Case Brief
RBI cancelled the banking licence of The Hyderabad Cooperative Urban Bank Ltd., Yakutpura, Hyderabad, Andhra Pradesh, after determining that the bank had ceased to be solvent and that all revival efforts had failed. The bank had earlier been placed under Section 35A directions from August 26, 2003, prohibiting acceptance of fresh deposits. An inspection as of March 31, 2005 showed worsening financial condition, erosion of deposits, and negative realizable value of paid-up capital and reserves. After a show-cause notice dated September 27, 2005 and no viable revival plan, RBI decided on cancellation in the interest of depositors. Following cancellation, the State Government appointed a liquidator on March 7, 2006, and the bank was prohibited from carrying on banking business, including acceptance and repayment of deposits; insured depositors would be covered up to the DICGC ceiling.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location