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Rupee Co-op Bank seeks govt intervention to resolve problems

Written by Abhinav Garg

Cooperative Bank of RupeesThe Rupee Cooperative Bank has notified the Deposit Insurance and Credit Guarantee Corporation (DICGC) program to reimburse account holders up to Rs 5 lakh.

Rupee Cooperative Bank administrator CA Sudhir Pandit met with Union Minister of State for Finance and Banking, Bhagwat Karad, urging him to intervene to resolve issues facing the bank.

According to Pandit, although 99% of depositors will get a full refund of their deposits under the amended Deposit Insurance and Credit Guarantee Act (DICGC), high value depositors with deposits of more than Rs 5 lakh will lose 65% of their deposits. if the bank is put into liquidation. “The majority of these depositors are elderly and all cash of around Rs 800 crore will be used up once deposits below Rs 5 lakh are fully repaid,” he explained. If the bank’s liquidity is depleted, no other bank will come forward for a merger, he stressed.

“A resolution plan or a stimulus will ensure that the big depositors do not lose most of their money, because if the bank is liquidated, the big depositors can collectively lose Rs 375 crore,” Pandit said.

Significantly, the Reserve Bank of India (RBI) refused to sanction the merger of Rupee Cooperative Bank with Maharashtra State Cooperative Bank (MSSB). The proposed merger with the MSCB was submitted in view of the latter’s desire to diversify into the retail sector. MSCB is the umbrella cooperative bank that lends money primarily for agriculture and agribusiness.

The Rupee Cooperative Bank has notified the Deposit Insurance and Credit Guarantee Corporation (DICGC) program to reimburse account holders up to Rs 5 lakh. Rupee Cooperative Bank administrators have stated that they will forward all claims made under the program to DICGC by October 15, 2021, after which approved claims will be resolved by DICGC within 90 days.

“The DICGC told us to maintain the expenses to run the bank for the next six months, during which time hopefully there will be a resolution plan for the bank, whether it is a merger with a bigger bank or its stimulus. We even met with the Union’s finance minister, Nirmala Sitharaman, ”he said.

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Abhinav Garg

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