Dhanvarsha Group Executes Private Placement Agreement of Rs 230 Crore to revive the City Cooperative Bank, Mumbai
• Dhanvarsha Group and the City Cooperative Bank signed an Agreement for Private Placement that has been executed as per Section 12 of the Banking Regulations Amendment Act 2020; the move also aims to make the Bank to a Small Finance Bank
Mumbai, August 1, 2022
Dhanvarsha Group, a leading business conglomerate engaged in several sectors including finance and banking, has offered a comprehensive revival package for the City Cooperative Bank Ltd., Mumbai and entered into an Agreement for Revival and Private Placement pertaining to an Investment of Rs.230 crore into the Share Capital of the Bank as per Section 12 of the Banking Regulations Amendment Act 2020. Dhanvarsha Group is all set to initially infuse Rs 230 crore to meet the capital requirements as suggested by the Reserve Bank of India (RBI).
The Agreement for Revival and Private Placement was signed on July 27, 2022 pertaining to an Investment of Rs.230 Crore into the bank as per Section 12 of the Banking Regulations Amendment Act 2020. The Agreement was signed by Mr Anshumman Joshi, Chairman, Dhanvarsha Group. On behalf of the City Cooperative Bank, Chairman, Mr Anandrao Adsul (Ex MP) and CEO Mr Arthur Rebello were the signatories.
The Danvarsha Group offers the revival package with an aim to convert the City Cooperative Bank into a Small Finance Bank with the approval of Reserve Bank of India. The City Co-operative Bank, which once upon a time was a leading and the most successful bank in the co-operative sector in Mumbai and Thane, is currently under All Inclusive Directions (AID) imposed by the RBI as per Section 35(a) of Banking Regulations Act. 1949.
Commenting on the development, Dhanvarsha Group’s Chairman Mr Anshumman Joshi said, “We are expressing our interest by way of firm proposal to infuse/invest sizable capital to the tune of Rs. 230 crores in the share capital of the Bank by way of private placement under Section 12 of the Banking Regulation (Amendment) Act, 2020, for the purpose of revival.”
“A revival will be in the larger interest of all the Depositors and Shareholders of The City Cooperative Bank Ltd and we can infuse adequate share capital through our companies, financial institutions, and funds. We are also interested to convert this State Level Co-operative bank to a Small Finance Bank as per the relevant RBI Norms,” added Mr Joshi who is widely known as a Saviour in Cooperative Sector.
In a letter to the Hon’able Union Finance Minister and the RBI, Dhanvarsha Group has prayed that the All-Inclusive Directions imposed under Section 35 (a) of the Banking Regulations Act. 1949 on The City Co-operative Bank Ltd., Mumbai be revoked and its proposal should be considered seriously in the larger interest of the Depositors of the Bank.
Under All-Inclusive Directions, the RBI restricts the bank from discharging its liabilities except as permitted by the Central Bank.
“For the benefits of Depositors and Stakeholders, we are making all efforts to revive the Bank. It is encouraging that Dhanvarsha Group has come forward with a robust revival plan. We have signed an agreement to execute the plan. Now, with new provisions, a co-operative bank may, with the prior approval of the Reserve Bank, issue, by way of public issue or private placement, equity shares or preference shares or special shares, on face value or at a premium,” said Mr Anandrao Adsul (Ex-MP), Chairman, The City Cooperative Bank.
Now a Cooperative Bank can also get funds through unsecured debentures or bonds or other securities with an initial or original maturity of not less than ten years, to any member of such cooperative bank or any other person residing within its area of operation.
Mr Anshumman Joshi further said, “We had a meeting with the RBI officials pertaining to the revival of the Bank and even they showed positive approach towards the revival of the banks in the larger interest of depositors and the cooperative sector.”
“We have also met Hon’ble Cooperative Commissioner and his team at Pune and requested for an exemption for Section 27 (3) so that the process of revival can take place which is largely in the interest of the cooperative banks and the sector. The proposed revival would be happening for the first time in the history of Cooperative sector in order to realize the dreams of Hon’ble Union Cooperation Minister Shri Amit Shah, who is very keen to provide fresh momentum to the sector,” concluded Mr Joshi.
Dhanvarsha Group emphasized that the greatest benefit to the Depositors of the Bank, with this revival package, would be that they don't have to take any haircut on their deposits.