Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
29 Aug 2008
Case Brief
The Reserve Bank of India cancelled the licence of Miraj Urban Co-operative Bank Limited, Miraj, Maharashtra after finding that the bank had ceased to be solvent and that revival efforts had failed. The release states that the bank's financial condition had been impaired in earlier inspections, that Section 35A directions had already restricted its operations including withdrawal limits, and that a later inspection showed further deterioration, 49.8% deposit erosion, and no concrete merger proposal. RBI also asked the Registrar of Co-operative Societies, Maharashtra to initiate winding up and appoint a liquidator. Consequent to the cancellation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits, and depositors' claims will be processed subject to the Deposit Insurance Scheme and applicable limits.
Why RBI Acted
RBI cancelled the banking licence of Miraj Urban Co-operative Bank Limited, Miraj, Maharashtra after concluding that the bank had ceased to be solvent and that repeated efforts to revive it, including consultation with the Government of Maharashtra and exploration of merger options, had failed. The release notes that a statutory inspection had shown the bank's financial position to be impaired, earlier Section 35A directions had already restricted operations including a cap on deposit withdrawals, and a subsequent inspection as of March 31, 2008 showed further deterioration, deposit erosion of 49.8%, and no concrete merger proposal. RBI also requested the Registrar of Co-operative Societies, Maharashtra to wind up the bank and appoint a liquidator.
Operating Impact
The bank can no longer conduct banking business, accept deposits, or repay deposits except through the liquidation and insurance process. Depositors will be paid subject to DICGC terms and the Rs. 1,00,000 insurance ceiling, while the Registrar is expected to wind up the bank and appoint a liquidator.
Regulatory Basis
- Section 35 A of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
- Section 110 A of Maharashtra Co-operative Societies Act, 1960
- Section 22 of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
- Section 5(b) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- License cancellation
- Order Date
- 26 Aug 2008
- Effective From
- 26 Aug 2008
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank