Kapol Co-op Bank takes first step towards merging with Pune-based Cosmos Bank

In the area of ​​municipal cooperative banks (UCB), the action is progressing, with Kapol Co-operative Bank based in Mumbai taking its first step towards a merger with the Pune-based Cosmos Co-operative Bank.

The extraordinary general meeting of the Kapol Co-operative Bank took place on 9.

The above-mentioned development happened about nine days before the Reserve Bank of India (RBI) Centrum Financial Services gave its “fundamental” approval to set up a small financial bank (SFB), which in turn would take over the scam hit Punjab & Maharashtra Co-operative ( PMC) bank.

Jyotindra Mehta, President of the National Federation of Urban Cooperative Banks and Credit Societies, noted that the resolution of weak UCBs has improved after the September 2020 amendment to the Banking Regulation Act (BR) in 1949, as one UCB will be merged with each bank can. be it an SFB, a universal bank or another UCB.

“Now there is a clear path to the solution by merging,” said Mehta

The Kapol cooperative bank was placed under management by RBI with effect from the close of business on March 30, 2017.

Once a UCB has been placed under Directions, the withdrawal of the deposit is limited. This brings a lot of misery to depositors as they cannot withdraw money beyond the limit.

Also, an instructed UCB cannot grant or renew loans and advances, make investments or, among other things, be held liable. While stressed UCBs are put under orders by the RBI in order to get them back to health, they remain under orders for many years.

Association of UCBs

Like Saraswat Co-operative Bank, India’s largest UCB, Cosmos Co-operative Bank is also growing through merger.

In the past 15 years, Cosmos Co-operative Bank has acquired about five UCBs, including Amravati Peoples Co-op Bank (Amravati, Maharashtra) and Unnati Co-op. Bank (Baroda, Gujarat), Sushil Kumar Nahata Co-op. Bank (Bhusawal, Maharashtra) and Co-op. Bank of Ahmedabad (Gujarat).

Saraswat Bank had acquired seven stressed UCBs (Maratha Mandir Co-operative Bank, Mandvi Co-operative Bank, Annasaheb Karale Janata Sahakari Bank, Murgha Rajendra Sahakari Bank, Kolhapur Maratha Co-operative Bank, South Indian Co-operative Bank and Nashik People’s Co – operational bank) in the period 2006-2009.

According to Kapol Co-operative Bank’s latest balance sheet, at the end of March 2020 it had deposits and advances of ₹ 392 billion and ₹ 150 billion, respectively.

In FY20, the bank’s net loss increased to 36 billion (₹ 30 billion in FY19). The multi-state bank had gross distressed assets of ¥ 138 billion at the end of March 2020, up from ¥ 141 billion at the end of March 2019. The bank has 14 branches – 13 in Mumbai and one in Surat.

Cosmos Co-operative Bank had deposits and advances of 15.195 billion and ₹ 11.503 billion, respectively, at the end of March 2020.

Established in 1906, the bank has 140 branches in Maharashtra, Madhya Pradesh, Karnataka, Gujarat, Tamil Nadu, Andhra Pradesh and Telangana. It reported a net loss of 54 billion in fiscal 2020 versus a net income of 22 billion in fiscal 2019.

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