Citizens’ Cooperative Bank Crisis: Save The Institution, Fix The Accountability

The restrictions imposed by the Reserve Bank of India (RBI) on The Citizens’ Co-operative Bank Ltd. (CCBL), Jammu, should concern us for reasons extending far beyond one bank.

There are depositors whose savings are affected. There are shareholders who collectively own the cooperative institution. There are employees whose future is connected with it. And there is the larger question of public confidence in Jammu and Kashmir’s cooperative movement.

RBI has acted as a banking regulator and its concerns cannot simply be dismissed. If there are weaknesses in liquidity, capital, asset quality, governance or compliance, the regulator is duty-bound to protect depositors.

But regulation answers only one part of the question. The other question is one of public policy:

Can Citizens’ Cooperative Bank be revived, and has every reasonable possibility of revival actually been examined?

For Jammu & Kashmir, that question assumes particular significance because the Union Territory already has a major precedent for government-supported reconstruction of distressed cooperative banks.

Three District Central Cooperative Banks — Jammu Central Cooperative Bank, Anantnag Central Cooperative Bank and Baramulla Central Cooperative Bank — were provided a combined recapitalisation package of approximately ₹366.93 crore.

The distribution was substantial:

The purpose of the exercise was not to reward successful banks. It was precisely the opposite.

These institutions required intervention because their financial condition had deteriorated and they needed recapitalisation and restructuring to move towards regulatory viability.

That distinction is fundamental to the present CCBL debate.

SOME OF THE RESCUED BANKS HAD EVEN HIGHER NPAs

The financial condition of some of these institutions was extremely serious.

Around March 2021, available government data indicated Gross NPA ratios of approximately:

Anantnag Central Cooperative Bank — 17%; Jammu Central Cooperative Bank — 38%; and Baramulla Central Cooperative Bank — an extraordinary 59%

Against this background, CCBL’s reported Gross NPA position of approximately ₹18.38 crore, or 21.26% of advances as of December 2025, deserves careful examination. Twenty-one per cent Gross NPA is undoubtedly serious.

But the experience of the three DCCBs demonstrates something important:

A high NPA ratio did not, by itself, cause the Government to abandon a cooperative bank.

Baramulla DCCB, despite an NPA ratio reportedly approaching 59%, was provided a reconstruction opportunity.

Jammu Central Cooperative Bank received approximately ₹180.14 crore; Anantnag received approximately ₹120.29 crore; Baramulla received approximately ₹66.50 crore.

Therefore, the question today should not be whether CCBL has problems. Clearly it does.

The question is: Are those problems capable of being corrected?

One important distinction must be acknowledged. The three rescued institutions are District Central Cooperative Banks. Citizens’ Cooperative Bank Jammu is an Urban Cooperative Bank.

Their regulatory architecture and roles are not identical.

Therefore, CCBL cannot simply demand ₹100 crore or ₹180 crore because another cooperative bank received such assistance.

Nor should public money automatically be used to cover losses arising from bad lending or failed governance.

But the difference in institutional category does not answer the fundamental question:

Why should Citizens’ Cooperative Bank not at least receive a professionally conducted viability and reconstruction assessment?

That is a far more reasonable demand than an unconditional bailout.

Public discussion is presently centred on CCBL’s NPAs.

That may be looking at the wrong number. The crucial number is the capital and liquidity gap required to restore the bank to regulatory health.

Before anyone declares the bank either viable or unviable, shareholders and depositors deserve answers to some basic questions.

What are CCBL’s current deposits?; What are its liquid assets?; What is its present CRAR?; What are the accumulated losses?; What provisioning remains necessary?; What is the actual regulatory capital shortfall?; How much additional capital would restore compliance?; And how much of the existing ₹18.38 crore Gross NPA can realistically be recovered?

Until these figures are established, nobody can responsibly say whether saving CCBL requires ₹10 crore, ₹25 crore, ₹50 crore or substantially more. First establish the number. Then decide the policy.

There is another uncomfortable question. What exactly constitutes CCBL’s approximately ₹18.38 crore of Gross NPAs?

Shareholders deserve to know the concentration and character of the stressed loan book, subject of course to legitimate banking confidentiality. How much belongs to the ten largest NPA accounts?; How much is secured by land, buildings or other assets?; What is the present value of those securities?; How many recovery proceedings are pending?; How many borrowers have been offered One-Time Settlements?; How much was recovered during each of the last five financial years?; How much represents genuine business distress?; How much arose because of deficient appraisal or inadequate post-disbursement monitoring?; Were there governance failures?

If irregular lending occurred, responsibility must be established. The answer to a banking crisis cannot simply be recapitalisation. It must be: Recovery + accountability + capital + professional management.

There is another dimension that cannot simply be wished away.

Jammu & Kashmir’s economy has operated under extraordinary circumstances for decades.

Terrorism, militancy and political instability were followed by repeated periods of disruption. The region experienced the 2008 and 2010 disturbances, devastating floods in 2014, prolonged disruption in 2016, the extraordinary circumstances surrounding 2019 and then the COVID-19 shock.

Businesses suffered during these periods; markets were repeatedly disrupted; tourism suffered periodically; borrowers failed.

This history cannot become an excuse for negligent banking.

But neither should every stressed loan created during this extraordinary economic period automatically be treated as if it originated in an ordinary commercial environment.

An independent asset-quality review should determine which losses resulted from economic distress and which resulted from poor banking decisions.

Those supporting CCBL must not selectively ignore the regulator.

RBI has indicated that it engaged with the Board and senior management regarding improvement in the functioning of the bank and found inadequate concrete efforts to address supervisory concerns and protect depositors.

That raises serious questions. What exactly were those supervisory concerns?; When were they communicated?; What corrective measures were demanded?; Which measures were implemented?; Which remained outstanding?; Why?; And who was responsible?

These questions must be answered because a cooperative institution belongs ultimately to its members — not to a particular Board or management.

Saving CCBL therefore cannot mean protecting those responsible for proven failures.

Boards can be reconstituted; Management can be professionalized; Accountability can be fixed. The institution can still be preserved.

The restructuring of J&K’s distressed DCCBs was not simply about injecting money.

The legal and institutional framework provided for professional intervention and monitored revival.

That is precisely the philosophy that should be examined for CCBL.

There is also a human dimension that balance sheets cannot adequately describe. Behind every deposit account is somebody’s money.

Deposit insurance provides an important statutory safety net within its prescribed limits, but insurance cannot substitute for a healthy functioning banking institution.

The objective should therefore be twofold: protect the depositor immediately and determine whether the institution can be restored permanently.

Perhaps the greatest long-term consequence of the CCBL episode will not appear in its financial statements. It could appear in public psychology.

If citizens begin believing that keeping money in a cooperative institution exposes them to uncertainty that does not exist in large commercial banks, deposits will gradually migrate.

If shareholders lose confidence, cooperative share capital becomes difficult to mobilise.

If younger generations see cooperative institutions only through the lens of financial distress, they will have little incentive to participate in them.

Eventually, locally owned banking institutions disappear.

This would be particularly unfortunate when the Government of India has established a dedicated Ministry of Cooperation and is promoting “Sahakar se Samriddhi” as a national vision.

The cooperative movement cannot be strengthened nationally while important cooperative institutions are allowed to disappear locally without first exhausting reasonable possibilities for rehabilitation.

There is no benefit in converting the issue into a confrontation between Jammu and the Reserve Bank of India.

RBI’s job is to protect the banking system and depositors.

If CCBL’s financial position warranted intervention, RBI was entitled — indeed obligated — to act within the law.

The question for Government begins after regulatory intervention.

What is the pathway back?

That requires RBI, the J&K Government, Registrar Cooperative Societies, Ministry of Cooperation and the bank’s members to work towards a common answer.

As a citizen of Jammu and a shareholder of Citizens’ Cooperative Bank, I am not demanding that Government blindly inject taxpayers’ money into the institution.

I am asking something much simpler; tell us the truth about the bank’s financial position; tell shareholders its present CRAR; tell us its accumulated losses; tell us the capital shortfall; tell us the liquidity gap; tell us how much of the NPA is recoverable; tell us what went wrong; tell us who was responsible.

And then tell us whether this institution can be saved.

Most importantly: If Jammu Central Cooperative Bank, Anantnag Central Cooperative Bank and Baramulla Central Cooperative Bank could collectively receive ₹366.93 crore of recapitalisation and a structured opportunity for revival despite serious financial distress, why should Citizens’ Cooperative Bank Jammu not at least receive an independent, transparent and time-bound viability assessment?

That is neither an unreasonable demand nor a demand for preferential treatment.

It is a demand for institutional fairness.

The Government of J&K should therefore take the initiative and seek, in consultation with RBI and the Union Ministry of Cooperation, a time-bound CCBL Revival and Reconstruction Assessment.

Give independent banking professionals access to the numbers.

Determine the capital requirement; Value the secured NPA assets; Establish realistic recovery potential.; Examine possible recapitalisation mechanisms; Reconstitute governance wherever required; and Set regulatory milestones.

And place the broad findings before members and depositors, consistent with banking law and confidentiality requirements.

If that assessment concludes that CCBL can be restored to sustainable banking health, Government and regulators should facilitate every legally permissible avenue for its reconstruction.

If it concludes that the institution genuinely cannot be saved, shareholders deserve to know why.

But institutional decline through silence and inertia should not be the answer.

The principle must remain simple: Save the bank, not the failures; Protect the depositors; Recover the money; Fix accountability; Professionalise the institution.

And give Jammu’s cooperative movement a fair chance to survive.

Because ultimately this debate is not merely about ₹18 crore of NPAs or one bank’s balance sheet.

It is about whether we still believe ordinary citizens should be able to collectively own strong, professionally managed and locally rooted financial institutions.

That is the very idea of cooperation.