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Shri Mahesh Sahakari Bank Ltd., Jalgaon, Maharashtra

Co-operative bankJalgaon, 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

26 Mar 2010

Case Brief

The Reserve Bank of India cancelled the licence of Shri Mahesh Sahakari Bank Ltd., Jalgaon, Maharashtra after finding that the bank had ceased to be solvent and that efforts to revive it in consultation with the Government of Maharashtra had failed. RBI noted that the bank’s financial position had deteriorated further in statutory inspections, no viable revival plan or merger proposal had been submitted, and the situation had become precarious. The Registrar of Co-operative Societies, Maharashtra was requested to initiate winding up and appoint a liquidator. RBI also noted that, consequent to cancellation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits.

Why RBI Acted

Governance oversightReporting & disclosureCapital & exposure norms

Statutory inspection showed the bank’s position had deteriorated and then further worsened, turning precarious. RBI had already issued Section 35A directions restricting operations, and after a show-cause notice, concluded the bank had no viable plan of action for revival, its financial projections were insufficient, and it had failed to submit any concrete merger proposal. On this basis, and because the bank had ceased to be solvent, RBI cancelled the licence and requested winding up and appointment of a liquidator.

Operating Impact

The bank cannot continue banking business and will enter liquidation proceedings. Depositors will be repaid subject to the Deposit Insurance and Credit Guarantee Corporation scheme, up to the statutory ceiling and under applicable terms and conditions. The prohibition covers acceptance and repayment of deposits and remains in force after licence cancellation.

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
19 Mar 2010
Effective From
19 Mar 2010
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank