Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
8 Jan 2010
Case Brief
The Reserve Bank of India cancelled the licence of Shree Sinnar Vyapari Sahakari Bank Ltd., Sinnar (Maharashtra) with effect after the close of business on December 31, 2009. RBI said the bank had ceased to be solvent, that revival attempts in consultation with the Government of Maharashtra had failed, and that the bank lacked a viable turnaround plan. The release notes that earlier statutory inspection had shown the bank’s financial position to be impaired and that RBI had already placed restrictions on its operations under Section 35A. RBI also requested the Registrar of Co-operative Societies, Maharashtra State to initiate winding up and appoint a liquidator. Following cancellation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits, and deposit repayment will proceed subject to DICGC terms and the liquidation process.
Why RBI Acted
RBI cancelled the banking licence of Shree Sinnar Vyapari Sahakari Bank Ltd., Sinnar (Maharashtra) after finding that it had ceased to be solvent, that efforts to revive it in consultation with the Government of Maharashtra had failed, and that the bank did not have a viable plan of action for revival. The bank’s financial position had earlier been found impaired in statutory inspection, and RBI had already issued directions under Section 35A of the Banking Regulation Act, 1949 restricting its operations from close of business on May 12, 2009. RBI concluded that the possibility of revival was remote and took the measure in the interest of depositors; it also requested the Registrar of Co-operative Societies, Maharashtra State to issue winding-up and liquidator orders.
Operating Impact
The bank can no longer conduct banking business, accept deposits, or repay deposits as an operating bank. Liquidation proceedings are to begin, and depositors will be paid subject to the Deposit Insurance Scheme, up to the applicable DICGC ceiling and terms. The cancellation affects the bank, its depositors, and the winding-up authorities.
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
- 31 Dec 2009
- Effective From
- 31 Dec 2009
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank