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Nagrik Sahakari Bank Maryadit, Ratlam, (Madhya Pradesh)

Co-operative bankRatlam, Madhya Pradesh

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

7 Dec 2005

Case Brief

The Reserve Bank of India cancelled the licence of Nagrik Sahakari Bank Maryadit, Ratlam, Madhya Pradesh on December 7, 2005. RBI said the bank had ceased to be solvent, its financial position had continued to worsen, and efforts to revive it with the Government of Madhya Pradesh had failed. The bank had earlier been classified as sick, placed under rehabilitation, subjected to a show-cause notice, and later put under operational directions restricting its business. RBI took the final step of cancelling the licence in the interest of depositors and requested the Registrar of Cooperative Societies, Madhya Pradesh to initiate winding-up and appoint a liquidator. Upon liquidation, depositors would be entitled to insured repayment up to Rs. 1,00,000 through DICGC, and the bank was prohibited from carrying on banking business including acceptance and repayment of deposits.

Why RBI Acted

Capital & exposure normsGovernance oversightCustomer protection

RBI stated that Nagrik Sahakari Bank Maryadit, Ratlam had ceased to be solvent, efforts to revive it in consultation with the Government of Madhya Pradesh had failed, and continued uncertainty was inconveniencing depositors. The bank had earlier been classified as sick, placed under rehabilitation, and later served a show-cause notice after its financial position was found precarious. RBI also noted that the bank had been placed under directions restricting its operations from March 7, 2005. As a final step, RBI cancelled the licence on December 7, 2005 in the interest of depositors, and requested the Registrar of Cooperative Societies to wind up the bank and appoint a liquidator.

Operating Impact

The bank can no longer carry on banking business, including accepting or repaying deposits. Liquidation proceedings will begin, and eligible depositors will be paid insured amounts up to Rs. 1,00,000 under the DICGC framework; the Registrar of Cooperative Societies was asked to appoint a liquidator.

Regulatory Basis

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

Action Facts

Primary Impact
License cancellation
Order Date
7 Dec 2005
Effective From
7 Mar 2005
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank