In a move aimed at addressing governance-related concerns, the Reserve Bank of India (RBI) announced on Friday that it has superseded the board of Abhyudaya Cooperative Bank for a duration of 12 months. This action comes as a response to certain material concerns arising from observed poor governance standards within the bank.
As part of the regulatory intervention, Satya Prakash Pathak, former Chief General Manager of State Bank of India, has been appointed as the Administrator to oversee the bank’s affairs during the 12-month period. The RBI clarified that while the board has been superseded, no business restrictions have been imposed on the bank. Normal banking activities will continue under the guidance of the appointed Administrator.
The RBI invoked its powers under Section 36 AAA, read in conjunction with Section 56 of the Banking Regulation Act, 1949, specifically applicable to cooperative societies. This move signifies the regulator’s commitment to maintaining the integrity and stability of financial institutions in the country.
In addition to the Administrator, the RBI has established a “Committee of Advisors” to assist in the effective discharge of duties. The members of this committee include Venkatesh Hegde (former General Manager, SBI), Mahendra Chhajed (Chartered Accountant), and Suhas Gokhale (former MD, COSMOS Co-operative Bank Limited). Their expertise is expected to contribute to the stabilization and improvement of the bank’s operations.
The RBI reassured that no business restrictions have been imposed on Abhyudaya Cooperative Bank, emphasizing that it will continue its normal banking activities. This comes in contrast to misinformation circulated in October via a fake document on social media falsely claiming the cancellation of the bank’s license. An official clarification from the RBI at that time debunked the misleading information.
Abhyudaya Cooperative Bank, headquartered in Mumbai, operates through 109 branches and 113 ATMs, as per information available on its website. As of March 31, 2021, the bank reported deposits of ₹10,952 crore and loans and advances of ₹6,711 crore, reflecting a stable financial position despite the governance challenges.
This move by the RBI aligns with its historical interventions in other financial institutions, including Yes Bank, Dewan Housing Finance, SREI twins, and Reliance Capital. The regulator’s focus on governance standards underscores its commitment to maintaining the health and stability of the banking sector in India.
Q1: Why did the Reserve Bank of India (RBI) supersede the board of Abhyudaya Cooperative Bank, and what was the duration of this intervention?
A1: The RBI superseded the board of Abhyudaya Cooperative Bank for a period of 12 months due to concerns related to poor governance standards observed within the bank.
Q2: Who has been appointed as the Administrator to manage the affairs of Abhyudaya Cooperative Bank during the 12-month period?
A2: Satya Prakash Pathak, former Chief General Manager of State Bank of India, has been appointed as the Administrator to oversee and manage the affairs of Abhyudaya Cooperative Bank during the regulatory intervention.
Find More News Related to Banking
Infosys, a global leader in digital services and consulting, has been awarded the ISO 42001:2023…
Anandana, The Coca-Cola India Foundation, has forged its maiden alliance with Hockey India for the…
Factory output in India saw a notable rise, registering a growth of 4.9% in March,…
The Indian Farmers Fertiliser Cooperative (IFFCO) has successfully conducted its 15th RGB elections for its…
In various states across India, one can find bridges of all sizes, connecting people from…
In a significant move to bolster research and conservation efforts concerning sharks and rays in…