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Journalism of Courage
The Reserve Bank of India (RBI) has superseded the nine-member board of Mumbai-based loss-making South Indian Co-operative Bank following discovery of large scale non-performing assets in its balance-sheet.
The RBI has recommended to the Registrar of Cooperative Societies (RoCS), a State government regulatory body, to appoint an administrator for the 14-branch bank.
The RoCS will now appoint an administrator whose main task will be to recover bad loans, if possible, and make lists of assets and liability. The RBI has found that the bank lent as much as Rs 27 crore to single account which turned into a NPA pulling down the entire bank.
The RBI inspection report also found that directors of the bank had availed of loans which remained unpaid. The bank, set up in 1919, made a gross loss of Rs 35.84 crore due to unpaid loans.
The appointment of an administrator means that the bank’s depositors will now have to wait a long time till the administrator either turns around the bank or recommends liquidation of the bank. Till then, the ban on withdrawals up to Rs 5,000 per account will continue.
Earlier, single branch Jai Hind Cooperative Bank in Fort was put under an administrator. Thanks to the RBI’s move, South Indian Co-operative Bank had to cancel its annual general meeting of shareholders scheduled for August 16.
According to the bank’s balance-sheet, the bank has recorded gross non-performing assets of Rs 73.99 crore, which constitutes 53.76 per cent of its gross advances. Its net NPAs — after provisioning of Rs 21.42 crore for bad loans — was Rs 68 crore.
