Case Brief
Reserve Bank of India cancelled the licence of The Basavakalyan Pattana Sahakara Bank Niyamith, Basavakalyan, Karnataka, after concluding that the bank had ceased to be solvent and that its revival prospects were remote. An inspection for the year ended March 31, 2006 found that the bank was violating multiple provisions of the Banking Regulation Act, 1949 (as applicable to cooperative societies) and several RBI guidelines/instructions, and that its realizable net worth had turned negative. The bank had earlier been placed under Section 35A directions restricting its activities, including a ceiling on repayment of deposits of Rs 500 per depositor. RBI had also issued a show-cause notice under Section 22 on October 16, 2006; the bank's reply was found unacceptable. Following cancellation, the Registrar of Co-operative Societies, Karnataka was requested to initiate winding up and appoint a liquidator, and the bank was prohibited from carrying on banking business including acceptance and repayment of deposits.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location