Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
16 Dec 2008
Case Brief
The Reserve Bank of India cancelled the licence of Chalisgaon People's Co-operative Bank Ltd., Chalisgaon, District Jalgaon, Maharashtra, after close of business on December 03, 2008. RBI said the bank had ceased to be solvent, efforts to revive it in consultation with the Government of Maharashtra had failed, and the bank did not have any viable plan of action for revival. The release cites deteriorating financial position in statutory inspections as of March 31, 2006 and March 31, 2007, followed by supervisory action and a show-cause notice. RBI also requested the Registrar of Co-operative Societies, Maharashtra to initiate winding-up and appoint a liquidator. Upon liquidation, depositors would be entitled to insurance cover up to Rs. 1,00,000 subject to the Deposit Insurance and Credit Guarantee Corporation scheme.
Why RBI Acted
RBI cancelled the banking licence of Chalisgaon People's Co-operative Bank Ltd. after concluding that the bank had ceased to be solvent, that all efforts to revive it in consultation with the Government of Maharashtra had failed, and that there was no viable plan for revival or turnaround. The release notes that statutory inspection findings for as of March 31, 2006 and March 31, 2007 showed impairment and further deterioration in the bank's financial position, leading to supervisory action, a show-cause notice dated February 26, 2008, and ultimately cancellation of the licence after close of business on December 03, 2008. The Registrar of Co-operative Societies, Maharashtra was requested to order winding up and appoint a liquidator.
Operating Impact
The bank is prohibited from carrying on banking business, including accepting and repaying deposits, and liquidation proceedings will commence. Depositors must await repayment through the liquidation/DICGC process, subject to scheme terms and the insurance ceiling. The effective cancellation took place after close of business on December 03, 2008.
Regulatory Basis
- Section 35 A of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
- Section 5(b) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- License cancellation
- Order Date
- 3 Dec 2008
- Effective From
- 3 Dec 2008
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank