Reserve Bank cancels the licence of The Royale Co-operative Bank Ltd., Surat, Gujarat

Case Brief

The Reserve Bank of India cancelled the licence granted to The Royale Co-operative Bank Ltd., Surat, Gujarat on June 2, 2005, citing insolvency and continued deterioration in the bank’s financial condition. RBI said earlier inspections had revealed serious deficiencies, including negative net worth, negative CRAR, high NPAs and erosion of deposits. The bank had already been subjected to Section 35A directions restricting fresh liabilities and deposit repayments above Rs.500, and steps had been taken to supersede its board. After the bank failed to improve and did not reply to the show-cause notice on cancellation, RBI took the extreme step of cancelling the licence. The Registrar of Co-operative Societies, Gujarat was requested to wind up the bank and appoint a liquidator, and depositors were told that insurance coverage would apply up to the statutory ceiling under DICGC.