Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
23 Dec 2010
Case Brief
The Reserve Bank of India cancelled the banking licence of The Golaghat Urban Co-operative Bank Ltd., Golaghat (Assam), originally granted on October 17, 1997 under Section 22 of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The RBI said the bank had ceased to be solvent, all efforts to revive it had failed, and allowing it to continue banking business would be detrimental to present and future depositors. The release also refers to serious deficiencies in the statutory inspection as on March 31, 2008, deterioration to a precarious financial position in the inspection as on March 31, 2009, a liquidity crunch, restrictions already placed on deposit withdrawals, and an unsatisfactory response to the show-cause notice dated June 08, 2010. The Registrar of Co-operative Societies, Government of Assam was requested to wind up the bank and appoint a liquidator.
Why RBI Acted
The RBI cancelled the banking licence granted on October 17, 1997 under Section 22 of the Banking Regulation Act, 1949 (as applicable to co-operative societies) because the bank had ceased to be solvent, revival efforts had failed, and continuing to allow it to conduct banking business would be detrimental to the interests of present and future depositors. The release also notes serious deficiencies found in the statutory inspection as on March 31, 2008, deterioration and precariousness in the inspection as on March 31, 2009, liquidity crunch, and the bank's unsatisfactory reply to the June 08, 2010 show-cause notice. A liquidation process was requested to be initiated by the Registrar of Co-operative Societies, Government of Assam.
Operating Impact
With immediate effect, the bank must stop conducting banking business, including acceptance and repayment of deposits. Liquidation proceedings are to begin, and depositor repayments will be handled subject to the Deposit Insurance Scheme, up to the applicable DICGC ceiling and conditions. Depositors are directly affected by the cessation of operations and the move to winding up.
Regulatory Basis
- Section 22 of the Banking Regulation Act, 1949
- Section 5(b) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- License cancellation
- Order Date
- 16 Dec 2010
- Effective From
- 16 Dec 2010
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank