RBI lifts curbs on Mumbai-based Sangli Sahakari Bank after 2.5 years

The bank's DICGC liability was down to Rs 36.97 crore from Rs 49.33 crore in September 2024. The company improved its net worth to Rs 5.41 crore as budgeted

The Reserve Bank of India (RBI) on Tuesday lifted the restrictions on Sangli Sahakari Bank, which had been in place for two and a half years. The decision was taken after a review of the bank's financial position, concluding that it was in the public interest to remove the restrictions.

 

In July 2022, the RBI had directed the co-operative bank not to grant or renew loans and advances, make investments, incur liabilities, borrow funds, accept fresh deposits, disburse payments, or enter into any compromise or arrangement without prior written approval. The bank was also prohibited from selling, transferring, or otherwise disposing of its properties or assets without RBI's consent.

 

 

These restrictions, initially imposed for six months from July 8, 2022, were extended periodically, with the latest extension valid until October 8, 2024.

 

“It was a bank in the hands of a group which did not take steps to improve its finances in the past. After elections, a new board was elected nearly two years ago. They have since worked consistently to improve the bank’s finances and have been performing well,” said an industry expert.

 

As per the bank’s monthly performance review submitted to the RBI for the period ended October 2024, deposits stood at Rs 38.05 crore, slightly down from Rs 38.09 crore in September 2024. Loans amounted to Rs 22.80 crore, down from Rs 23.06 crore during the same period.

 

Since the imposition of the restrictions, the bank has recovered over Rs 19 crore towards principal and Rs 8 crore towards interest. The bank has also taken action on all non-performing asset (NPA) accounts, though recoveries were delayed due to elections and court vacations.

 

The Deposit Insurance and Credit Guarantee Corporation (DICGC) liability of the bank reduced to Rs 36.97 crore from Rs 49.33 crore in September 2024. The bank also improved its net worth to Rs 5.41 crore as planned.

 

The bank’s capital-to-risk-weighted assets ratio (CRAR) improved significantly to 56.03 per cent as of October 31, 2024, from 37.71 per cent on March 31, 2024, driven by higher recoveries and operational profits.

 

The NPAs of the bank were reduced to Rs 22.64 crore as of October 31, 2024, compared to Rs 25.26 crore at the end of March 31, 2024. Additionally, the bank has prepared a month-wise recovery plan with actions aligned to its financial goals for the year.