CKP Co-op Bank’s licence revoked

The Reserve Bank of India has revoked the license of CKP Cooperative Bank Ltd, one of the oldest cooperative banks in Mumbai. In 2012, the RBI had directed the bank to take steps to improve its financial health. However, sources said its status was only deteriorating further.

Founded in 1915, CKP Bank has eight branches across Mumbai and Thane, with 1.31 lakh customers and deposits worth Rs.485 crore. The RBI will now appoint a liquidator to recover loans and try to return the depositors’ money. As per the revised limits announced in February this year, for every customer savings up to Rs.5 lakh are supported by the deposit insurance scheme.

In its order, the RBI has observed that CKP Bank was given adequate time and opportunities by the Urban Cooperative Banks’ task force.

However, its revival efforts were far from adequate. Its gross non-performing assets increased from 90.6 per cent to 96.83 per cent from March 31, 2018 to March 31, 2019. Further, the bank’s deposits eroded from 48.65 per cent to 51.45 per cent.

The report states that no merger proposal was received with respect to the bank. It adds, “Taking into consideration all the facts and circumstances, the RBI is satisfied that allowing CKP Co-op Bank to carry out its business any further would be detrimental to the interest of the bank’s present and future depositors. Hence, its license to conduct business is cancelled.”

CKP Bank’s former director Rajendra Phanse said, “The RBI’s action is too harsh and untimely. We will challenge it before the Finance Minister within 30 days as per the Banking Regulation Act’s provision.”

Phanse said besides deposits worth Rs.485 crore, the bank has an investment of Rs.235 crore in government securities. He also said it has attached assets worth Rs 65 crore of defaulters, and is in the process of attaching additional assets worth Rs 60 crore.

“The bank also made an operating profit of Rs.15 crore in the last financial year,” he said, adding that in 2009, when Madhopura Cooperative Bank went down, the Centre revived it by infusing Rs.800 crore. Phanse said, “Our bank needs just Rs.300 crore. So why are we being given such stepmotherly treatment.”

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