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Reserve bank cancels mumbai’s 105-year-old CKP co-op bank license

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On May 3, 2020, After the closure of Punjab and Maharashtra Co-operative (PMC) Bank, the Reserve Bank of India (RBI) has cancelled the license granted to the 105-year-old CKP Co-operative Bank Ltd located in Mumbai (Maharashtra) to conduct banking business which includes acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.
The order has come into effect after the working hours of 30 April, 2020 in order to save investors’ decision.RBI cancels licence of CKP Co-operative BankThe RBI in its order gave 6 specific reasons for cancelling the license of the bank. These include,

  • The financial position of the bank is highly unfavorable & there is no concrete revival plan or any proposal for merger with any other bank.
  • The Bank is not meeting the minimum capital and reserves requirement specified in Section 11 (1) read with Section 56 of the Act and the capital adequacy and income prospects as laid down in Section 22 (3) (d) of the Act & the bank is also failed to meet minimum capital requirement of 9%.
  • The bank will be unable to fully pay its current or future depositors with its current financial status, hence Section 22 (3) (a) read with Section 56 of the Act is not complying.
  • The functions of the bank were being conducted harmfully to the depositors and the general conduct of the bank management has been biased towards public interest as well as the interest of depositors. Thus, the bank is not complying with the provisions of sections 22 (3) (b) and (c) of the Act.
  • Although the bank has been given sufficient time, opportunity and dispensation, the efforts made by the bank for revival are quite inadequate. No merger proposal has been received with respect to the bank.
  • Allowing the bank to continue its banking business will not give any useful purpose as per the hypothesis envisaged in Section 22 (3) (e) of the Act. if the bank is allowed to carry on its banking business, it will adversely affect the public interest.

Key Points:

i.In the sequence of cancellation of license and commencement of liquidation work, the process of payment of amount will be initiated to depositors of CKP bank Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961.

ii.During the liquidation,  99.2 % depositors of the bank will be entitled to deposit up to Rs. 5 lakh from the DICGC subject to the general terms and conditions. iii.The RBI also asked the Registrar of Co-operative Societies, Pune, Maharashtra, to issue orders for winding up the business of the bank and appoint a liquidator for the bank.

About CKP Co-operative Bank Ltd:
General Manager
– Shri Moreshwar Dhaimodkar

About Reserve Bank of India (RBI):
Headquarters
– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).