The Reserve Bank of India cancelled the licence of Pune’s Rupee Cooperative Bank on Wednesday evening, drawing a curtain over the bank that has faced restrictions since 2013.
One of the major urban cooperative banks in Maharashtra, Rupee Cooperative Bank has presence in other parts of the state as well. In 2013, the bank’s board of directors was dismissed by the RBI and Sudhir Pandit and others were appointed administrators to look after it.
An RBI press statement cited various reasons including lack of adequate capital and earning possibility, as well as harm to public interest if the bank is allowed to function. The statement said the bank would not be able to repay its depositors in full and thus it was not necessary for the bank to exist.
This decision comes even as the administrators continued their efforts to resurrect the bank. Action against delinquent directors and employees for the non-payment of loans and the confiscation of properties was undertaken by the administrators. The bank had reported profit after a series of measures such as voluntary retirement schemes for staff and the rationalisation of assets were taken. The bank was fitted with core banking software to ensure control and transparency.
While the RBI had decided to cancel the licence and thus shut doors on the possibilities of revival, the administrators submitted multiple proposals for revival but in vain. The Maharashtra State Cooperative Bank was keen to merge the bank with itself but failed to get approval. Proposals for mergers with Saraswat Bank and a few nationalized banks also failed to get the green light from the apex bank.
All banking transactions including cash withdrawals stand banned. The RBI, in its press statement, said the fate of savers with deposits of Rs 5 lakh would be safe as the Deposit Insurance Credit Guarantee Corporation would refund 100 per cent of their money. The bank has around 5 lakh depositors whose savings are within this range. However, 4,600 depositors have deposits above Rs 5 lakh and their cumulative deposit is worth Rs 340 crore. Such depositors stand to lose substantial amounts of their deposits. The order will be effective after six week, from September 22.
