Shareholders step in to shore up capital of strained Baghat bank
Rs 1.6 lakh pledged initially as bank battles high NPAs, political pressure on recoveries and RBI-imposed restrictions
In a significant development, shareholders of the financially stressed Baghat Urban Cooperative Bank have begun coming forward to contribute their share capital in an effort to stabilise the institution and restore confidence among depositors.
As an initial step, a group of shareholders has given consent to contribute Rs 1.6 lakh to the bank’s kitty to strengthen its capital base. The move was initiated by the bank management on Tuesday, recognising that improved financial inclusion and capital adequacy are crucial for easing regulatory constraints. The bank has around 1,100 shareholders and nearly 80,000 depositors, many of whom are bearing the impact of restrictions imposed by the Reserve Bank of India (RBI).
Confirming the development, Managing Director Rajkumar Kashyap said shareholders were voluntarily stepping in to help the bank navigate the prevailing financial strain. He expressed hope that wider participation from shareholders would further bolster the bank’s capital position in the coming weeks.
On the recovery front, the bank marginally missed its loan recovery target for January but remains optimistic about achieving the goals set for February. Bank staff are intensifying efforts to improve recoveries, which are critical to reducing the non-performing assets (NPAs) burden.
Several key decisions aimed at improving the bank’s financial health are expected to be taken at the annual general body meeting scheduled for February 17. The management believes these measures could play a decisive role in helping the bank tide over the current crisis.
The bank’s NPA position has shown improvement over recent months. NPAs, which stood at Rs 138 crore on October 8, 2025, have been reduced to Rs 114 crore. While the January target was to bring NPAs down to Rs 110 crore, the bank now aims to reduce them to Rs 108 crore by February and below Rs 95 crore by the end of March.
Recovering dues from politically connected borrowers has emerged as a major challenge. In one such case, a borrower who had defaulted on loans amounting to Rs 4.11 crore allegedly exerted pressure to delay the acquisition of his properties. In an unprecedented move, the Deputy Commissioner of Solan recalled the file related to property possession under the SARFAESI Act, 2002, and notices were issued to the bank and revenue officials citing procedural lapses. With limited options left, the borrower deposited Rs 15 lakh and assured repayment under the one-time settlement scheme. Bank officials, who had earlier seen little hope of recovery, are now awaiting full settlement.
Despite these efforts, the bank remains under severe financial strain and is racing to demonstrate tangible progress before the RBI reviews its control measures by the end of March. The restrictions, imposed on October 8, cap withdrawals at Rs 10,000 per customer for six months and prohibit the bank from issuing new loans, renewing credit limits or accepting fresh deposits without prior approval.
