Over 1,100 customers to lose out in CKP Co-operative Bank’s liquidation
- These customers are those who have deposited more than ₹5 lakh in their accounts
- RBI cancelled the bank's licence citing its highly adverse financial position
Mumbai: With savings of close to ₹6 lakh in CKP Co-operative Bank, 53-year-old Pradeep Kumar Mishra is among the 1,130 customers who stand to lose out from RBI’s decision to liquidate the bank after putting severe curbs on it in 2014. A teacher at a school in Sion in central Mumbai, Mishra said he has been banking with the co-operative bank for the past 20 years and in 2014 wanted to withdraw the money to pay for his son’s engineering degree.
“I had to quickly arrange money from other sources and pay ₹1.1 lakh every year for four years to the engineering college after deposit withdrawals were stopped,” said Mishra, who is a customer at the bank’s Chembur branch.
Although the RBI’s decision to liquidate CKP Co-operative Bank will end a six-year-old tussle for most depositors, these 1,130 people who have more than ₹5 lakh in their accounts will have to settle for less.
Of the total depositors, 1,130 customers had deposits above ₹5 lakh and their total deposits were at ₹120 crore. The rest of the bank’s depositors had up to ₹5 lakh in bank accounts, totaling ₹365 crore. So, in terms of value of deposits, 24.7% of it is above the ₹5-lakh maximum limit that is insured by the Deposit Insurance Credit Guarantee Corporation, or DICGC. These numbers were provided to Mint by Moreshwar Dhaimodkar, a general manager at the Mumbai-based co-operative bank.
“A few years ago, as part of the bank’s revival plan, depositors were asked if they want to invest a part of their deposits and accrued interest as share capital. I had consented to put in some money in that scheme as well. That put together, the total sum for me is close to ₹8 lakh,” said Mishra.
The central bank said on 2 May that the financial position of the bank is highly adverse and unsustainable and there is no concrete revival plan or proposal for merger with another bank. “The bank’s efforts for revival have been far from adequate though the bank has been given ample time and opportunity and dispensations. No merger proposal has been received in respect of the bank,” RBI had said.
Then there is the case of 58-year-old Mahesh Mehta who said he has ₹7 lakh in the bank’ Chembur branch. “I am going to lose about ₹2 lakh of my savings after being in limbo for six years. Now, I just hope that I get my money as soon as possible as the wait has been quite long,” said Mehta.
The last several months have not been very kind to depositors, be it in the case of Dewan Housing Finance Corp Ltd (DHFL), Punjab and Maharashtra Co-operative (PMC) Bank and now CKP Co-operative Bank. While Yes Bank was promptly salvaged by a consortium of public and private sector banks, co-operative banks are hard to resurrect owing to their dual regulations structure.
The management of CKP Co-operative Bank will approach the Maharashtra government seeking its intervention through a capital infusion of ₹240 crore after the Reserve Bank of India (RBI) cancelled its licence, Dhaimodkar told Mint over phone.
The RBI on 2 May said it has cancelled the licence of The CKP Co-operative Bank Ltd for reasons including the lack of any viable revival plan and functioning “in a manner detrimental to the public interest and interest of the depositors”.
A look at the bank’s list of defaulters, available on its website, would make it clear that delinquent estate loans led to its downfall. According to Dhaimodkar, of the ₹158-crore outstanding loan book as on 31 March, ₹153 crore or 97% of the loans were non-performing. He added that about ₹85-90 crore of the bad loans were in the real estate sector.
“The bank’s outstanding loan book was at ₹622 crore in 2012 and we have been able to recover over ₹500 crore since then,” said Dhaimodkar.
Following RBI’s recent decision to cancel the licence, the bank now stares at liquidation and its depositors will get up to ₹5 lakh under the DICGC Act. The bank’s total deposits stood at ₹485.56 crore as on November 2019, its website showed.
On Sunday, RBI spokesperson Yogesh Dayal tweeted that of 1,32,170 depositors of the bank, about 99.2% will get full payment of their deposits from DICGC. This means that only 0.8% of its depositors had more than ₹5 lakh in their bank accounts.
The DICGC limit was increased earlier this year to ₹5 lakh from ₹1 lakh after the collapse of the Punjab and Maharashtra Co-operative (PMC) Bank. The premium paid by banks was increased to 12 paise for every ₹100 of deposits.
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First Published:4 May 2020, 07:18 PM IST
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