Dashing hopes of many, the RBI has disallowed the merger of the Rupee Cooperative Bank with the Maharashtra State Cooperative Bank (MSCB). RBI’s refusal will complicate things further for the UCB, say co-operators active in reviving the ailing bank.
In June this year, the Reserve Bank of India had extended the Direction on the Rupee Co-operative Bank till August 31, 2021. The Pune headquartered UCB was placed under Directions from the close of business on February 22, 2013. The validity of the directions was extended from time-to-time.
It is learnt that it was Nabard which advised the RBI against this merger. It bears recall that co-op banks in the country are supervised and funded by the Nabard. Though the Nabard report could not be accessed, sources say that Nabard felt that MSCB would be plunging itself into financial trouble by agreeing to merge the beleaguered Rupee Bank with itself.
Reacting to the development, the MSCB Chairman Vidyadhar Anaskar said that all the financial data of the MSCB was provided to the RBI earlier. Anaskar was hopeful for a positive response from the RBI as he saw no role of Nabard in the matter.
Earlier the ailing bank’s merger was difficult because the public sectors were themselves financially not free from difficulties.
Meanwhile, the bank’s board of administrators are taking necessary steps like launching criminal action against defaulters and recovering losses. The bank’s administrator of the board of directors Sudhir Pandit is quoted saying up to January 2021, the bank made a total recovery of Rs 258.11 crore, and aggregated operating profit of Rs 53.19 crore in the last four years.
According to Pandit, the bank is taking all possible steps to improve its financial situation including attachment of properties of defaulters and filing criminal cases against defaulters and their guarantors. He said the bank has been earning operating profit for the last five years.
Unfazed by the RBI dismissal of the proposal, Pandit is hopeful of finding yet another bank with which the Rupee Bank could be merged. He is also not averse to converting it into a Small Finance Bank.
There are more than 6 lakh depositors associated with the Rupee Bank, who continue to suffer. The recent amendment in the DICGC Act, when passed would help the small depositors but the institutional depositors would continue to suffer unless the bank is reborn either as SFB or as a merged entity.