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The Baripada Urban Co-operative Bank Ltd., Baripada (Odisha)

Co-operative bankBaripada, Odisha

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

30 Oct 2014

Case Brief

The Reserve Bank of India cancelled the licence of The Baripada Urban Co-operative Bank Ltd., Baripada (Odisha), effective October 16, 2014, after concluding that the bank had ceased to be solvent, revival attempts had failed, and continuing uncertainty was harming depositors. The release describes major adverse findings from statutory inspections, including negative capital and CRAR, negative net worth, substantial accumulated losses, high gross and net NPAs, erosion in deposits, and weak recovery prospects. RBI also noted irregularities such as overstating profits by using unrealized interest on NPAs, failure to report CTR/STR transactions to FIU-IND, and non-compliance with several provisions of the Banking Regulation Act. The bank had earlier been placed under All-Inclusive Directions under Section 35A, which were extended until November 18, 2014, but the situation continued to deteriorate. RBI consequently cancelled the licence, asked the Registrar of Co-operative Societies, Odisha to initiate winding up and appoint a liquidator, and stated that the bank is prohibited from carrying on banking business.

Why RBI Acted

Capital & exposure normsReporting & disclosureGovernance oversightKYC / AMLLicensing breach

RBI cancelled the licence of The Baripada Urban Co-operative Bank Ltd., Baripada (Odisha) because the bank had become insolvent, revival prospects were bleak, and continued operation was seen as detrimental to depositors. The release cites persistent poor financial health: negative capital/CRAR and net worth, large accumulated losses, very high gross and net NPAs, erosion in deposits, unrealized interest on NPAs being used to overstate profits, non-reporting of CTR/STRs to FIU-IND, outstanding NPAs against ex-directors, and non-compliance with Sections 11(1), 18, 22(3)(a), 22(3)(b) and 31 of the Banking Regulation Act. The bank had earlier been placed under All-Inclusive Directions under Section 35A, but that did not restore viability, and the RBI therefore issued a show-cause notice before cancelling the licence and requesting winding up and liquidation.

Operating Impact

The bank can no longer carry on banking business and enters liquidation proceedings. Depositors will be paid insurance-covered amounts up to Rs 1,00,000 subject to DICGC terms, while other claims depend on the liquidation process. The cancellation and winding-up request affect the bank, its depositors, and creditors; the effective date is October 16, 2014.

Regulatory Basis

  • Section 35 of the Banking Regulation Act, 1949 (AACS)
  • Sections 11(1), 18, 22(3)(a), 22(3)(b) and 31 of the Act
  • Section 22 of the Act
  • section 5(b) of the Act
  • Section 35A of the BR Act

Action Facts

Primary Impact
License cancellation
Order Date
16 Oct 2014
Effective From
16 Oct 2014
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank