Case Brief
What Happened
The Reserve Bank of India cancelled the licence of The Baroda Mercantile Co-operative Bank Ltd., Vadodara, Gujarat, after concluding that the bank had ceased to be solvent and that efforts to revive it had failed. RBI had earlier placed Section 35A directions with a withdrawal cap, but the situation worsened: the bank’s financial condition deteriorated further, deposits were eroding, and the realizable value of paid-up capital and reserves was negative. As the bank had no viable revival plan, RBI took the extreme step of cancelling the licence and requested the Registrar of Co-operative Societies, Gujarat to initiate winding-up and appoint a liquidator.