RBI cancels the licence of The City Co-operative Bank Ltd., Mumbai, Maharashtra
The Reserve Bank of India (RBI), vide order dated June 19, 2024, has cancelled the licence of “The City Co-operative Bank Ltd., Mumbai, Maharashtra.” Consequently, the bank ceases to carry on banking business, with effect from the close of business on June 19, 2024. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. The Reserve Bank cancelled the licence of the bank as: i) The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949. ii) The bank has failed to comply with the requirements of Sections 22(3) (a), 22(3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949; iii) The continuance of the bank is prejudicial to the interests of its depositors; iv) The bank with its present financial position would be unable to pay its present depositors in full; and v) Public interest would be adversely affected if the bank is allowed to carry on itsbanking business any further. 2. Consequent to the cancellation of its licence, “The City Co-operative Bank Ltd., Mumbai, Maharashtra.” is prohibited from conducting the business of ‘banking’ which includes, among other things, 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. 3. On liquidation, every depositor would be entitled to receive deposit insurance claimamount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961. As per the data submitted by the bank, about 87% of the depositors are entitled to receive full amount of their deposits from DICGC. As on June 14, 2024, DICGC has already paid ₹230.99 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank. (Puneet Pancholy) Press Release: 2024-2025/526 Chief General Manager

Withdrawal under Hardship :
The depositors have withdrawn to the extent of Rs.103.96 crores from their accounts on Hardship Grounds from the date of All Inclusive Direction (AID) i.e. 18 th April 2018 upto 30 th September 2023.

Payment to Depositors by DICGC :
a) Subsequent to amendment of DICGC Act, an amount equivalent to the deposit outstanding upto maximum Rs.5.00 lakhs is paid by DICGC. Till today an amount of Rs.230.90 crores is credited in depositors' alternate Bank Accounts, thus reducing our liability towards depositors. The amount of Deposits of our Bank as on 30.09.2023 is Rs.177.96 crores.

b) In terms of Section 21 of the DICGC Act, we have repaid the first installment of Rs.46.20 crores on 31 st August 2023 to DICGC

Liquidity :
We have surplus liquidity after maintaining mandatory Cash Reserve Ratio (CRR) and Statutory Liquid Ratio (SLR).

Recovery Position :
During the pandemic the recovery from NPAs was greatly hampered and the regular defaulters have taken undue advantage of the situation and stopped repaying their dues. The defaulters are taking all efforts to stop our recovery initiatives and file appeals in the court. Defualters even have spread rumors stating that the Bank is closed down and therefore the loan should not be repaid.

We have recovered Rs. 117.59 crores from the defaulters of loan repayment from April 2018 to September 2023.

Out of the total outstanding advances of Rs.154.21 crores we have assets of realisable value of Rs. 71.04 crores approx. Remaining amount can be written off with the permission of appropriate authority reserving our rights to recover the amount from the defaulters, inspite of writing off. We have Bad and Doubtful Debts Reserve to the extent of Rs.150.70 crores.

We have taken few properties/premises of defaulters in our possession. We have also filed criminal complaints with Economic Offence Wing of Mumbai, Police against Ex-CEOs and other Officials of the bank, defaulters, valuers, etc. They have recently arrested an Ex. CEO and Ex. Branch Manager alongwith three defaulters of our Bank and their interrogation is going on.

Cost Cutting Measures : 

Staff Cost :
Voluntary Retirement Scheme

After formulating Voluntary Retirement Scheme for our employees, we have obtained approval from Registrar Co-operative Societies, as advised by Reserve Bank of India. We have complied with all the conditions laid down by RCS in this respect. In compliance therewith, we have relieved 3 employees under this scheme thus reducing the salary (burden) expenses of Rs.13.02 lakhs per anum. We had once again introduced the VRS Scheme and we have relieved 6 staff members reducing the staff expenses of Rs. 26.70 lakhs per anum.

Freezing Salaries Although, we pay salary to staff members regularly but have discontinued to pay yearly bonus, annual increments, all allowances such as functional allowances, leave travel assistance, Medical Allowance, etc.

No recruitment

We have not recruited any staff members in place of 54 staff members who have either retired/ resigned from the Bank since April 2018.

Saving in Staff Cost

By taking the above decision, the monthly average Staff Cost of Rs.74.09 lakhs on 31.03.2018 is now reduced to Rs.26.14 lakhs as on 30.09.2023

Other Expenses : 
a). Inorder to curtail the expenses, we have decided to run our Mira Road Branch in a small premises and have surrendered the excess rental units to the landlords and surrendered three Units of Thane Branch and shifted the Branch in a smaller premiss thus saving the rent expenses of Rs.13,350/- per month, since March 2023.

b). We have also surrendered the rental premises to the owners of our Fort Branch, having rent of Rs. 4,79,711/ per month and shift the Branch to our old small premises in the same area, having rent of Rs. 9,681/- per month.

Reduction in accumulated loss :
After transfering excess provision of Bad and Doubtful Debts, Investment Depriciation Reserve etc.accumulated loss is reduced to the extent of Rs.21.87 as of half yearl ending on 30th Sept 2023