Reserve Bank Cancels the Licence of The Chetak Urban Co-operative Bank Ltd, Parbhani, (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the banking licence of The Chetak Urban Co-operative Bank Ltd., Parbhani, Maharashtra, after concluding that the bank had ceased to be solvent and that revival was not feasible. RBI said the bank’s realizable net worth had become negative, statutory inspection revealed breaches of the Banking Regulation Act and RBI instructions, and a prior Section 35A order had already restricted the bank from incurring liabilities and from repaying deposits beyond Rs 1,000 per depositor. Following a show-cause notice and further scrutiny, RBI decided to cancel the licence under Section 22 of the Banking Regulation Act, 1949 (as applicable to cooperative societies). The Registrar of Co-operative Societies, Maharashtra was asked to initiate winding up and appoint a liquidator, and depositors would look to insurance coverage under DICGC, subject to the statutory ceiling.