Case Brief
What Happened
RBI cancelled the banking licence of The Madhavpura Mercantile Co-operative Bank Ltd., Ahmedabad (Gujarat), effective from the close of business on June 04, 2012. The release says the bank had ceased to be solvent, efforts to revive it had failed, and depositors were being harmed by continued uncertainty. RBI also described the bank’s financial position as highly precarious, citing negative net worth, full deposit erosion, very high NPAs, accumulated losses, and the absence of any viable revival or merger proposal. After a show-cause notice and consideration of alternative revival proposals, RBI concluded that the bank was not complying with statutory requirements and that public interest would be adversely affected if it were allowed to continue banking operations. RBI also requested the Central Registrar of Co-operative Societies to initiate winding up and appoint a liquidator.