Reserve Bank Cancels the Licence of Natpur Cooperative Bank Ltd., Nadiad, Gujarat

Case Brief

The Reserve Bank of India cancelled the licence of Natpur Co-operative Bank Ltd., Nadiad, Gujarat on 22 November 2005 at 12:00 noon. RBI said the bank had ceased to be solvent, that revival efforts in consultation with the Government of Gujarat had failed, and that the bank’s financial condition had deteriorated severely, with deposits being eroded and paid-up capital and reserves in the negative. The bank had earlier been placed under Section 35A directions on 16 January 2002 because of a severe liquidity crunch, and a show-cause notice was issued on 18 December 2004. As no viable revival plan existed and the prospects of revival were remote, RBI cancelled the licence as a final step to protect depositors, and requested the Registrar of Co-operative Societies, Gujarat to initiate winding-up and appoint a liquidator. The release also notes that after liquidation, depositors would be entitled to DICGC insurance up to Rs. 1,00,000.