Recorded RBI impact
License cancellation
License cancellation · Fresh imposition
Published by RBI
12 Jan 2009
Case Brief
The Reserve Bank of India cancelled the licence of Vasantdada Shetkari Sahakari Bank Limited, Sangli, Maharashtra, with effect from January 7, 2009. RBI said the bank had ceased to be solvent, revival efforts with the Government of Maharashtra had failed, and the uncertainty was inconveniencing depositors. The bank’s response to the show-cause notice was found unsatisfactory, and it had not produced any concrete revival or merger plan. RBI also requested the Registrar of Co-operative Societies, Maharashtra to initiate winding-up proceedings and appoint a liquidator.
Why RBI Acted
The Reserve Bank of India cancelled the licence of Vasantdada Shetkari Sahakari Bank Limited, Sangli, Maharashtra, on January 7, 2009. RBI stated that the bank had ceased to be solvent, that attempts to revive it in consultation with the Government of Maharashtra had failed, and that continued uncertainty was inconveniencing depositors. The bank had also been served a show-cause notice on why its licence should not be cancelled and why winding-up steps should not be taken; its reply was found unsatisfactory and it did not submit any concrete revival or merger proposal. RBI requested the Registrar of Co-operative Societies, Maharashtra to wind up the bank and appoint a liquidator.
Operating Impact
The bank can no longer carry on banking business, including accepting or repaying deposits. Liquidation proceedings will begin, and depositor repayment will be subject to the Deposit Insurance and Credit Guarantee Corporation framework, up to the applicable insurance ceiling of Rs. 1,00,000 per depositor.
Regulatory Basis
- Section 35A of the Banking Regulation Act 1949 (As Applicable to Co-operative Societies)
- Section 110 A of the Maharashtra Co-operative Societies Act, 1960
- Section 5(b) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- License cancellation
- Order Date
- 7 Jan 2009
- Effective From
- 7 Jan 2009
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank