Maharashtra Cabinet Approves Rs.827 Crore Relief Package for Cooperative Banks
The Maharashtra government on Tuesday approved a share capital infusion of ₹ 827 crore for the three district central cooperative banks of Nashik, Nagpur, and Dharashiv, to strengthen their financial position. The decision was taken at a Cabinet meeting chaired by Chief Minister Devendra Fadnavis. While ₹672 crore was allocated to the Nashik District Central Cooperative Bank, ₹81 crore to the Nagpur bank, and ₹74 crore to the Dharashiv bank.
The Cabinet also authorised the dismissal of the existing board of the Dharashiv District Bank and the appointment of an administrator, citing the bank’s deteriorating financial condition.While Nashik and Nagpur banks are currently under administrators, Dharashiv has an elected board.
Nashik District Central Cooperative (NDCC) Bank
The Maharashtra State Cabinet has approved a major financial relief package for the cash-strapped Nashik District Central Cooperative (NDCC) Bank by sanctioning a share capital infusion of ₹672 crore.
This decision is crucial because the bank was under the threat of losing its banking license from the Reserve Bank of India (RBI) due to a severe shortage in required capital.
According to Santosh Bidwai, the bank’s administrator, the cabinet’s approval will allow the government to invest this amount in the bank as share capital, helping the institution to generate revenue and stabilize its financial position.
However, the state government has clearly stated that this fund cannot be used to settle overdue loans owed to the bank. The NDCC Bank has been struggling with a deep financial crisis caused by a large number of non-performing assets (NPAs).
More than 57,000 farmers in Nashik district owe the bank a total of ₹2,300 crore. An audit report had revealed that the bank was short of ₹672 crore in the minimum share capital required under the Banking Regulation Act, following which the RBI issued a show-cause notice warning of possible cancellation of its license.
Mr. Bidwai said, “The state government had earlier informed the RBI that the proposal for share capital infusion was under consideration. Now that the cabinet has approved it, there are signs of the bank’s revival.”
He further added that the government will issue a Government Resolution (GR) and release the funds after obtaining an undertaking from the bank. These funds will need to be returned to the government within a fixed period and will be invested to generate income, not used for loan recovery.
Once the funds are released and utilized as per conditions, the RBI is expected to withdraw its show-cause notice against the bank, a process likely to take around three months.
Mr. Bidwai expressed optimism, stating, “We will be able to use this money to provide loans to farmers and earn revenue in return. This step will become a turning point in the revival of the bank.”
