Yashwant Sahakari Bank Limited, Miraj, Sangli, Maharashtra

RBI cancelled the banking licence of Yashwant Sahakari Bank Limited, Miraj, Sangli, Maharashtra, after concluding that the bank had ceased to be solvent and that efforts to revive it in consultation with the Government of Maharashtra had failed. Statutory inspections revealed deterioration in the bank’s financial position as of March 31, 2006 and severe deterioration as of March 31, 2008. The bank had earlier been placed under all-inclusive directions under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies), including a ceiling of Rs. 1,000 on withdrawal of deposits. A show-cause notice under Section 22 was issued on February 09, 2009, but the reply was found unsatisfactory and the bank did not present any concrete revival or merger proposal. On that basis, RBI took the extreme measure of cancelling the licence and initiating liquidation proceedings; the Registrar of Co-operative Societies, Maharashtra was requested to order winding up and appoint a liquidator.

The bank can no longer carry on banking business, including acceptance and repayment of deposits. Liquidation proceedings are to begin, and depositors will be paid subject to deposit insurance terms and conditions, up to the applicable ceiling. The action primarily affects the bank, its depositors, and the liquidation/winding-up authorities.