Licence of the Primary Teachers Co-operative Credit Bank Ltd. - Cancelled

Case Brief

RBI issued an order cancelling the licence of Primary Teachers Co-operative Credit Bank Ltd., Nipani, Karnataka, after business hours on October 06, 2008. The bank had ceased to be solvent, inspections had shown a worsening financial position, and revival attempts with the Government of Karnataka had not succeeded. RBI also noted that the bank had not filed police complaints regarding frauds of Rs.109.99 lakh allegedly perpetrated by its ex-CEO despite being advised to do so. The bank had earlier been placed under Section 35A directions restricting lending, investments, borrowings, fresh deposits, and deposit withdrawals. After considering all options, RBI cancelled the licence in the interest of depositors and requested the Registrar of Co-operative Societies, Karnataka 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 depositors may seek insured repayment under the DICGC framework.