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The Harugeri Urban Co-operative Credit Bank Ltd., Harugeri, Karnataka

Co-operative bankHarugeri, Karnataka

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

5 Feb 2007

Case Brief

The Reserve Bank of India cancelled the licence of The Harugeri Urban Co-operative Credit Bank Ltd., Harugeri, Karnataka, effective after close of business on January 22, 2007. RBI said the bank had ceased to be solvent, efforts to revive it had failed, and continued uncertainty was inconveniencing depositors. The release also notes that a special scrutiny had revealed severe liquidity problems, and a later statutory inspection showed the financial position had further deteriorated and was precarious. RBI had earlier placed the bank under Section 35A directions restricting core activities such as granting or renewing loans, making investments, borrowing, and accepting fresh deposits, and the board had been superseded with an administrator appointed. Following cancellation, RBI requested winding up and appointment of a liquidator; depositors would be entitled to repayment up to Rs.1,00,000 through DICGC insurance.

Why RBI Acted

Capital & exposure normsGovernance oversightOther

RBI cancelled the licence of Harugeri Urban Co-operative Credit Bank Ltd. after concluding that the bank had ceased to be solvent and that all efforts to revive it in consultation with the Government of Karnataka had failed. The release says the bank had severe liquidity problems and other deficiencies, its financial position had further deteriorated and was precarious, and RBI acted after issuing a show-cause notice and considering the bank's reply. RBI also requested the Registrar of Co-operative Societies, Karnataka to initiate winding up and appoint a liquidator.

Operating Impact

The bank can no longer carry on banking business, including accepting or repaying deposits, and liquidation proceedings are to begin. Depositors will be paid only up to the insured limit of Rs.1,00,000 from DICGC, while remaining claims depend on liquidation recoveries.

Regulatory Basis

  • Section 35A of the Banking Regulation Act 1949(AACS)
  • Section 5(b) of the Banking Regulation Act, 1949(AACS)

Action Facts

Primary Impact
License cancellation
Order Date
22 Jan 2007
Effective From
22 Jan 2007
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank