Skip to Main Content

Shimsha Sahakara Bank Niyamitha, Maddur, Mandya District, Karnataka

Co-operative bankMaddur, Karnataka

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

5 Jul 2024

Case Brief

RBI cancelled the licence of Shimsha Sahakara Bank Niyamitha, Maddur, Mandya District, Karnataka, by order dated July 05, 2024. The bank was found to lack adequate capital and earning prospects and to be non-compliant with multiple provisions of the Banking Regulation Act, 1949, including Sections 11(1) and 22(3)(a) to (e) read with Section 56. RBI also stated that the bank’s continuance would be prejudicial to depositors and public interest. As a consequence, the bank ceased to carry on banking business with effect from the close of business on July 05, 2024, and the Registrar of Cooperative Societies, Karnataka was requested to initiate winding up and appoint a liquidator.

Why RBI Acted

Capital & exposure normsLicensing breachCustomer protectionOther

By order dated July 05, 2024, RBI cancelled the licence of Shimsha Sahakara Bank Niyamitha, Maddur, Mandya District, Karnataka. RBI stated that the bank does not have adequate capital and earning prospects, and therefore does not comply with Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949. It also failed to comply with Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56. RBI said continuance of the bank was prejudicial to depositors, that it would be unable to pay present depositors in full, and that public interest would be adversely affected if it continued banking business.

Operating Impact

The bank can no longer conduct banking business, including accepting or repaying deposits, effective immediately from close of business on July 05, 2024. Depositors’ claims will move into liquidation and DICGC insurance payout processes, subject to applicable law, with most depositors reportedly entitled to full insured amounts up to ₹5 lakh.

Regulatory Basis

  • Section 11(1) of the Banking Regulation Act, 1949
  • Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949
  • Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949
  • Section 5(b) read with Section 56 of the Banking Regulation Act, 1949

Action Facts

Primary Impact
License cancellation
Order Date
5 Jul 2024
Effective From
5 Jul 2024
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank