RBI Takes Strong Action Against Abhyudaya Bank Board of Directors

In a significant move, the Reserve Bank of India (RBI) has taken decisive action against the Board of Directors of Abhyudaya Cooperative Bank in Mumbai, signaling a commitment to addressing governance issues.

Abhyudaya Bank
Abhyudaya Bank

Board Removal and Appointment of Administrator:

The RBI has removed the board of directors of Abhyudaya Cooperative Bank for a period of 12 months, citing concerns over poor governance standards. This cooperative bank holds accounts for a substantial number of lower-middle-class customers, leading to a palpable sense of concern among the account holders.

To manage the affairs of the bank during this period, the RBI has appointed Satya Prakash Pathak, a former Chief General Manager of State Bank of India, as the Administrator. Additionally, an advisory committee has been formed to assist the Administrator, comprising Venkatesh Hegde (former general manager of State Bank), Mahendra Chhajed (chartered accountant), and Suhas Gokhale (former managing director of Cosmos Co-operative Bank).

No Impact on Transactions:

Despite these changes, it’s crucial to note that there are currently no commercial restrictions imposed on the bank by the RBI. Customers can continue with their transactions smoothly, bringing a sigh of relief to the concerned account holders. The RBI has explicitly stated that the administration will not disrupt the normal functioning of the bank.

Key Statistics of Abhyudaya Co-operative Bank:

As of March 31, 2020, Abhyudaya Co-operative Bank boasts over 17.30 lakh depositors with total deposits amounting to Rs. 10,838 crores, according to the bank’s website. While information beyond 2020 is not publicly available, these figures highlight the significant presence and importance of the bank in the cooperative sector.

RBI’s Stance on Non-Compliant Banks:

This action against Abhyudaya Cooperative Bank aligns with the RBI’s recent trend of taking stringent measures against cooperative banks found to be non-compliant with regulations. In September 2019, the RBI similarly removed the board of PMC Bank, subjecting it to various regulatory sanctions due to financial irregularities, transaction concealment, and misreporting of loans.

As customers navigate through these developments, the reassurance from the RBI regarding uninterrupted banking transactions provides a silver lining amid the concerns. The appointment of an experienced Administrator and advisory committee reflects a proactive approach to restoring stability and adherence to governance standards within Abhyudaya Cooperative Bank.

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