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RBI imposes restriction on Bhuj co-op bank

On Saturday, the RBI had dissolved the board of directors of the bank as financial irregularities came to their notice.

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One more co-operative bank in the state has found itself in a crisis. The Reserve Bank of India has imposed restrictions on financial transactions of Ahmedabad head-quartered Bhuj Mercantile Co-operative Bank (BMC) on Tuesday. On Saturday, the RBI had dissolved the board of directors of the bank as financial irregularities came to their notice.

The BMC has seven branches including six in Kutch district and one in Ahmedabad. It has considerably sound financials as its non-performing assets (NPA) stand at less than 7%.

Bhuj Mercantile Co-operative Bankank’s advances stood at Rs90 crore, while its NPA are around Rs7 crore. The bank has 44,400 depositors of which 8,000 are from Ahmedabad, while Ahmedabad’s share in the bank’s total deposits of Rs169 crore is Rs7 crore.

On Saturday, the RBI had dissolved BMC’s board of directors as it found the financial position of the bank not in accordance with the Banking Regulation Act and instructed the state registrar of co-operatives to appoint an administrator.

As the depositors withdrew Rs32 crore on Saturday, the RBI imposed section 35-A of Banking Regulation Act on the bank restricting withdrawal of only Rs10,000 from savings and current account of the bank on Monday night. Moreover, the depositors were not allowed pre-mature withdrawal of fixed deposits from the bank.

On Tuesday, the bank found itself in a liquidity crunch at its Ahmedabad branch.

It had to stop payment to customers for a couple of hours. In Ahmedabad, 266 account holders withdrew Rs17.36 lakh.

Dilip Raval, registrar of co-operatives, said the administrator will issue notice to the board of directors after carrying out audits of the bank. If any irregularities are found, an inquiry will be conducted.

“We have instructed to lodge a police complaint in case any record is not available in custody of the administrator,” said Raval.

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