RBI cancels licence of Mahila Nagrik Sahkari Bank Maryadit

By Staff
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Google Oneindia News

Mumbai, May 3 (UNI) The Reserve Bank of India (RBI) has asked the Registrar of Co-operative Societies, Madhya Pradesh, to issue an order for winding up the Mahila Nagrik Sahkari Bank Maryadit, Khargone, Madhya Pradesh, and appointing a liquidator for the bank.

The action comes in the wake of the bank becoming insolvent and failure to revive its performance despite all efforts, said a RBI release here today, adding that its order cancelling the bank's licence has come into effect after the close of business yesterday.

Highlighting the fact that on liquidation, every depositor is entitled to repayment of his deposits up to a monetary ceiling of Rs 1,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the release pointed out that ''consequent to the cancellation of its licence, the bank is prohibited from carrying on ''banking business'' as defined in Section 5 (b) of the Banking Regulation Act, 1949 (AACS) including acceptance and repayment of deposits.'' There was a run on the bank and deposits amounting to Rs 71.94 lakh were withdrawn from the bank between October 24, 2003, and December 18, 2003.

A RBI scrutiny of the bank's books of accounts had revealed that its liquidity position as on December 18, 2003, was ''severely impaired'', said the release, adding that the bank was, therefore, placed under directions under Section 35 A of the BRA, 1949 (AACS) with effect from the close of business on February 25, 2004.

A subscequent inspection of the bank on March 31, 2005, revealed a further deterioration of its financial condition and its realisable value of paid-up capital and reserves was in the negative and its deposits were fully eroded, said the release.

The RBI then issued a notice to the bank on October 7, 2005, asking it to show cause as to why the licence granted to it to conduct banking business should not be cancelled.

''As the bank did not have a viable plan of action for revival and the chances of its revival were remote, the RBI took the extreme measure of cancelling the licence of the bank after examining all options for its revival, in the interest of the bank's depositors,'' said the release.

With the cancellation of its licence and after commencement of liquidation proceedings, the process of paying the depositors of the bank the amount insured as per the DICGC Act will be set in motion, informed the release.

Depositors who may need any clarifications may contact Mr M K Ray, Deputy General Manager, Urban Banks Department, RBI, Bhopal, added the release.

UNI JJ PP SKB1926

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