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

Case Brief

The Reserve Bank of India cancelled the licence of The Achalpur Urban Co-operative Bank Ltd., Amravati, Maharashtra, after determining that the bank had ceased to be solvent, had negative realizable capital and reserves, and had not complied with several provisions of the Banking Regulation Act, 1949 and RBI guidelines/instructions. RBI had already placed the bank under Section 35A directions barring it from incurring liabilities, and it had issued a show-cause notice under Section 22 asking why the licence should not be cancelled. The bank’s reply was found unacceptable, and RBI concluded that revival prospects were remote in the absence of a viable action plan. RBI also requested the Registrar of Co-operative Societies, Maharashtra to issue winding-up orders and appoint a liquidator. Consequent to the cancellation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits, and depositors will be eligible for insured repayment up to the DICGC limit.