Case Brief
What Happened
The Reserve Bank of India cancelled the banking licence of The Karamsad Urban Co-operative Bank Ltd., Karamsad, Gujarat on 9 December 2006. RBI said the bank had ceased to be solvent, its financial condition had deteriorated further, and all revival efforts had failed. The bank was unable to repay matured fixed deposits because of a liquidity crunch, and RBI had earlier placed withdrawal restrictions under Section 35A. Following a show-cause notice and finding no viable revival plan, RBI cancelled the licence as a final step to protect depositors. RBI also asked the Registrar of Co-operative Societies, Gujarat to wind up the bank and appoint a liquidator.