Reserve Bank Cancels the Licence of Citizen Co-operative Bank Ltd., Burhanpur

Case Brief

The Reserve Bank of India cancelled the licence of Citizen Co-operative Bank Ltd., Burhanpur (M.P.) with effect after the close of business on May 27, 2009. RBI said the bank had ceased to be solvent, revival efforts in consultation with the Government of Madhya Pradesh had failed, and the bank’s continuing uncertainty was inconveniencing depositors. The release also notes that earlier statutory inspections had shown the bank’s financial position was impaired and later deteriorated further, and that a show-cause notice was issued on September 19, 2008 before the final decision. Because the bank had no viable turnaround plan and could not satisfy the required regulatory prescriptions, RBI cancelled the licence in the interest of depositors and asked the Registrar of Co-operative Societies, Madhya Pradesh to commence winding up and appoint a liquidator. The release also states that, on liquidation, depositor claims would be covered up to Rs. 1,00,000 under DICGC terms and conditions.