Case Brief
What Happened
The Reserve Bank of India cancelled the banking licence of Raichur Zilla Mahila Pattana Sahakara Bank Niyamitha, Raichur (Karnataka) after the bank ceased to be solvent and efforts to revive it, in consultation with the Government of Karnataka, failed. RBI said statutory inspections had exposed serious problems: deterioration in financial condition, irregularities in the Board’s functioning, and severe liquidity stress. The bank had earlier been placed under Section 35A directions that barred fresh lending, investments, borrowings, acceptance of fresh deposits, and imposed a withdrawal cap of Rs.1,000 per depositor. After a show-cause notice for cancellation was issued and the bank failed to provide a viable revival plan, RBI cancelled the licence and asked the Registrar of Co-operative Societies, Karnataka to wind up the bank and appoint a liquidator. The bank was thereby prohibited from carrying on banking business, including accepting and repaying deposits.