Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi

RBI cancelled the licence of Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi, Gujarat. The bank must cease banking business immediately and winding-up proceedings are to be initiated.

With immediate effect from the close of business on January 12, 2024, the bank cannot conduct banking business, including accepting or repaying deposits. Depositors’ claims will be handled through liquidation, with insured deposits eligible for DICGC coverage up to ₹5 lakh per depositor subject to the applicable law.

• Section 11(1) of the Banking Regulation Act, 1949
• Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949
• Section 22(3)(a) read with Section 56 of the Banking Regulation Act, 1949

+4 more in the case brief

RBI has extended its existing Section 35A directions against Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi for another three months. The earlier terms continue unchanged.

The bank remains under RBI-imposed operating conditions for the extended period and must continue complying with the existing directive until close of business on March 02, 2024, unless further modified. The action affects the bank’s operational flexibility and may indirectly affect customers through whatever restrictions are contained in the unchanged directive.

• Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS)
• sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS)

RBI placed Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi under operating restrictions under Section 35A. The bank faces limits on lending, deposits, liabilities, payments, and withdrawals.

The bank must operate under RBI-imposed restrictions for six months unless modified earlier. Customers face withdrawal limits, and the bank cannot expand lending, accept fresh deposits freely, take on new liabilities, or dispose of assets without prior RBI approval.

• Section 35 A of the Banking Regulation Act, 1949
• Section 56 of the Banking Regulation Act, 1949
• Section 18A of the DICGC Act (amendment) 2021