The Hindu Business Line : RBI cancels Prudential Bank's licence; liquidator takes over

EVEN as over 1.84 lakh depositors of Prudential Bank were awaiting repayment of over Rs 275 crore of their hard-earned savings for the last couple of years, the Reserve Bank of India has cancelled the licence of the city-based ailing urban cooperative bank.

The RBI decision has come as `bolt from the blue' not just for the depositors but also to the 344 employees of the bank who have ensured recovery of around Rs 185 crore of NPAs over the last one-and-a-half years by pressuring the big defaulters through protest demonstrations at their residential and official locations.

The apex bank, which had made the State Registrar of Co-operative Societies (RCS) to supersede the Prudential Bank board during March last year and run the bank in view of its failure to maintain the stipulated SLR and CRR levels, said the decision to cancel the licence was taken after being satisfied that there was no improvement in the financial position of the bank.

In a circular addressed to the Prudential Bank Managing Director, the RBI has also viewed that the affairs of the bank were being run in a manner detrimental to the interests of the depositors.

However, the apex bank did not elaborate on the issue. The urban co-operative bank was directed not to carry on banking business including acceptance and repayment of deposits.

Meanwhile, the State RCS has appointed its Joint Registrar, Mr Amarender, as the liquidator for the bank on Wednesday.

Accusing that the latest development would only serve the interests of defaulters, the Prudential Bank Employees Union General Secretary, Mr B. George Reddy, told Business Line that the RBI should not have resorted to such a drastic step when the bank was well on a recovery path with the sincere efforts of the employees that resulted in recovery of around Rs 185 crore in the last couple of years.

More Stories on : RBI & Other Central Banks | Co-operatives

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