Case Brief
The Reserve Bank of India cancelled the licence of Shri Vitrag Co-operative Bank Ltd., Surat, Gujarat, on September 1, 2005, because the bank had ceased to be solvent. RBI said inspections had revealed serious deficiencies, including negative net worth, negative CRAR, high NPAs, erosion of deposits, and multiple violations of RBI guidelines and directives. After an unsatisfactory reply to a show-cause notice, RBI took the extreme step of cancelling the licence and requisitioned the Registrar of Co-operative Societies, Gujarat, to initiate winding up and appoint a liquidator. Following the cancellation, the bank was prohibited from carrying on banking business, including acceptance and repayment of deposits, and depositors would be entitled to insured repayment up to the DICGC ceiling through the liquidation process.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location