RBI reconstitutes Committee of Advisors of Abhyudaya Cooperative Bank

RBI reconstitutes the board of Abhyudaya Co-op bank

The Reserve Bank of India (RBI) on March 14 said it has reconstituted the committee of advisors of Abhyudaya cooperative bank.

Following this, the Committee of Advisors will now comprise of Devendra Kumar, former Chief General Manager, SBI,  Venkatesh Hegde, former General Manager, SBI and Suhas Gokhale, former MD, COSMOS Co-operative Bank Limited, the RBI said in a press release.

This is following the resignation of Mahendra Chhajed from the Committee of Advisors for personal reasons with effect from March 4, 2024, the RBI said.

The RBI had announced the supersession of the Board of Directors of Abhyudaya Cooperative Bank Ltd for a period of 12 months and appointed Satya Prakash Pathak as administrator to manage the affairs of the bank during this period.

Subseqently, a Committee of Advisors was also constituted to assist the Administrator to discharge his duties.

The RBI had superseded the Board of Mumbai-based Abhyudaya Cooperative Bank citing material concerns related to poor corporate governance standards.

The RBI has clarified that no business restrictions have been placed on the bank and the bank can continue to carry on its normal banking activities under the guidance of the RBI-appointed administrator.

As per the website of Abhydaya Bank, as on 31 March 2020, the bank has more than 17.30 lakh depositors and total deposits of Rs10,838 crores and advances of Rs 6,654 crores. Also, the bank had Capital Adequacy Ratio of 12.60 per cent as on that date. Numbers post 2020 are not available in public domain.

In recent years, the RBI has been cracking down on erring cooperative banks. In September 2019, the RBI had superseded the board of PMC Bank and placed it under various regulatory restrictions after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL.

During investigations, it was found that the bank had been allegedly running fraudulent transactions for several years to facilitate lending to HDIL through fictitious accounts and violating single-party lending rules. The RBI imposed restrictions on deposit withdrawals and superseded its board after the fraud was detected.

Later, PMC bank was amalgamatged to Unity Small Finance Bank which came into effect from January, 2022.

That apart, the central bank has acted on several other cooperative banks. The RBI has cancelled the licence of at least eight cooperative banks and imposed monetary penalties on several banks in the financial year 2023 alone.

The banks that went defunct this year included Mudhol Cooperative Bank, Millath Cooperative Bank, Shri Anand Cooperative Bank, Rupee Cooperative Bank, Deccan Urban Cooperative Bank, Laxmi Cooperative Bank, Seva Vikas Cooperative Bank and Babaji Date Mahila Urban Bank.

According to Abhydaya Bank website, the bank was conferred with scheduled bank status by the RBI in September 1988.  The cooperative bank has branches in Maharashtra, Gujarat and Karnataka