KOCHI: The financially ‘undisciplined’ Adoor Cooperative Urban Bank Ltd, which was set to complete two years of RBI’s Directions under 35A, has got yet another six months’ extension from the regulator.
The Adoor bank had built huge NPAs and was sitting on unsustainably low capital adequacy ratio (CAR), which had prompted the regulator to impose tough restrictions on lending and withdrawal of cash by account holders, the first time being in May 9, 2018.
The Section 35A of the Banking Regulation Act, 1949 empowers RBI to give ‘directions’ to banks and can take action, “to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company”.
An RBI release on Tuesday (May 5) once again extended the ‘direction’ period for the urban cooperative bank, thus adding another six months to the already completed two years of ‘directions’.
The Adoor Cooperative Urban Bank was first put under Direction from November 9, 2018 vide an RBI circular dated November 2, 2018 for six months. This was extended for six months thrice, the latest being from November 9, 2019 to May 9, 2020.
The RBI circular on Tuesday stated, “The Reserve Bank of India has reviewed the financial position of the said bank and considers it necessary in public interest to extend the aforesaid directions,”
The financial details or balance sheet of the bank was unavailable and hence businessbenchmark.news is incapable of furnishing any such details as part of this write-up.