TNR Special: Part 9
RBI review early next year will decide future of Himachal Pradesh’s troubled institution
Sourabh Sood
Shimla: The future of the crisis-hit Baghat Urban Co-operative Bank, widely known as Bachat Bank, remains uncertain as the institution races to improve its financial health before the Reserve Bank of India’s next inspection.
With its capital adequacy ratio still in the negative zone and non-performing assets weighing heavily on the balance sheet, the bank’s survival now depends on how much it can recover in the remaining weeks of the year.
The bank is pursuing an aggressive recovery drive that includes property seizure proceedings and a one-time settlement (OTS) scheme open until December 31. Officials say the response to this scheme will play a decisive role.
Several high-value borrowers are negotiating terms, but many accounts remain stuck in valuation disputes and legal challenges. Bank insiders admit that immediate liquidity will depend on how many big defaulters agree to settle.
RBI restrictions on withdrawals, imposed earlier after the bank failed key financial health criteria, continue to affect thousands of depositors. A partial easing for business credit accounts has brought some relief, but common account holders remain under strict limits. Many depositors say they worry that these curbs may continue well into next year if the bank fails to improve its capital position.
Bank officials maintain that they are committed to stabilising the institution and claim that recoveries in recent days have already improved internal confidence. However, they also acknowledge that much depends on the upcoming RBI review. If the regulator finds progress insufficient, discussions on deeper restructuring, including the possibility of a merger, could come to the fore.
For now, depositors, employees and local businesses are watching closely. The coming three months are expected to decide whether the bank can revive independently or whether a new structure will be required to protect public interest.
Immediate challenges before bank
Capital adequacy ratio (CRAR): Still negative, far below RBI norms
Large NPAs: Major borrowers yet to settle, many properties overvalued
Restricted withdrawals: Limits continue for common depositors
Liquidity stress: Salary delays and operational strain persist
What will decide bank’s future
Success of OTS by December 31
Volume of recoveries from big defaulters
Results of property auctions and seizures
RBI inspection in early 2026
Possibility of restructuring or merger if revival is slow
