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The Kittur Rani Channamma Mahila Pattana Sahakari Bank Niyamita

Co-operative bankHubli, 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

25 Jul 2007

Case Brief

The Reserve Bank of India cancelled the licence of The Kittur Rani Channamma Mahila Pattana Sahakari Bank Niyamita, Hubli, Karnataka, after concluding that the bank had ceased to be solvent and that revival efforts in consultation with the Government of Karnataka had failed. RBI said successive statutory inspections showed the bank's financial position had deteriorated further, the reply to the show-cause notice was unsatisfactory, and earlier irregularities continued to persist. Following cancellation, RBI requested the Registrar of Co-operative Societies, Karnataka, to order winding up and appoint a liquidator. The release also notes that the bank had previously been placed under Section 35A directions restricting operations, including a cap on deposit withdrawals of Rs.1,000 per depositor.

Why RBI Acted

Capital & exposure normsGovernance oversightCustomer protection

RBI cancelled the licence of The Kittur Rani Channamma Mahila Pattana Sahakari Bank Niyamita, Hubli, after concluding that the bank had ceased to be solvent, its financial position had deteriorated further on successive inspections, and all efforts to revive it in consultation with the Government of Karnataka had failed. The bank's reply to the show-cause notice was found unsatisfactory and without concrete revival plans. The release also notes that earlier irregularities persisted and, in the interest of depositors, RBI decided to take the extreme measure of cancelling the licence and initiating liquidation proceedings. The bank had earlier been placed under Section 35A directions restricting operations, including a cap on withdrawals of deposits.

Operating Impact

The bank can no longer carry on banking business, including accepting or repaying deposits, and liquidation proceedings are to commence. Depositors will be eligible for DICGC insurance up to Rs.1,00,000 per depositor, subject to the liquidation process.

Regulatory Basis

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

Action Facts

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