Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
8 Oct 2007
Case Brief
The Reserve Bank of India cancelled the licence of Indira Priyadarshini Mahila Nagrik Sahakari Bank Mydt., Chhattisgarh State, after determining that the bank had ceased to be solvent and that attempts to revive it had failed. RBI noted that statutory inspections revealed serious irregularities and deficiencies, and that the bank’s financial position was severely impaired. The bank had already been placed under Section 35A directions, and the Registrar of Co-operative Societies had superseded its Board of Directors. Following a show-cause notice and review of revival options, RBI concluded that the bank had no viable revival plan and that the chances of revival were remote. The release states that the licence cancellation is followed by winding up and liquidation proceedings, and depositors would be entitled to DICGC insurance up to Rs. 1,00,000 per depositor.
Why RBI Acted
The Reserve Bank of India cancelled the licence of Indira Priyadarshini Mahila Nagrik Sahakari Bank Mydt., Chhattisgarh State, after concluding that the bank had ceased to be solvent and that all efforts to revive it had failed. The release says statutory inspection under Section 35 of the Banking Regulation Act, 1949 (as applicable to co-operative societies) revealed serious irregularities in functioning and that the bank’s financial position was severely impaired. The bank had earlier been placed under directions under Section 35A, and the Registrar of Co-operative Societies had superseded its Board of Directors. RBI issued a show-cause notice and, finding no viable revival plan and remote prospects of recovery, cancelled the licence in the interest of depositors; winding up and liquidation were also sought.
Operating Impact
The bank is prohibited from carrying on banking business, including accepting and repaying deposits. Liquidation proceedings are to follow, and depositors will be paid insured amounts up to the DICGC limit, with the remaining claims subject to the winding-up process.
Regulatory Basis
- Section 35 of the Banking Regulation Act, 1949 (As applicable to Cooperative Societies)
- Section 35A 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 Oct 2007
- Effective From
- 3 Oct 2007
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank