Case Brief
The Reserve Bank of India cancelled the licence of Faizpur Janata Sahakari Bank Ltd., Faizpur, District Jalgaon, Maharashtra after finding that the bank had ceased to be solvent and that all attempts to revive it, in consultation with the Government of Maharashtra, had failed. RBI had previously conducted statutory inspections that indicated impaired financial health as of March 31, 2006 and further deterioration as of March 31, 2007. It had earlier imposed Section 35A directions restricting operations, including a ceiling of Rs. 1,000 on deposit withdrawals, and issued a show-cause notice on February 26, 2008. After considering the reply, RBI concluded that there was no viable revival plan and that the prospect of turnaround was remote. The licence was therefore cancelled after close of business on December 2, 2008, and the Registrar of Co-operative Societies, Maharashtra was asked to start winding up and appoint a liquidator. The bank is consequently barred from carrying on banking business, including acceptance and repayment of deposits, and depositors may claim insurance coverage subject to the DICGC terms and ceiling.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank