Reserve Bank Cancels the Licence of The Harugeri Urban Co-operative Credit Bank Ltd., Harugeri, Karnataka

Case Brief

The Reserve Bank of India cancelled the licence of The Harugeri Urban Co-operative Credit Bank Ltd., Harugeri, Karnataka, effective after close of business on January 22, 2007. RBI said the bank had ceased to be solvent, efforts to revive it had failed, and continued uncertainty was inconveniencing depositors. The release also notes that a special scrutiny had revealed severe liquidity problems, and a later statutory inspection showed the financial position had further deteriorated and was precarious. RBI had earlier placed the bank under Section 35A directions restricting core activities such as granting or renewing loans, making investments, borrowing, and accepting fresh deposits, and the board had been superseded with an administrator appointed. Following cancellation, RBI requested winding up and appointment of a liquidator; depositors would be entitled to repayment up to Rs.1,00,000 through DICGC insurance.