RBI Shock to Latur DCC Bank Directors

The Reserve Bank of India (RBI) has initiated action concerning Maharashtra Cooperation Minister and NCP leader Babasaheb Patil and seven other directors of the Latur District Central Cooperative Bank. The matter relates to allegations that the directors had exceeded the maximum 10-year tenure prescribed under the amended banking law. Bank member Satish Sheshrao Jadhav filed a complaint with the RBI on May 25 seeking disqualification of the eight directors. After the RBI did not act on the complaint, Jadhav approached the Aurangabad Bench of the Bombay High Court, which on August 3 directed the central bank to decide the complaint within six weeks.

Following the court direction, the RBI sought responses from the concerned directors on September 4. Seven of the eight directors submitted their resignations on September 10. Patil, however, continued as a director, following which the RBI on September 18 directed the Latur DCC Bank to remove the director found ineligible under the relevant provisions of the Banking Regulation Act. The law provides a 10-year tenure cap for directors of district central cooperative banks. Patil has disputed the RBI’s decision and said he would challenge it before the High Court.