RBI cancels banking license of CKP Co-operative Bank, calls its financial position ‘highly adverse and unsustainable’

The Reserve Bank of India (RBI) cancelled the banking licence of CKP Co-operative Bank, to carry on banking business, as its financial position has become highly adverse and unsustainable, RBI said in a statement on Saturday. Accordingly, the RBI took the decision on April 28 which came into effect at the close of business hours on April 30.

“The Registrar of Co-operative Societies, Pune, Maharashtra, has also been requested to issue an order for winding up the affairs of The CKP Co-operative Bank Ltd., Mumbai and appoint a liquidator for the bank,” read the statement.

“There is no concrete revival plan or proposal for a merger with another bank. Credible commitment towards revival from the management is not visible. The bank is not satisfying the requirement of minimum capital and reserves… and capital adequacy and earning prospects as stipulated in Section 22(3)(d) of the Act and also stipulated minimum regulatory capital requirement of 9 per cent.”

According to RBI, the bank is not in a position to pay its present and future depositors. “The affairs of the bank were and are being conducted in a manner detrimental to the public interest and interest of the depositors and that the general character of the management of the bank is prejudicial to the interest of depositors as also public interest,” the statement read.

“No useful purpose would be served by allowing the bank to continue. Rather, the public interest would be adversely affected if the bank is allowed to carry on its banking business any further. The bank is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits,” it added.

“With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The CKP Co-operative Bank Ltd., Mumbai, as per the DICGC Act, 1961 will be set in motion. On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees Five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions,” it further added.