Reserve Bank Cancels the Licence of The Parbhani People's Co-operative Bank Ltd., Parbhani (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the licence of The Parbhani People's Co-operative Bank Ltd., Parbhani, Maharashtra on June 16, 2006. RBI said the bank had ceased to be solvent, its financial position had become precarious and then further deteriorated, and deposits were being eroded. The bank had earlier faced heavy deposit withdrawals and a severe liquidity crisis, and directions under Section 35A of the Banking Regulation Act had already restricted its activities. After examining revival options and issuing a show-cause notice, RBI concluded that there was no viable plan and that revival prospects were remote. RBI requested the Registrar of Co-operative Societies, Maharashtra to initiate winding-up and appoint a liquidator. As a result, the bank is prohibited from carrying on banking business, including accepting and repaying deposits, and depositor repayment will proceed in liquidation subject to the Deposit Insurance Scheme.