Mumbai: The Reserve Bank of India (RBI) on Friday took over the board of Abhyudaya Cooperative Bank in Mumbai, citing major concerns regarding inadequate corporate governance standards, the central bank said in a statement.
The RBIs intervention is valid for a duration of 12 months.
The regulator appointed Satya Prakash Pathak, former Chief General Manager of State Bank of India, as the administrator to oversee the banks operations.
It is emphasised by the RBI that there are no restrictions imposed on the banks business activities, and the bank is permitted to continue its regular banking operations under the supervision of the administrator appointed by the RBI.
Reserve Bank of India (RBI) also formed a committee of advisors to support the appointed administrator in fulfilling his responsibilities, as stated by the central bank.
The committee includes Venkatesh Hegde, a former general manager at SBI, Mahendra Chhajed, a chartered accountant, and Suhas Gokhale, the former Managing Director of COSMOS Co-operative Bank Limited.
The above action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank. No business restrictions have been placed by RBI and the bank shall continue to carry on its normal banking activities as is hitherto, under the guidance of the Administrator, the RBI statement said.
Its noteworthy that in recent years, the Reserve Bank of India (RBI) has taken stringent actions against several cooperative banks found in violation of regulations.
For instance, in September 2019, the RBI took control of PMC Bank, superseding its board and implementing various regulatory restrictions. The RBI acted after the revelation of financial irregularities, including the concealment and misreporting of loans extended to the real estate developer HDIL.
