RBI cancels Rupee Co-operative's licence

The Reserve Bank of IndiaBank of India on Wednesday canceled the licence of the Co-operative Bank, saying the Pune-based lender does not have adequate capital, earning prospects and does not comply with regulations.

The co-operative will stop doing business on September 22. Maharashtra s Commissioner for Cooperation and Registrar of Cooperative Societies will issue an order to wind up the bank and appoint a liquidator, the said.

According to the data submitted by the bank, more than 99% of the depositors of Co-operative will be entitled to an insurance claim of up to 5 lakh in respect of the Deposit Insurance and Credit Guarantee Corporation Act DICGC. DICGC has already paid Rs 700.44 crore of total insured deposits under the provisions of Section 18 A of the DICGC Act, 1961, based on the willingness received from the concerned depositors, the said on May 18, 2022.

The RBI granted a three month extension for Rupee Co-operative's banking licence from the RBI in December 2021, meaning it wouldn't be able to pay its depositors in full and would be detrimentally affected by it's ability to carry on business. It was the company's 27th extension.

Sudhir Pandit, the bank's administrator at the time, said that Rupee Co-operative had recovered a total of Rs 326.49 crore, earned operating profit of Rs 70.82 crore and disbursed Rs 376.95 crore to 95,115 depositors under hardship withdrawal.

Rupee Co-operative had submitted several options for resolution, including a proposal for a merger.

In April 2022, reports said that the proposed merger of the bank with the Saraswat Cooperative Bank had met with hurdles because the latter expressed doubts about the viability of the merger.

The reports said that a sum of 700 crore had been paid to account holders of the Rupee Co-operative Bank in January 2022 after submitting a proposal to the RBI in January 2022.

In September 2021, the DICGC had said that it had taken a decision to pay depositors of 21 stressed co-operatives a sum of Rs 5 lakh within 90 days.

The RBI said last month it has decided to implement a four-tier regulatory framework for urban co-operative UCBs based on size of deposits, with the aim of strengthening their financial soundness. Other lenders on the list include Punjab and Maharashtra Cooperative Bank, Kapol Cooperative Bank, Cooperative Bank and Cooperative Bank.