Himachal Pradesh News
RBI Extends Restrictions on Baghat Urban Cooperative Bank Till October 8 Amid Financial Crisis
The Reserve Bank of India (RBI) has extended the financial restrictions imposed on Baghat Urban Cooperative Bank for another three months, allowing the curbs to remain in force until October 8, 2026. The move comes as the bank continues to grapple with severe financial stress and uncertainty over its future.
The Reserve Bank of India (RBI) has extended the financial restrictions imposed on Baghat Urban Cooperative Bank for another three months, allowing the curbs to remain in force until October 8, 2026. The move comes as the bank continues to grapple with severe financial stress and uncertainty over its future.
In an order issued on July 1, the RBI said the extension had been granted in the public interest. This marks the third extension since October 2025, reflecting the regulator’s continued concerns over the bank’s fragile financial position.
Under the existing restrictions, Baghat Urban Cooperative Bank is barred from sanctioning or renewing loans, making investments, raising liabilities, accepting fresh deposits, or making payments without prior approval from the RBI. Depositors are also subject to a withdrawal limit of ₹10,000 per account holder.
The extension means depositors will have to wait longer to access their savings in full. However, around 5,600 depositors have already received insurance protection amounting to nearly ₹89 crore under the norms of the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Recognising the bank’s deteriorating financial condition and limited ability to recover independently, the Registrar Cooperative Societies appointed Neeraj Sood as administrator on July 15 to oversee its operations and explore revival options.
Officials have been working on multiple strategies to improve the bank’s financial health, including efforts to merge it with a stronger cooperative bank outside Himachal Pradesh. Attempts to secure a merger with cooperative banks within the state reportedly failed as institutions were reluctant to absorb a loss-making entity.
Sources associated with the bank indicated that discussions with a cooperative bank based in Panipat are currently in the advanced stages, with the proposal awaiting approval at the institution’s annual general meeting.
Meanwhile, efforts to seek financial assistance from the state government have not yielded the desired outcome, as authorities have reportedly expressed their inability to provide the required capital support.
The bank administration has also reached out to Solan traders, encouraging them to invest by purchasing shares to strengthen the bank’s capital base. However, market response remains cautious, with investors waiting for clarity on potential government support or a merger with a financially stable institution.
The uncertainty surrounding the bank has intensified after the RBI reportedly initiated proceedings for cancellation of its licence. Industry observers believe that investor confidence is unlikely to improve unless a strong banking partner comes forward with a concrete merger proposal.
At the same time, a surcharge inquiry conducted by the Assistant Registrar Cooperative Societies is underway to determine accountability for the bank’s financial setbacks. So far, no significant recoveries have been made from officials allegedly responsible for regulatory lapses, while some former employees have already retired after receiving full retirement benefits.
