Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
9 Oct 2014
Case Brief
RBI cancelled the licence of The Ajmer Urban Co-operative Bank Ltd., Ajmer (Rajasthan) with effect from the close of business on September 19, 2014. The bank had ceased to be solvent, revival efforts had failed, and RBI said continued uncertainty was inconveniencing depositors. The release says the bank had persistent regulatory violations, worsening financial condition, large NPAs, heavy accumulated losses, negative CRAR, and bleak revival prospects; its response to the show-cause notice was not satisfactory. RBI also requested winding up and appointment of a liquidator, and noted that on liquidation depositors would be entitled to DICGC protection up to Rs 1 lakh.
Why RBI Acted
The Reserve Bank of India cancelled the licence of The Ajmer Urban Co-operative Bank Ltd., Ajmer (Rajasthan) with effect from the close of business on September 19, 2014. RBI said the bank had ceased to be solvent, all efforts to revive it had failed, and depositors were being inconvenienced by continued uncertainty. The release also cites persistent violations of regulatory guidelines, continued deterioration in financial condition, large NPAs, substantial accumulated losses, poor revival prospects, and an unsatisfactory reply to the show-cause notice issued under Section 22 of the Banking Regulation Act, 1949. RBI requested the Registrar of Co-operative Societies, Rajasthan to initiate winding up and appoint a liquidator.
Operating Impact
The bank can no longer carry on banking business from the effective date, and winding-up/liquidation steps are to follow. Depositors may claim insurance cover up to Rs 1 lakh under DICGC terms, while the bank itself faces cessation of operations as a banking entity.
Regulatory Basis
- Section 5(b) of the Banking Regulation Act, 1949
- Section 22 of the Banking Regulation Act
Action Facts
- Primary Impact
- License cancellation
- Order Date
- 19 Sept 2014
- Effective From
- 19 Sept 2014
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank