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Dyanopasak Urban Co-operative Bank Ltd., Parbhani

Co-operative bankParbhani, Maharashtra

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

License cancellation

License cancellation · Fresh imposition

S5

Published by RBI

12 Sept 2008

Case Brief

The Reserve Bank of India cancelled the licence of Dyanopasak Urban Co-operative Bank Ltd., Parbhani, on 12 August 2008. RBI said the bank had ceased to be solvent, its financial position was impaired, and repeated efforts to revive it in consultation with the Government of Maharashtra had failed. The bank had earlier been placed under Section 35A directions restricting operations, and a show-cause notice was later issued before RBI finally cancelled the licence. RBI also requisitioned the Commissioner for Co-operation and Registrar of Co-operative Societies, Maharashtra, to issue a winding-up order and appoint a liquidator. After cancellation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits.

Why RBI Acted

Capital & exposure normsCustomer protectionGovernance oversight

RBI cancelled the licence of Dyanopasak Urban Co-operative Bank Ltd., Parbhani, Maharashtra after inspection showed its financial position was impaired and it had ceased to be solvent. The bank had been placed under Section 35A directions restricting operations on 13 March 2008, and a show-cause notice was issued on 4 April 2008. After examining the reply and finding no viable proposal for turnaround or required regulatory compliance, RBI concluded revival was remote and took the extreme step of cancelling the licence in the interest of depositors.

Operating Impact

The bank cannot conduct banking business any longer, including accepting or repaying deposits. The registrar is to initiate winding up and appoint a liquidator, and depositors may claim insurance cover up to the applicable DICGC ceiling subject to terms and conditions.

Regulatory Basis

  • Section 35A of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies)
  • Section 5(b) of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies)

Action Facts

Primary Impact
License cancellation
Order Date
12 Aug 2008
Effective From
12 Aug 2008
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank