The Reserve Bank of India has superseded the board of Abhyudaya Cooperative Bank for one year due to poor governance standards. An administrator has been appointed to manage the bank's affairs.
Photograph: ANI Photo.
Mumbai, Nov 24 (PTI) The Reserve Bank of India on Friday superseded the board of Abhyudaya Cooperative Bank for one year for poor governance standards and appointed an administrator to manage the affairs of the lender.
However, no business restriction has been placed by the RBI and the bank will continue to carry on with its normal banking activities under the guidance of the administrator.
Satya Prakash Pathak, former Chief General Manager of State Bank of India (SBI), has been appointed as the administrator to manage the affairs of the Mumbai-based bank during the one-year period, the RBI said in a statement.
Also, a committee of advisors has been appointed to assist the administrator to discharge his duties.
"The action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank," the RBI said.
The members of the committee of advisors are Venkatesh Hegde, former General Manager of SBI, Mahendra Chhajed, Chartered Accountant, and Suhas Gokhale, former MD of COSMOS Co-operative Bank Ltd.
Last month, there was fake news about RBI cancelling licence of Abhyudaya Co-operative Bank Ltd.
As per the website of the bank, it had total deposits of Rs 10,838 crore and advances of Rs 6,654 crore as on March 31, 2020.
In September 2019, the RBI had superseded the board of Punjab and Maharashtra Cooperative (PMC) Bank. However, it was placed under regulatory restrictions, including putting a cap on withdrawals by its customers, after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL.
Subsequently, debt-ridden PMC Bank was merged with Unity Small Finance Bank (USFB).
Following collapse of PMC Bank, the government approved amendments to the Banking Regulation Act to empower the RBI to have greater control over cooperative banks in order to prevent malpractices and ensure better regulation.
These amended law is applicable for urban co-operative banks and multi-state cooperative banks.
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