Case Brief
What Happened
The Reserve Bank of India cancelled the banking licence of The Srikakulam Co-operative Urban Bank Ltd., Srikakulam, Andhra Pradesh, which had been granted under Section 22 of the Banking Regulation Act, 1949 (AACS). RBI said the bank had ceased to be solvent, revival attempts had failed, and the bank was not in a position to repay depositors fully as claims fell due. The release details long-term deterioration in financial health, including negative net worth, negative CRAR, rising deposit erosion, and high NPAs. It also records defaults in CRR and SLR maintenance, KYC violations, breaches of operational instructions, and the board’s failure to act promptly against fraud committed by the managing director. RBI stated the bank was non-compliant with several provisions of the Act and that allowing it to continue would be detrimental to depositors and contrary to public interest. The licence cancellation was accompanied by initiation of liquidation proceedings, and the bank was prohibited from carrying on banking business, including acceptance and repayment of deposits.