RBI cancels license of CKP Co-operative Bank, bank was not in a position to pay its depositors

The license of Mumbai-based CKP Co-operative Bank Ltd has been cancelled by Reserve Bank of India (RBI) on Saturday. The licence has been cancelled with effect from the close of business on April 30, 2020, as the bank’s financial position had worsened.

In its order, the central bank has maintained that the CKP Co-operative Bank Ltd was not in a position to pay its present and future depositors due to its financial instability.

In a statement on Saturday, the RBI said, “The CKP Co-operative Bank Ltd., Mumbai, is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits.”

The Registrar of Co-operative Societies, Pune, Maharashtra, has also been requested to issue an order for winding up the affairs of CKP Co-operative Bank Ltd. and appoint a liquidator for the bank.

The RBI said, “The financial position of the bank is highly adverse and unsustainable. There is no concrete revival plan or proposal for merger with another bank. Credible commitment towards revival from the management is not visible.”

“The bank is not satisfying the requirement of minimum capital and reserves….The bank is not in a position to pay its present and future depositors, thereby not complying with Section 22(3) (a) read with Section 56 of the Act,” the RBI said.

The central bank further said that the CKP Co-operative Bank’s efforts for revival have been far from adequate though it was given ample time and opportunity and dispensations.