The Municipal Co-operative Bank Ltd., Ahmedabad

RBI cancelled the banking licence of The Municipal Co-operative Bank Ltd., Ahmedabad, and asked for liquidation proceedings to begin. The bank had become insolvent and had serious financial and compliance issues.

The bank can no longer conduct banking business and will move into liquidation. Depositors will receive insured amounts up to the DICGC ceiling subject to the scheme’s conditions, while the liquidator and registrar process winding up; the bank’s customers and creditors are affected by the cessation of operations and liquidation process.

• Section 22 of the B.R.Act, 1949 (AACS)
• Section 35 of the BR Act, 1949 (AACS)
• Section 36 (1) of the B.R.Act, 1949 (AACS)

+1 more in the case brief

RBI extended its existing directions on The Municipal Co-operative Bank Ltd., Ahmedabad for another six months. The order continues the bank’s operating restrictions until February 14, 2014, subject to review.

The bank remains under the RBI’s Section 35A operating restrictions for the extended period, subject to further review. Depositors, customers, and counterparties are affected to the extent the existing directions limit the bank’s normal operations during this period.

• Section 35A of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)

RBI has extended its existing directions on The Municipal Co-operative Bank Ltd., Ahmedabad by six months. The restrictions now continue until February 14, 2013, subject to review.

The bank remains subject to RBI-imposed operating restrictions until February 14, 2013, unless the directions are reviewed or changed earlier. Depositors, members, and counterparties must continue to operate within the constraints of the modified directive.

• sub–section (1) of Section 35 A of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)

RBI imposed a penalty of Rs 1 lakh on The Municipal Co-operative Bank Ltd., Ahmedabad. The action followed violations of KYC norms and instructions on unsecured advances.

The bank must absorb the monetary penalty; the release does not describe any operational restriction or ongoing compliance order beyond the fine. The action is adverse only in the sense of financial sanction and regulatory finding against the cooperative bank.

• Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS)