RBI cancels licence of Kanyaka Parameshwari Bank

Mumbai, Aug 17 (UNI) Reserve Bank of India (RBI) has cancelled the license of the Kanyaka Parameshwari Mutually Aided Co-operative Urban Bank Ltd after it ceased to be solvent.

Delivering the order, the Central bank in a release here today said that in view of the fact that the Kanyaka Parameshwari Mutually Aided Co-operative Urban Bank Ltd, Andhra Pradesh had ceased to be solvent and all efforts to revive it in close consultation with the Andhra Pradesh government had failed and the depositors of the bank were being inconvenienced by continued uncertainty.

The RBI cancelled the bank's license after the close of business yesterday.

The Registrar of Co-operative Societies, Andhra Pradesh has also been requested to issue an order for winding up of the bank and appoint a Liquidator for the bank.

It may be highlighted that on liquidation every depositor is entitled to repayment of his deposits up to a monetary ceiling of Rs one lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the release said.

The bank was granted the licence by the RBI on July 21, 1997, to commence banking business. The statutory inspection of the bank conducted by the apex bank with reference to its financial position as on March 31, 2004, revealed that the bank had violated several guidelines/instructions of the RBI.

The bank was also facing liquidity problems during January 2005 due to a run on its deposits. In order to protect the interests of the depositors, the bank was placed under directions issued under Section 35A of the B R Act, 1949 (AACS) vide order dated January 27, 2005. On a requisition by the bank, the RCS superseded the Board of Directors of the bank vide order dated March 14, 2005, the release added.

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