The Faiz Mercantile Cooperative Bank Ltd., Nashik, Maharashtra

RBI cancelled the licence of The Faiz Mercantile Cooperative Bank Ltd., Nashik, Maharashtra, effective close of business on December 30, 2023. The bank is no longer permitted to carry on banking business.

With immediate effect from the stated cutoff, the bank cannot conduct banking business, including accepting or repaying deposits. On liquidation, depositors may claim insurance up to ₹5 lakh per depositor from DICGC, subject to law; RBI noted most depositors were eligible for full insurance coverage.

• Section 11(1) of the Banking Regulation Act, 1949
• Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949
• Section 22(3)(a) read with Section 56 of the Banking Regulation Act, 1949

+5 more in the case brief

RBI has extended its All-inclusive Directions on The Faiz Mercantile Cooperative Bank Ltd., Nashik for three more months, through March 03, 2024. The existing terms remain unchanged.

The bank remains subject to the existing RBI operational restrictions under the AID framework until close of business on March 03, 2024, unless reviewed or modified earlier. Customers, including depositors and counterparties, continue to operate under the same restrictions as before; no new terms are introduced in this release.

• Section 35A read with Section 56 of the Banking Regulation Act, 1949
• sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949

RBI has extended its existing Directions on The Faiz Mercantile Cooperative Bank Ltd., Nashik. The restriction now continues from September 4, 2023 to December 3, 2023, subject to review.

The bank remains subject to the same RBI operating conditions through December 3, 2023, unless further modified on review. The extension continues to constrain the bank’s operations in the manner set out in the underlying Directions, affecting the bank and its customers.

• Section 35A
• Section 56
• sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949

RBI placed The Faiz Mercantile Cooperative Bank Ltd., Nasik under restrictive Directions under Section 35A read with Section 56. The bank faces limits on lending, deposits, liabilities, payments, and asset disposal, with depositor withdrawals capped at ₹2,000.

The bank must operate under RBI-imposed restrictions for six months unless modified earlier, with core activities constrained and depositor withdrawals capped. Borrowers, depositors, and counterparties are directly affected because new lending, fresh deposits, payments, and asset disposal are restricted, while eligible depositors may rely on DICGC insurance up to the statutory ceiling. The effective date is the close of business on March 03, 2023.

• Section 35 A of the Banking Regulation Act, 1949
• Section 56 of the Banking Regulation Act, 1949
• Section 18A of the DICGC Act (amendment) 2021

RBI imposed a penalty of Rs 25,000 on The Faiz Mercantile Co-operative Bank Ltd., Nasik for violating RBI directions on board governance and exposure norms.

The bank must absorb the monetary penalty and address the compliance lapse identified by RBI. The order does not itself invalidate customer transactions, but it signals heightened regulatory scrutiny over director-related lending and exposure norm compliance.

• Section 47 A (1) (c)
• Section 46 (4) (i)
• Section 56 of the Banking Regulation Act, 1949