Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
6 Sept 2010
Case Brief
The Reserve Bank of India cancelled the banking licence of Anyonya Co-operative Bank Ltd., Vadodra, Gujarat, after determining that the bank had ceased to be solvent and that revival efforts had failed. The release says the bank had a severely deteriorated financial position, with negative CRAR and net worth, erosion of deposits, default in maintaining SLR, non-compliance with key provisions of the Banking Regulation Act, 1949 (AACS), violation of Section 6 through an MoU with Religare Enterprises Ltd., and inadequate identification and recovery of NPAs. RBI had earlier issued a show-cause notice under Section 22 of the Act, but the bank’s response and revival proposal were not found satisfactory. In the absence of any concrete, feasible revival or merger plan, RBI cancelled the licence and requested the Registrar of Co-operative Societies, Gujarat to initiate winding up and appoint a liquidator.
Why RBI Acted
RBI cancelled the licence of Anyonya Co-operative Bank Ltd., Vadodra, Gujarat after concluding that the bank had ceased to be solvent and that efforts to revive it in consultation with the Government of Gujarat had failed. The release notes a very weak financial position, negative CRAR and net worth, erosion of deposits, default in maintaining SLR, non-compliance with Sections 11(1) and 22(3)(a) & (b) of the Banking Regulation Act, 1949 (AACS), violation of Section 6 by entering into an MoU with Religare Enterprises Ltd., and inadequate identification/recovery of NPAs. RBI had earlier issued a show-cause notice under Section 22 for cancellation of licence; the reply and revival proposal were found unsatisfactory, and no concrete or viable merger/revival plan existed. RBI therefore took the extreme measure of cancelling the licence and initiating liquidation proceedings.
Operating Impact
The bank can no longer carry on banking business, including acceptance and repayment of deposits. Liquidation proceedings are to begin, and depositors will receive repayment subject to DICGC terms and conditions, up to the insurance ceiling of Rs. 1,00,000 per depositor.
Regulatory Basis
- Section 35 A of the Banking Regulation Act, 1949 (AACS)
- section 22 of the Banking Regulation Act, 1949 (AACS)
- Section 5(b) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- License cancellation
- Order Date
- 3 Sept 2010
- Effective From
- 3 Sept 2010
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank