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Rahuri Peoples Co-operative Bank Ltd., Rahuri, Maharashtra

Co-operative bankRahuri, 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

18 Mar 2010

Case Brief

The Reserve Bank of India cancelled the licence of Rahuri Peoples Co-operative Bank Ltd., Rahuri, Maharashtra, after finding that the bank had ceased to be solvent and that revival efforts in consultation with the Government of Maharashtra had failed. RBI said the bank’s financial position was impaired, its operations had already been restricted under Section 35A directions from August 24, 2009, and it had no viable plan to turn around and meet regulatory requirements. Following a show-cause notice and review of the bank’s reply, RBI concluded that cancellation was necessary in the interest of depositors. The Registrar of Co-operative Societies, Maharashtra State was asked to initiate winding up and appoint a liquidator; the bank was also prohibited from carrying on banking business, including accepting and repaying deposits.

Why RBI Acted

Capital & exposure normsGovernance oversightOther

RBI said the bank had ceased to be solvent, all efforts to revive it in consultation with the Government of Maharashtra had failed, and depositors were being inconvenienced by continued uncertainty. A statutory inspection as of March 31, 2008 showed impaired financial position, and the bank had earlier been put under Section 35A directions restricting operations from August 24, 2009. After a show-cause notice dated August 27, 2009 and review of the reply, RBI concluded there was no viable turnaround plan or prospect of meeting regulatory prescriptions, and cancelled the bank's licence. RBI also requested the Registrar of Co-operative Societies, Maharashtra State to initiate winding up and appoint a liquidator.

Operating Impact

The bank cannot continue banking business and will enter liquidation proceedings. Depositors will be paid subject to the Deposit Insurance Scheme, up to the applicable ceiling and under usual terms and conditions; the immediate impact is on the bank, its depositors, and the winding-up/liquidation process.

Regulatory Basis

  • Section 35 A of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
  • Section 5(b) of the Banking Regulation Act, 1949 (AACS)

Action Facts

Primary Impact
License cancellation
Order Date
3 Mar 2010
Effective From
3 Mar 2010
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank