Reserve Bank Cancels the Licence of Suvarna Nagari Sahakari Bank Ltd., Parbhani

Case Brief

The Reserve Bank of India cancelled the licence of Suvarna Nagari Sahakari Bank Ltd., Parbhani (Maharashtra), after concluding that the bank had become insolvent, its net worth was negative, and revival was not feasible. The statutory inspection had found non-compliance with provisions of the Banking Regulation Act, 1949 (as applicable to co-operative societies) and violations of RBI guidelines/instructions. RBI noted that the bank had earlier been placed under Section 35A directions precluding it from incurring any liability, but it failed to recover. RBI also rejected the bank’s reply to a show-cause notice and requested the Registrar of Co-operative Societies, Maharashtra to initiate winding-up and appoint a liquidator. Following cancellation, the bank is prohibited from carrying on banking business, including acceptance and repayment of deposits, and depositors will be entitled to DICGC insurance up to the statutory ceiling.