Citing "Unsustainable" Finances, RBI Cancels CKP Co-Operative Bank Licence

The Reserve Bank of India (RBI), late on Saturday, cancelled the licence of The CKP Co-Operative Bank Ltd, citing a number of reasons including "highly adverse and unsustainable" financial position and lack of "concrete revival plan".

The cancellation of the CKP Co-Operative Bank's licence means that the lender is no longer allowed to accept or repay deposits.
 
Moreover, with the liquidation proceedings kicking in, the process of paying to the depositors would be as per the DICGC Act, 1961, RBI said, in a release. According to the Act, upon liquidation, every depositor is entitled to repayment of his/her deposits up to Rs 5 lakh  from the Deposit Insurance and Credit Guarantee Corporation (DICGC). The central bank also requested the Registrar of Co-Operative Societies to "wind up the affairs" of the bank and appoint a liquidator.

The RBI release stated that CKP Co-Operative Bank has not maintained the minimum requirement of capital and "is not in a position to pay its present and future depositors".

"The affairs of the bank were and are being conducted in a manner detrimental to the public interest and interest of the depositors," it also said, adding that the bank's management did not work on any revival or merger plan, despite the poor financial status of the lender.

The RBI's decision comes within less than a year of its actions in the case of Punjan and Maharashtra Co-Operative Bank and Yes Bank. However, in those cases, liquidation process had mot been initiated and the centralk bank had simply put certain restrictions on the bank's ctivities and had taken control of its day-to-day proceedings.