The Reserve Bank of India (RBI) has taken decisive action by superseding the board of Abhyudaya Co-operative Bank Ltd. today, citing concerns over its governance standards. The central bank's intervention was announced with the appointment of Satya Prakash Pathak as the administrator to oversee the bank's operations for a year.
Under the new management, Abhyudaya Co-operative Bank will continue its normal banking activities without any business restrictions, ensuring that its customers face no disruption in services. This move aims to uphold normal banking functions while addressing management issues within the Mumbai-based institution.
To assist in the bank's management, an advisory committee has been formed consisting of Venkatesh Hegde, Mahendra Chhajed, and Suhas Gokhale. These experienced professionals are expected to guide the bank back to a path of sound governance and financial stability.
Abhyudaya Co-operative Bank, which has a significant presence in Mumbai's labor sector and was founded by textile mill activists turned social workers, has seen a dramatic decline in profits over recent years. From a high of Rs 98 crore in March 2014, profits plummeted to just Rs 16.2 crore by March 2020. Despite a history of successful mergers and a substantial business mix valued at Rs. 17,492 crore, serving over 2.23 lakh members and more than 17.30 lakh depositors, the bank's financial performance indicates a period of strain that the RBI aims to address through this intervention.
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