Case Brief
The Reserve Bank of India cancelled the banking licence of The Dhansura People's Co-operative Bank Ltd., Dhansura, Gujarat, after concluding that the bank had ceased to be solvent and that attempts to revive it had failed. The bank had earlier been put under Section 35A directions because of a liquidity crisis: it was first prohibited from granting or renewing loans and advances, and later the directions were modified to stop acceptance of fresh deposits and cap repayment of deposits at Rs 1,000 per depositor. RBI noted deterioration in the bank's financial position, including erosion of deposits and negative realisable value of paid-up capital and reserves. As no viable revival plan existed and the prospects of revival were remote, RBI cancelled the licence in the interest of depositors and requested the Registrar of Co-operative Societies, Gujarat, to commence winding up and appoint a liquidator.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location