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UHello,
I need legal guidance regarding refund/encashment of shares purchased from ***** Co-operative Bank Ltd.
In 2018, while taking a personal loan from the bank, approximately ₹1 lakh worth of the bank’s shares were purchased as part of the process. Physical share certificates are available.
After closure of the loan in 2024, multiple requests were made to the bank through emails and calls seeking encashment/refund of the shares and resignation from membership.
After repeated follow-ups, the bank replied stating that due to RBI regulations and provisions under the Banking Regulation Act applicable to co-operative banks, they are unable to refund or encash the shares as it would reduce the bank’s share capital. They further stated that such shares are considered ownership/risk capital and therefore cannot be surrendered on demand.
However, despite several follow-ups, the bank has still not:
– Provided the current valuation of the shares
– Given dividend details
– Provided any timeline for refund/redemption
– Explained transfer/liquidation options
– Offered any practical resolution
The bank is repeatedly sending generic regulatory explanations without giving a clear solution regarding the specific shareholding.
I would like legal advice regarding:
1. Whether the bank can indefinitely refuse encashment/refund.
2. What legal remedies are available against the bank.
3. Whether complaint can be filed before RBI, Registrar of Co-operative Societies, Consumer Forum, or any other authority.
4. Whether a legal notice should be issued to the bank.
Thank you for reading.
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ASco-operative banks routinely refunded share capital once a loan was closed. However, the legal landscape transformed significantly with the Banking Regulation (Amendment) Act, 2020 (which came into deep enforcement for Primary Urban Co-operative Banks via subsequent RBI master circulars).and Holding back your financial information (valuation, dividend statements) after loan closure constitutes a clear Deficiency of Service under the Consumer Protection Act, 2019. You can file a case before the District Consumer Disputes Redressal Commission seeking directions for disclosure and compensation for mental harassment.…so A generic email can easily be deflected by a bank’s customer service desk with a template response. A formal legal notice issued by an advocate shifts the matter to the bank’s legal panel and executive management…
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