Tag: Maharashtra State Cooperative Bank

RBI denies Rupee Bank, MSC Bank merger nod, BFSI News, ET BFSI

Banking & Finance

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Pune: The Reserve Bank of India (RBI) has denied the stressed Rupee Cooperative Bank permission to merge with the Maharashtra State Cooperative Bank (MSCB) in a culmination of a process that has taken nearly two years.

The order also disallowed the MSCB to take over the Mumbai-based City Cooperative Bank, stated a communication to both the banks and the MSCB from the Commissioner for Cooperation and Registrar, Cooperative Societies (CC&RCS). The communication has been accessed by the TOI.

Though neither the RBI and nor the CC&RCS communicated reasons for the denial of permission to the banks to merge, sources familiar with the matter said National Bank for Agriculture and Rural Development (Nabard) expressed reservations about the deal. A source said Nabard expressed concerns about agro-finance being used for retail banking, with the MSCB being primarily an agricultural bank. The source said RBI was concerned about the merger setting a precedent for cooperative banks across the country, which would bring about policy difficulties.

MSCB chairman Vidyadhar Anaskar said, “We had prepared and submitted the proposal nearly two years ago after RBI asked for a joint proposal with the Rupee Bank and getting approved at the annual general meeting. But during this time, we were asked no questionsabout the financial positions or feasibility. Nabard should not have had a say in this proposal, as they are a supervisory authority, with RBI being the sole licensing authority,”

Rupee Bank administrator Sudhir Pandit said, “The RBI’s decision is not totally unexpected. It is necessary to mention here that there are no shortcomings or lacunae in the merger proposal. Rupee Bank has good business potential. We will continue our efforts for its merger with other strong banks, or its conversion into a small finance bank or its revival.”



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HC to RBI, BFSI News, ET BFSI

Banking & Finance

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After finding that the Reserve Bank of India (RBI) is taking a lenient approach towards erring officials of various banks where scams were detected, the Nagpur bench of Bombay High Court directed it to act tough in such situation.

Expressing concern over increasing numbers of bank frauds and scams coming to fore, a division bench comprising justices Sunil Shukre and Avinash Gharote further asked the apex bank to take penal action against erring officials, in whichever position they are, for not complying with its guidelines.

The directives came while hearing a suo moto criminal PIL (No. 614/2017) regarding Rs25 crore losses caused to the UCO Bank due to alleged embezzlement of funds by its own officers. The HC had appointed Rajnish Vyas as amicus curiae to plead the PIL.

While adjourning the hearing by three weeks, the bench told the top bank that its earlier affidavit was “unsatisfactory” and asked it to file a detailed reply on action it has taken or proposed to take against the UCO bank officials concerned.

“The RBI is required to play the role of a real sentinel. Therefore, we expect that its reply would reflect its concern about prevention of such frauds and scams and taking punitive action against those responsible for it,” the bench said.

The judges noted that the RBI doesn’t have any independent machinery to carry out the investigation into any fraud, but it can certainly take penal action under the powers conferred upon it in Banking Regulation Act, 1949, and the RBI Act, 1934, against the erring banks and also the officials concerned.

“On going through various provisions made in Banking Regulation Act, 1949, one would not require any time to grasp the fact that the powers of RBI in controlling the affairs of the banks are enormous. That’s the reason why it is called the central bank having the supervision and control over all the banks and financial institutions engaged in the business of banking in India,” the judges said.

Way paved way for confiscating MSCB assets

The Nagpur bench of the High Court on Thursday vacated the stay on confiscation of movable assets of Maharashtra State Cooperative Bank (MSCB) in Mahal. The orders came while hearing a bank’s petition for staying the confiscation orders in a case filed by Bhandara’s Wainganga Cooperative Sugar Mill workers alleging Rs13.89 crore misappropriation by its officials.

The case was listed before a division bench comprising justices Nitin Jamdar and Anil Kilor, which rejected the bank’s contention.

Earlier, the Supreme Court on December 4, 2019, had ordered recovering the amount from the bank within six months.



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