Reserve Bank Cancels the Licence of the Sindh Mercantile Co-op. Bank Ltd., Ahmedabad (Gujarat State)

Case Brief

The Reserve Bank of India cancelled the licence of Sindh Mercantile Co-op. Bank Ltd., Ahmedabad (Gujarat) after determining that the bank had ceased to be solvent, revival efforts had failed, and no viable plan for revival existed. RBI noted that the bank had earlier been placed under directions in 2002 because of a severe liquidity crunch, and that a statutory inspection and subsequent scrutiny showed no improvement in its financial position. A show-cause notice issued in December 2005 did not yield a satisfactory reply. Following the cancellation, RBI requested the Registrar of Co-operative Societies, Gujarat State to issue winding-up orders and appoint a liquidator. RBI also noted that insured deposits would be repaid up to the DICGC ceiling under applicable rules.