The administrator of Pune-based Rupee Cooperative Bank will explore various options after a stay on the cancellation of the Bombay High Court. The RBI has ordered the reversal of the UCB from September 22 as a result of these changes, including the conversion into a small bank SFB or merger with another sound urban co-operative bank UCB. The high court will take up the matter on October 17.
Sudhir Pandit, administrator, Rupee Bank, told Business Standard that the bank is pursuing a proposal to merge with Cosmos Co-operative Bank and speaking to some private investors for forming an SFB The top priority is the proposal. It is culturally compatible for both Rupee and Cosmos because it is a local bank.
The merger proposal is expected to be discussed with officials next week.
Pandit said Rupee Bank will make sure that merger does not become a burden for In August 2021, and that they had declined the joint merger proposal of the Maharashtra State Co-op Bank MStC and Rupee Bank.
In December 2021, the country's largest urban cooperative bank, Saraswat Co-op Bank, evinced interest in the merger of Rupee Bank with itself.
The merger proposal was rejected in January 2022 by the Mehsana Urban Co-op Bank.
The losses on the books of Rupee Co-op Bank are around 538 crore, according to Pandit. Its liquid investments in government securities were Rs 840 crore.
The RBI announced on August 8, 2022 that it had cancelled the of Rupee Bank because it did not have enough capital and earning prospects.
Deposit Insurance and Credit Guarantee Corporation DICGC has already paid about 700 crore to eligible depositors.
The high-value depositors with amounts above the DICGC limits have money of around 370 crore in Rupee Bank.
These depositors have shown readiness to convert liabilities worth Rs 300 crore into perpetual non-cumulative preference shares, which are treated as tier I capital. He said that the negative net worth would be reduced to 238 crore.
Pandit said the capital adequacy ratio of Cosmos Bank was comfortable with the merger of Rupee Bank.
If the merger goes through, the capital adequacy ratio would still be above minimum regulatory capital norms. The capital adequacy ratio of the Cosmos Bank was 13.19 per cent as of March 31, 2022.