The Chairman of Administrative Board of the beleaguered Rupee Bank Mr Mukund Abhyankar has resigned from his post on the issue of allowing the withdrawal of deposits by its members.
Talking to Indian Cooperative Abhyankar said “yes I have resigned as out of six members, four were opposed to allowing the depositors to withdraw Rs 20 thousand from their accounts as directed by the RBI.”
I was in favour of allowing the members to withdraw up to Rs 20 thousand following RBI’s directions but majority opinion was against it”, Abhyankar added.
The opposing point of view is that by allowing withdrawal of such huge amount the prospect of merger of Rupee Bank with other banks would diminish drastically. I think it is more theoretical than real, Abhyankar added.
Rupee bank has about 6.2 lakh depositors and if four lakh among them decide to withdraw this amount the Bank will will be hit by an outflow of Rs 400 crores. Such drastic reduction in liquidity would diminish the possibility of its merger, felt other board members.
Abhyankar on the other hand argues that Rs 400 crore may be a big amount for the UCB but it is not big sum for a nationalized bank such as State Bank of India or others. Add this with other liabilities and the figure turns out to be Rs 750 crore. In my view the problem is still not that big, underlined the outgoing Chairman.
I even had informal talk on the issue with some top-notch CMDs of nationalized banks who felt that given the huge clientele the Bank could take this risk. They have ways of making up for the losses on yearly basis, added Abhyankar.
Besides, they would also be getting income tax benefits out of this deal. It may be recalled that RBI’s 18 February direction allowed it to disburse up to Rs 20000 to the depositors.
Earlier, majority of depositors had responded positively to the Admin Board proposal of locking their deposits in Pune based Rupee Cooperative Bank for a few years. They were ready to wait for 2-3 years till the mess is cleared and withdrawal of their deposits becomes smooth.
Readers would note that the Administrative Board had come up with a bold proposal of saying goodbye to all the staff numbering 550. It was ready to settle their claims at one go and this will cost the Bank about Rs 40 crore. The UCB pays them annual salary to the tune of Rs 30 crore.
The RBI has placed restrictions on the bank since 2013 owing to its poor financial health.