Case Brief
The Reserve Bank of India cancelled the banking licence of Nutan Sahakari Bank Ltd., Vadodra, Gujarat after the close of business on November 05, 2008. RBI said the bank had become insolvent, repeated efforts to revive it in consultation with the Government of Gujarat had failed, and the continued uncertainty was inconveniencing depositors. Earlier inspections had shown the bank’s financial position was impaired and later precarious. RBI had previously restricted its operations, including a cap on deposit withdrawals, and had issued a show-cause notice asking why its licence should not be cancelled. After examining the bank’s reply and finding no viable revival or merger plan, RBI took the extreme step of cancelling the licence in the interest of depositors. The Registrar of Co-operative Societies, Gujarat was requested to order winding up and appoint a liquidator. The release also states that, upon cancellation and liquidation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits, and depositors would be paid subject to the Deposit Insurance Scheme up to the prescribed ceiling.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank