending 24 August 2004.
[15] In July 2010 Arjun Modhwadia, an Indian National Congress politician alleged that Amit Shah who was a former director of the bank, had received ₹2.50 crore (US$290,000) in bribe from Ketan Parekh in exchange for help in the case.
[31] In August 2011 before the term for the restructuring scheme was to finish a delegation representing the banking industry met with the Secretary of Union agriculture ministry P K Basu.