Case Brief
The Reserve Bank of India cancelled the licence granted to The Metro Cooperative Bank Ltd., Surat, Gujarat, by order dated September 8, 2005, and the order was delivered on September 16, 2005. RBI said the bank had ceased to be solvent. The release also recounts the bank's deteriorating condition: it failed to meet clearing liabilities, had poor liquidity, high NPAs, negative net worth and CRAR, erosion of deposits, violations of RBI guidelines and directives, unsatisfactory Board functioning, and irregularities including allegations of fictitious accounts and fraudulent transactions. RBI had earlier imposed Section 35A directions prohibiting fresh deposits and restricting deposit repayments, and later requisitioned supersession of the Board, after which an Administrator was appointed. Following the cancellation, the bank was prohibited from carrying on banking business, including accepting and repaying deposits, and liquidation/recovery proceedings with DICGC coverage for depositors were to follow.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location