The Reserve Bank of India has declared the Veershaiva Cooperative bank, Mumbai insolvent and stopped all its operations, a move that had long been on the cards. The RBI move was necessitated by the bank’s repeated refusal to mend its ways.
A series of inspections ordered by the RBI had revealed that the bank was not doing enough to improve its financial position. One of the inquiries had even concluded that the bank had indulged in massive fraud and misappropriation of funds in respect of auto and other loans at some of its branches.
The continuing deterioration in the financial conditions of the bank had left the RBI with no choice but to take this extreme step. In recent months the bank had not only been unable to discharge its basic obligations but also its serious financial problems had greatly inconvenienced the depositors.
