Baghat Urban Co-operative Bank Faces Ongoing Financial Crisis Affecting Thousands
Current Situation of Baghat Urban Co-operative Bank
The financial turmoil at Baghat Urban Co-operative Bank persists, characterized by significant non-performing assets (NPAs) and a shortage of liquidity. Despite efforts to recover funds and actions taken against major defaulters, the Reserve Bank of India (RBI) has maintained crucial restrictions, leaving numerous depositors in a state of financial distress.
Withdrawal Restrictions and Financial Stress
The RBI's limit on deposit withdrawals remains set at Rs 10,000 per account. This restriction, which was implemented in October, has yet to be lifted for regular customers, although some conditional relief has been granted to business accounts.
High Levels of Bad Loans
Recent reports indicate that the bank's NPAs are still between Rs 129 and 138 crore, highlighting its severe financial difficulties. The capital-to-risk ratio is currently negative, complicating any potential recovery efforts.
Recovery Efforts and Accountability
Under the SARFAESI Act, properties belonging to 15 major defaulters have been seized. An auction initiative for these properties has been launched, but actual financial recovery has been minimal. A one-time settlement (OTS) scheme is in place until December 31, 2025, aimed at encouraging repayments. Reports also suggest that some bank employees exploited internal weaknesses, exacerbating the financial losses, and several transactions are under investigation.
Government Response and Future Outlook
During the final day of the Himachal Pradesh Assembly session in Dharamshala, Deputy Chief Minister Mukesh Agnihotri, who oversees the cooperative ministry, stated that the situation at Baghat Bank is under close observation. He assured that the state government is coordinating with the RBI and the Co-operative Department, emphasizing that actions against significant defaulters will persist and that the interests of depositors will be safeguarded.
Agnihotri also mentioned that the state is assessing whether administrative oversights contributed to the crisis and promised strict accountability.
With around 80,000 depositors impacted, public pressure is mounting. Many traders and retirees who rely on regular withdrawals are experiencing significant challenges. While recovery initiatives and government assurances provide some hope, the bank's future hinges on effective loan recovery, liquidation of seized assets, and regulatory approval from the RBI.