Following a keep on cancellation of banking license by Bombay High Court, Pune-based Rupee Cooperative Bank’s administrator will explore numerous choices. These embody conversion right into a small finance financial institution (SFB), or merger with one other sound city co-operative financial institution (UCB).
On August 8, the Reserve Bank of India (RBI) had ordered cancellation of the banking license of the ailing UCB from September 22. The excessive courtroom will take up the matter on October 17.
Sudhir Pandit, administrator, Rupee Bank, advised Business Standard that the financial institution was pursuing a proposal to merge with Cosmos Co-operative Bank and in addition talking to some non-public traders (for forming an SFB).
The prime precedence is the Cosmos Bank proposal. Being native banks, it’s appropriate culturally for each Rupee and Cosmos.
Officials of Cosmos Bank are probably to focus on a merger proposal with the RBI subsequent week.
While making a plea to RBI to think about the proposal, Pandit mentioned Rupee Bank will be certain that merger doesn’t turn into a burden for Cosmos Bank.
In August 2021, RBI had declined the joint merger proposal of the Maharashtra State Co-op Bank (MStC) and Rupee Bank.
In December 2021, the nation’s largest city cooperative financial institution Saraswat Co-op Bank had evinced curiosity in merger of Rupee Bank with itself.
The Mehsana Urban Co-op Bank had additionally give you a merger proposal however that was rejected in January 2022.
Pandit mentioned the losses on the books of Rupee Co-op Bank are round Rs 538 crore. Its liquid investments (in authorities securities) had been Rs 840 crore.
The RBI, in its order dated August 8, 2022, mentioned that it canceled the banking license of Rupee Bank because the financial institution didn’t have enough capital and incomes prospects.
Deposit Insurance and Credit Guarantee Corporation (DICGC) has already paid about Rs 700 crore to eligible depositors.
The high-value depositors (these with quantities above DICGC limits) have cash of round Rs 370 crore in Rupee Bank.
These depositors have proven readiness to convert liabilities value Rs 300 crore into perpetual non-cumulative choice shares, that are handled as tier I capital. This would cut back the detrimental web value to Rs 238 crore, he mentioned.
Pandit mentioned the capital adequacy ratio of Cosmos Bank was snug to merge Rupee Bank.
Assuming the merger goes by way of, the capital adequacy ratio would nonetheless stay above minimal regulatory capital norms. Cosmos Bank had a capital adequacy ratio of 13.19 per cent as of March 31, 2022.