Page 21 - Banking Finance May 2019 N

CO-OPERATIVE BANK NEWS

RBI imposes Rs.1 lakh penalty on Co-op Bank Rupee Cooperative Bank

The Reserve Bank of India said it has imposed a penalty of Rs.1 lakh on UP Postal customers threaten to
Primary Co-operative Bank, Lucknow for violation of
norms regarding shifting of its branch. The RBI had exercise NOTA option
issued a show-cause notice to the bank, in response An association of Rupee Cooperative
to which the lender submitted a written reply. Bank custom-
After considering the facts of the case and the bank's ers threat-
reply in the matter and personal hearing, the Reserve ened to exer-
Bank of India (RBI) came to the conclusion that the violation was substantiated cise None of
and warranted imposition of penalty. The Rs.1 lakh penalty has been imposed the Above
on the co-operative bank "for violation of RBI Instructions/Guidelines for shift- option in the
ing of its branch without obtaining prior approval from RBI", the central bank forthcoming Lok Sabha elections for
said. political leaders' failure to pay heed
to their "legitimate demands". "We
Recently, the RBI had imposed certain restrictions on The Mudhol Co-operative have and will reach out to more and
Bank, Bagalkot district, Karnataka till its "financial position improves". From the more people and request them to
close of business on April 8, 2019, the bank has been barred from granting or
exercise None of the Above (NOTA)
renewing any loans, make any investments, and acceptance of fresh deposits,
option during the Lok Sabha polls as
without prior approval of RBI in writing.
only then they (political class) will
hear our legitimate demands," the
"In particular, a sum not exceeding Rs.1,000 of the total balance in every sav- depositors of the bank said.
ings bank or current account or any other deposit account may be allowed to
be withdrawn" subject to conditions stated in the RBI directions, it said. They said no political leader had
The RBI, however, added that the directions issued to The Mudhol Co-opera- taken any meaningful action on their
tive Bank should not per se be construed as cancellation of the banking licence. demands to tap into their own
The bank will continue to undertake banking business with restrictions till its money. "Since 2013, our money is
financial position improves, it added. stuck in the bank and we are not able
to utilize it for no fault of ours,"
Rupee Cooperative Bank recovers Rs 38.40 crore from Dhananjay Khanzode, a depositor
leading the association, said. Since
defaulters FY19 the RBI placed the bank under direc-
Rupee Co-operative Bank said it has recovered Rs 38.40 crore from defaulters tions in February 2013, over half a
in the fiscal ended March 2019, taking the total million depositors have not been able
recovered amount to Rs 371.46 crore since Feb- to withdraw money from their bank
ruary 2013 when the bank was placed under di- accounts.
rections by the RBI. The bank said it recovered Rs A few have been allowed to with-
242.70 crore in the past three years alone since draw for specified needs, after mak-
the incumbent board of administrators took ing an application with proof of the
charge of the bank. It said the bank has made full "hardship." Another depositor said
provisions against all advances that have turned sour. Including interest, the the bank's board had given deep dis-
bank had a total outstanding loan of Rs 2,360 crore as on the day when direc- counts to defaulting borrowers under
tions were imposed on it by the Reserve Bank of India. the one-time settlement scheme,
The bank said it finds the allegations made by some of the depositors for con- causing huge loss to the bank. The
cessions given under the one-time settlement (OTS) scheme to defaulting bor- incumbent board itself has written to
rowers "unfair, wrong and with ulterior motives." "The OTS scheme was sanc- the RBI and the state government to
tioned by the state government. It is transparently executed without any dis- look into the merger proposal given
crimination. As observed by statutory auditors and inspectors, there is no viola- by TJSB Bank and allow some conces-
tion of norms under the Scheme," the bank clarified. sions for the merger to take effect.

BANKING FINANCE | MAY | 2019 | 21