Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
8 Feb 2017
Case Brief
The Reserve Bank of India cancelled the licence of Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra, effective from the close of business on February 07, 2017. RBI said the bank had failed to comply with Sections 11(1) and 18 of the Banking Regulation Act, 1949 (AACS), and that its operations were being carried out in a manner detrimental to the interest of present and future depositors and the public, in violation of Sections 22(3)(a) to 22(3)(e) and Section 24 of the Act. RBI also noted that the bank was not in a position to pay its depositors in full when claims accrued, that there was no scope for revival, and that allowing it to continue business would adversely affect public interest. Consequent to the cancellation, the bank was prohibited from conducting the business of banking, and the Registrar of Co-operative Societies, Maharashtra, was requested to initiate winding up and appoint a liquidator.
Why RBI Acted
RBI cancelled the licence of Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra, with effect from the close of business on February 07, 2017. The bank had not complied with Sections 11(1) and 18 of the Banking Regulation Act, 1949 (AACS), and its operations were being carried out in a manner detrimental to the interest of present and future depositors and the public, in violation of Sections 22(3)(a) to 22(3)(e) and Section 24 of the Act. RBI further stated that the bank was not in a position to pay its present and future depositors in full as and when claims accrue, that its financial position left no scope for revival, and that public interest would be adversely affected if it were allowed to continue banking business. RBI also requested the Registrar of Co-operative Societies, Maharashtra, to order winding up and appoint a liquidator.
Operating Impact
The bank must stop all banking business immediately. Liquidation proceedings are to begin, and deposit repayment will proceed under the DICGC framework, subject to the usual terms and conditions and the ₹1,00,000 insurance ceiling per depositor. Depositors are directly affected, while the bank’s operations are effectively terminated.
Regulatory Basis
- Sections 11(1) and 18 of the Banking Regulation (B R) Act, 1949 (AACS)
- Section 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), 22(3)(e) and 24 of the Banking Regulation Act, 1949 (AACS)
- Section 5 (b) of the B R Act,1949 (AACS)
Action Facts
- Primary Impact
- License cancellation
- Effective From
- 7 Feb 2017
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank