Rupee Co-Op Bank Board Superseded

The Reserve Bank of India (RBI) has superseded the board of the third-largest urban co-operative bank in the country, the Pune-based Rupee Co-operative Bank Ltd. It has appointed an administrator to run the bank.

The RBI action follows its stumbling upon irregularities in the working of the Rupee Bank's board and also instances of insider lending.

"We have superseded the bank's board under Section 110 of the Maharashtra State Co-operative Societies Act to secure proper management and also protect the interest of the present and future depositors," an RBI spokesperson said.

The administrator has been appointed with the express purpose of bringing the bank back on track, the spokesperson added.

 

Rupee Bank is a scheduled bank and has 42 branches and three extension counters in the State.

As on March 31, 2001, it had a paid-up capital of Rs 24.40 crore. Deposits of the Rupee Bank stood at Rs 2,175.23 crore, investments at Rs 441.64 crore and loans and advances were at Rs 1409.88 crore.

The bank's chairman and senior executives were not available for comment. The 87-year old bank was originally christened as The Pune District Co-operative Rupee Bank Ltd. In 1981, was renamed as the Rupee Co-operative bank Ltd.

The bank posted a net profit of Rs 8.87 crore for the financial year ended March 31, 2001. The RBI has taken action against more than a dozen cooperative banks in the country since the beginning of the financial year.

The beleaguered cooperative sector started coming apart last year following the stock market scam involving the Ahmedabad-based Madhavpura Mercantile Cooperative Bank.

Since then, the RBI has cracked the whip on rogue cooperative banks by taking stringent measures in a bid to restore a semblance of order and confidence among the depositors.

The RBI superseded boards of some of these banks, appointed administrators, cancelled the banking licenses of some, and suspended yet others from clearing house operations.

The factors that are primarily responsible for the downfall of cooperative banks -- which are supposed to cater to the banking needs of those (read weaker) sections of the society that cannot access mainstream banking -- are by now all too familiar.

The boards of some of the banks have turned into 'borrowers' boards', loan sanctioning procedures are opaque (characterised by slipshod appraisals) and political interference in their functioning is rampant.