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Mahatma Fule Urban Co-operative Bank Ltd., Patoda, Dist. Beed (Maharashtra)

Co-operative bankPatoda, 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

17 Sept 2013

Case Brief

The Reserve Bank of India cancelled the licence of Mahatma Fule Urban Co-operative Bank Ltd., Patoda, Dist. Beed (Maharashtra) with effect from August 24, 2013. RBI said the bank had ceased to be solvent and that depositors were being inconvenienced by the continued uncertainty. The release also recounts serious supervisory findings from inspections, including failure to maintain statutory liquidity reserves, breach of single-group exposure limits, unsecured advances beyond prescribed limits, a very high credit-deposit ratio, persistent irregularities, erosion of net worth and deposits, and other financial weaknesses. The bank had earlier been placed under all-inclusive directions, and a show-cause notice for cancellation of licence under Section 22 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies) was issued before the final cancellation.

Why RBI Acted

Capital & exposure normsReporting & disclosureGovernance oversightCustomer protectionLicensing breach

RBI cancelled the licence of Mahatma Fule Urban Co-operative Bank Ltd., Patoda, Dist. Beed (Maharashtra) effective August 24, 2013 because the bank had ceased to be solvent and the continued uncertainty was inconveniencing depositors. The background notes persistent statutory inspection findings, including failure to maintain statutory liquidity reserves, excess exposure and unsecured advances, worsening capital and asset quality, losses, and other irregularities; RBI had earlier placed the bank under all-inclusive directions and issued a show-cause notice under Section 22 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies).

Operating Impact

The bank can no longer carry on the business of banking and liquidation proceedings are to be initiated. Depositors will be eligible to claim insured amounts up to the statutory ceiling under the DICGC framework, subject to the scheme’s terms and conditions, and the Registrar of Co-operative Societies was requested to issue a winding-up order and appoint a liquidator. The effective date of the cancellation is August 24, 2013.

Regulatory Basis

  • Section 5(b) of the Banking Regulation Act, 1949 (AACS)
  • Section 36 (1) of the Act
  • Section 22 of the Act

Action Facts

Primary Impact
License cancellation
Order Date
28 Feb 2013
Effective From
24 Aug 2013
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank