Skip to Main Content

Gujarat Industrial Co-operative Bank Ltd., Ahmedabad (Gujarat)

Co-operative bankAhmedabad, Gujarat

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

14 Nov 2011

Case Brief

The Reserve Bank of India cancelled the licence of Gujarat Industrial Co-operative Bank Ltd., Ahmedabad (Gujarat) before commencement of business on November 11, 2011. RBI said the bank had ceased to be solvent, revival efforts in consultation with the Government of Gujarat had failed, and the continuing uncertainty was inconveniencing depositors. The release also describes severe deterioration in the bank's financial condition, failed revival and merger attempts, serious irregularities, and non-compliance with Sections 11(1) and 22(3)(a) & (b) of the Banking Regulation Act, 1949 (AACS). RBI noted that the bank was therefore prohibited from carrying on the business of banking and that liquidation proceedings would be initiated, with depositor repayment to follow under the DICGC framework.

Why RBI Acted

Capital & exposure normsGovernance oversightReporting & disclosureLicensing breach

RBI cancelled the banking licence of Gujarat Industrial Co-operative Bank Ltd., Ahmedabad (Gujarat) after concluding that the bank had ceased to be solvent, revival efforts in consultation with the Government of Gujarat had failed, and continued uncertainty was inconveniencing depositors. The release cites a deteriorating financial position, negative net worth and CRAR, high NPAs, erosion of deposits, failed revival plans and merger attempts, and serious irregularities. It also states that the bank did not comply with Sections 11(1) and 22(3)(a) & (b) of the Banking Regulation Act, 1949 (AACS).

Operating Impact

The bank can no longer carry on banking business and is subject to liquidation proceedings. Depositors will be eligible to claim insured deposits up to the DICGC ceiling of Rs 1,00,000, subject to applicable terms and conditions. The action affects the bank, its depositors, and the liquidation authority.

Regulatory Basis

  • Section 35A of the Banking Regulation Act, 1949 (AACS)
  • Section 36 AAA of Banking Regulation Act, 1949 (AACS)
  • Section 22 of the Banking Regulation Act, 1949 (AACS)
  • Section 35 of the Banking Regulation Act, 1949 (AACS)
  • Sections 11(1) and 22(3)(a) & (b) of the Act ibid
  • Section 5(b) of the Banking Regulation Act, 1949 (AACS)

Action Facts

Primary Impact
License cancellation
Order Date
11 Nov 2011
Effective From
11 Nov 2011
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank