Deposits worth Rs 300 crores still unrecovered
Chhatrapati Sambhajinagar: The Reserve Bank of India (RBI) has announced the immediate cancellation of the business license of Nagar Urban Multistate Co-operative, a bank with a prestigious 113-year history that had recently come under scrutiny due to a series of loan scams.
RBI on Wednesday night released a statement confirming the revocation of the bank's license. The decision comes amid growing concerns about the bank's financial stability and its inability to return shareholders capital and depositors funds. The order also revealed that as of March 2023, the bank had managed to return deposits worth Rs 294.85 crores. In addition, the Central cooperatives department has issued orders for the appointment of new employees to oversee the bank's affairs.
NPA of Rs 450 crore
Nagar urban bank, initially established in 1910, had attained multistate status in 2013. However, the bank's financial troubles came to the forefront in 2014 when allegations of irregularities in loan transactions surfaced, resulting in non-performing assets (NPAs) of approximately Rs 450 crores. An administrator was appointed to oversee the bank's operations on August 3, 2019. In 2021, despite the election of a new board of directors, the bank remained subject to restrictions, which were initially imposed on December 6, 2021, and later extended.
46 branches to be closed
With 46 branches across the state including one branch in Chhatrapati Sambhajinagar. Following its multistate status, the bank faced branch closures. Six branches were shut down after the administrator's appointment, and six more were closed in recent months, leaving a total of 46 branches in operation.
Rs 300 crore deposits unrecoverable
The cancellation of Nagar urban's license will have severe effects for its hundreds of employees and thousands of depositors. According to bank officials, approximately Rs 300 crores in deposits are still unrecovered since the initial banking restrictions were imposed.