Devendra Fadnavis seeks RBI directive on cooperative bank merger issues

By: | Published: June 1, 2018 3:41 AM

Maharashtra Chief Minister Devendra Fadnavis has urged authorities of the Reserve Bank of India (RBI) to extend the existing guidelines that prevail for merger of Cooperative Banks with Commercial Banks towards merger of Cooperative banks with Cooperative banks.

Devendra Fadnavis, Reserve Bank of India, TJSB, DIC, Thane Janata Sahakari Bank, Rupee Cooperative BankAs per present guidelines, such a transfer is not permitted between cooperative banks and the acquiring bank has to take over not only the assets and liabilities but also the total losses.

Maharashtra Chief Minister Devendra Fadnavis has urged authorities of the Reserve Bank of India (RBI) to extend the existing guidelines that prevail for merger of Cooperative Banks with Commercial Banks towards merger of Cooperative banks with Cooperative banks. The chief minister had convened a special meeting to resolve issues related to Rupee Cooperative Bank with authorities of RBI, officials of the State Cooperative Department and secretaries of the state government and top officials of the Thane Janata Sahakari Bank (TJSB). During the meeting, Fadnavis prevailed upon the authorities of RBI to consider the transfer of assets and liabilities of the cooperative bank with the acquiring bank through a DIC (Deposit Insurance Corporation) assisted merger.

As per present guidelines, such a transfer is not permitted between cooperative banks and the acquiring bank has to take over not only the assets and liabilities but also the total losses. TJSB has shown inclination to take over Assets and Liabilities of Rupee Bank under DIC Assisted Merger scheme. According to Sudhir Pandit, chairman, Board of Administrators,Rupee Coop Bank, Pune, the Thane Janata Sahakari Bank has shown interest for a merger with Rupee Cooperative Bank, however, the existing guidelines do not permit the acquisition of the assets and liabilities of the cooperative bank by a cooperative bank.

TJSB is a multistate scheduled cooperative bank with 136 branches across Maharashtra, Goa, Gujarat, Karnataka and Madhya Pradesh with Rs 15,000 crore business. Loosely citing the example of the merger of Suvarna Sahakari Bank with Indian Overseas Bank ( IOB) where IOB was allowed the take over the assets and liabilities of Suvarna Sahakari Bank, Pandit said that RBI should take a lenient view and permit the same in the case of cooperative banks as well. Rupee Cooperative Bank is presently under All Inclusive Directions of RBI and the bank recently recieved an extension for three months up to August 31, 2018.

At present the total liabilities of Rupee Cooperative Bank is around Rs 1364 crore and the bank has ready realisable assets of Rs 924 crore which leaves a gap of Rs 440 crore. Pandit said. If the DIC gives a non-refundable contribution of Rs 230 crore to the acquiring bank, it still leaves a gap of Rs 210 crore, which remains to be resolved. he added. The CM has advised TJSB Bank to submit a concrete proposal for merger with Rupee Cooperative Bank in view of the existing policies of the RBI.

Meanwhile, the Administration Board has submitted a comprehensive proposal to RBI to overcome the current problems faced by Rupee Cooperative Bank, Pandit said.He said that the CM had first sought a proposal from TJSB after which he said he would consider ways to resolve the hurdles in the possible merger to protect the interests of the investors. The Chief Minister also advised the concerned authorities to expedite the hearing of appeal proceedings of Delinquent Directors and Executives of the Bank. If it is done in time bound manner it will boost the recovery, Pandit said.Recently RBI carried out annual statutory inspection of the Bank. As told by the Bank the inspection report is satisfactory and does not have any regulatory concerns, Pandit said.

The joint meeting under Chairmanship of the Chief Minister was attended by Minister for Cooperation Subhash Deshmukh, Executive Director of RBI Sudarshan Sen , Chairman of Administration Board of Rupee Bank CA Sudhir Pandit, Member of Administration Board Dr. Achyut Hirve, Principal Secretary Pravin Pardeshi, Additional Chief Secretary Anil Diggikar, Secretary for Cooperation Sandhu, Commissioner for Cooperation Dr. Vijay Zade among others.

Chairman of Thane Janata Sahakari Bank ( TJSB) C Nandgopal Menon, Sunil Prabhakar Sathe, CEO of TJSB also participated in the meeting. The CMO Maharashtra office tweeted that CM Devendra Fadnavis had chaired a meeting with RBI and officials of Rupee Cooperative Bank to solve various issues faced by investors and to protect their interests

The Reserve Bank of India (RBI) had first imposed restrictions on the bank from February 22, 2013, to August 21, 2013, and extended it on eight occasions six months each, and four occasions for three months each. The co-operative bank was given its last extension for six months between November 22, 2017, and May 31, 2018 and now upto August 31, 2018.

“The Reserve Bank has extended directions issued to Rupee Co-Op Bank Ltd., Pune, Maharashtra, for a further period of three months from June 1, 2018, to August 31, 2018, subject to review,” RBI said in a release. However, RBI said that the directions issued for the bank should not be construed as cancellation of banking licence by the regulator.

“The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these directions depending upon circumstances,” RBI said further. As per Rupee Co-Operative Bank website, the lender has 40 offices/branches, including the headquarters in Pune, across Maharashtra.

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