In a significant development for Maharashtra’s cooperative banking sector, the Reserve Bank of India (RBI) has directed Janata Sahakari Bank Ltd., Dharashiv, to remove directors found to be in violation of Section 10A(2A)(i) read with Section 56 of the Banking Regulation Act, 1949.
The action follows an order passed by the Aurangabad Bench of the Bombay High Court, in Writ Petition filed by Piraji Baburao Manjule and another petitioner.
The petition sought action against certain directors who were allegedly continuing in office in contravention of the statutory tenure provisions applicable to cooperative bank directors.
Pursuant to the court’s directions, RBI examined the petitioners’ representations, reviewed the records available on file, and considered oral submissions made by the concerned directors.
In a communication, RBI informed the petitioner that it had directed the bank to remove from office those directors found to be in violation of the relevant provisions of the Banking Regulation Act.
RBI also noted that the petitioner had been given an opportunity to make additional written or oral submissions following the High Court order, but no further submissions were received. The central bank subsequently disposed of the representations after taking the required action.
While neither the High Court order nor the RBI communication discloses the names or number of directors affected, a report published in a local Marathi daily claimed that seven serving directors, including former MLA and current Vice-Chairman Vaijinath Shinde, have been rendered ineligible under the tenure-related provisions applicable to cooperative bank directors.
The report further stated that nine directors were originally affected by the restriction, but two had passed away, leaving seven directors against whom action has reportedly been taken. These details, however, do not form part of the RBI communication and could not be independently verified.
Janata Sahakari Bank is a multi-state urban cooperative bank operating across several districts of Maharashtra and parts of Karnataka. The development assumes significance as elections to the bank’s board are expected in the coming months.
Indian Cooperative has reviewed copies of both the Bombay High Court order and the RBI communication in the matter.