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The Priyadarshini Mahila Sahakari Bank Ltd., Latur

Co-operative bankLatur, Maharashtra

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 2008

Case Brief

The Reserve Bank of India cancelled the licence of The Priyadarshini Mahila Sahakari Bank Ltd., Latur, Maharashtra, after concluding that the bank had ceased to be solvent and that all efforts to revive it had failed. RBI noted that the bank’s financial position was impaired/precarious, earlier Section 35A directions had restricted its operations, and no viable turnaround plan or regulatory-compliance proposal was available. The bank was also served a show-cause notice before the final decision. RBI requisitioned the Commissioner for Co-operation and Registrar of Co-operative Societies, Maharashtra to issue a winding-up order and appoint a liquidator. Upon liquidation, depositors would be entitled to insurance-backed repayment up to the prescribed DICGC ceiling, subject to usual terms and conditions.

Why RBI Acted

Capital & exposure normsGovernance oversightCustomer protectionLicensing breach

The Reserve Bank of India cancelled the licence of The Priyadarshini Mahila Sahakari Bank Ltd., Latur, Maharashtra after inspection showed an impaired and precarious financial position, the bank had ceased to be solvent, and there was no viable turnaround or regulatory-compliance proposal. RBI had earlier issued Section 35A directions restricting operations and later a show-cause notice; after examining the reply and finding revival remote, it took the final step of licence cancellation and initiated winding-up/liquidation proceedings to protect depositors.

Operating Impact

The bank can no longer carry on banking business, including acceptance and repayment of deposits. Liquidation proceedings are to begin, and depositor repayments will proceed subject to deposit insurance limits and liquidation processes. Depositors are the main affected stakeholders; the bank’s operations are effectively समाप्त/terminated through winding up.

Regulatory Basis

  • Section 35A of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies)
  • Section 5(b) of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies)

Action Facts

Primary Impact
License cancellation
Order Date
23 Jul 2008
Effective From
23 Jul 2008
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank