Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
26 Oct 2009
Case Brief
The Reserve Bank of India cancelled the licence of Suvidha Mahila Nagrik Sahakari Bank Maryadit, Hoshangabad (M.P) after determining that the bank had ceased to be solvent, that repeated revival efforts had failed, and that continued uncertainty was harming depositors. The release notes that statutory inspections indicated impairment and later deterioration in the bank's financial condition; RBI had earlier issued directions under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies) restricting operations from October 5, 2004. RBI also issued a show-cause notice on December 24, 2007, but found no viable revival plan and concluded that revival was remote. Following cancellation, the Registrar of Co-operative Societies, Madhya Pradesh was asked to start winding up and appoint a liquidator, and the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits.
Why RBI Acted
RBI cancelled the banking licence of Suvidha Mahila Nagrik Sahakari Bank Maryadit, Hoshangabad (M.P), because the bank had ceased to be solvent, repeated efforts to revive it in consultation with the Government of Madhya Pradesh had failed, and depositors were being inconvenienced by continued uncertainty. The release says statutory inspections showed the bank's financial position was impaired and later deteriorated further; the bank was earlier placed under directions under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies) from the close of business on October 5, 2004, restricting its operations. RBI issued a show-cause notice on December 24, 2007, but found no viable plan of action for revival and concluded that the possibility of revival was remote. On cancellation, the Registrar of Co-operative Societies, Madhya Pradesh was requested to initiate winding up and appoint a liquidator.
Operating Impact
The bank can no longer conduct banking business or accept/repay deposits, and liquidation proceedings are expected to begin. Depositors will be paid subject to Deposit Insurance and Credit Guarantee Corporation terms, up to the applicable ceiling of Rs. 1,00,000 per depositor.
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
- 21 Oct 2009
- Effective From
- 21 Oct 2009
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank