On Saturday, the Reserve Bank of India (RBI) cancelled the licence of Mumbai-based CKP Co-operative Bank Ltd as its financial position is unviable and also not in a state to pay its depositors. The cancellation of the licence of CKP Co-operative Bank Ltd by Reserve Bank of India has been done with effect from the close of business on April 30, 2020.
In an order dated 28.04.2020, RBI has maintained that the financial position of the bank is highly dreadful and unviable to pay its present and future depositors.
The bank has a negative net worth of ₹239.2 crores. It has a customer base of 1,34,167 and has eight branches spread across Mumbai and Thane districts.
In a press release on Saturday, the RBI said, “The CKP Co-operative Bank Ltd., Mumbai, is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits.”
“The financial position of the bank is very adverse and unsustainable. There is no concrete revival plan or proposal for a merger with another bank. Credible commitment towards revival from the management isn’t visible,” the RBI said.
Further RBI said, it has asked The Registrar of Co-operative Societies, Pune, Maharashtra, has been to issue an order for winding up the affairs of the Mumbai-based CKP Co-operative Bank and appoint a liquidator for the bank.
While cancelling the license the RBI said that the bank is not satisfying the stipulated minimum regulatory capital requirement of 9 per cent.
“The bank isn’t satisfying the need for minimum capital and reserves….The bank isn’t during a position to pay its present and future depositors, thereby not complying with Section 22(3) (a) read with Section 56 of the Act,” the RBI added.
After the cancellation of its license, the bank is prohibited to accept deposits and repay its deposits further with an immediate effect.
“Consequent to the cancellation of its licence, The CKP Co-operative Bank Ltd, Mumbai, is prohibited from conducting the business of ”banking” which incorporates acceptance of deposits and repayment of deposits…” it said.
“On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions,” the RBI said.
The RBI further said that the affairs of the bank were conducted in a manner detrimental to the public interest and interest of the depositors.
“The affairs of the bank were and are being conducted during a manner detrimental to the general public
interest and interest of the depositors which the overall character of the management of the bank is prejudicial to the interest of depositors as also public interest”.
“The bank’s efforts for revival are faraway from adequate though the bank has been given ample time and opportunity and dispensations. No merger proposal has been received in respect of the bank. Thus, altogether likelihood, the public interest would be adversely affected if the bank were allowed to hold on its business any longer,” the RBI added.
There has been no proposal received for mergers has been received in respect of bank.
“No merger proposal has been received in respect of the bank. Thus, altogether likelihood, the public interest would be adversely affected if the bank were allowed to hold on its business any longer,” the RBI said.
