In a major setback to the financially stressed Baghat Urban Cooperative Bank, none of the 24 properties put up for auction attracted bidders, dealing a blow to the bank’s efforts to improve its financial health ahead of a crucial review by the Reserve Bank of India (RBI).
The failed auction has not only highlighted the challenges facing the bank but has also raised questions about the effectiveness of its recovery strategy at a time when its operations remain under close regulatory scrutiny.
The bank management, which is attempting to reduce its non-performing assets (NPAs) from Rs 102 crore to Rs 94 crore by the end of the month, is now pinning its hopes on the sale of a 72-bigha plot. If sold, the property is expected to fetch around Rs 3 crore and provide some relief to the bank’s strained finances.
Another key financial indicator, the Capital to Risk Weighted Assets Ratio (CRAR), currently stands at negative 8 per cent. Though it has improved from negative 18 per cent, it remains far below the regulatory minimum requirement of 9 per cent, reflecting the extent of financial erosion and operational mismanagement.
The severity of the crisis prompted the RBI to impose restrictions on the bank in October 2025, including a cap of Rs 10,000 on withdrawals by depositors. The restrictions, initially imposed for six months, were later extended by another three months and are due for review on July 8.
Financial experts point out that CRAR weakens when risk-weighted assets grow faster than capital, often due to rising NPAs, deteriorating asset quality and inadequate risk management practices.
Baghat bank Managing Director Rajkumar Kashyap acknowledged that the auction had failed to attract buyers but expressed optimism about ongoing recovery efforts.
“Major recoveries are on the anvil as 20 loan defaulters have applied under the latest One-Time Settlement (OTS) policy, which offers a 40 per cent waiver on interest. The OTS committee will soon decide these cases, which could bring a sizeable amount to the bank,” he said.
Kashyap added that several measures undertaken by the bank are expected to yield positive results after receiving approval at the forthcoming annual general meeting.
“Significant measures being taken by the bank are likely to fetch remunerative results once they are approved,” he said, expressing confidence that the institution would gradually recover from its current difficulties.
However, sources indicated that politically influential loan defaulters continue to resist surrendering possession of mortgaged properties, complicating the bank’s efforts to bring down its NPA levels.
The crisis has affected nearly 80,000 depositors and around 1,100 shareholders, many of whom continue to face financial hardship due to restrictions on withdrawals.
Critics have also questioned the lack of accountability within the institution, noting that no action has reportedly been taken against officials responsible for sanctioning unsecured or irregular loans despite the bank’s deteriorating financial condition.
With public confidence in the institution severely dented, depositors are now hoping either for the lifting of RBI restrictions or a merger with a financially stronger cooperative bank to restore stability and safeguard their savings.
