Reserve Bank Cancels the Licence of The Nagpur Mahila Nagari Sahakari Bank Ltd, Nagpur (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the licence of The Nagpur Mahila Nagari Sahakari Bank Ltd, Nagpur (Maharashtra), after concluding that the bank had ceased to be solvent, revival efforts had failed, and its depositors were being inconvenienced by continued uncertainty. RBI noted that statutory inspection findings showed the bank’s financial position was unsatisfactory, that it was not complying with several provisions of the Banking Regulation Act, 1949 (as applicable to co-operative societies), and that it had violated several RBI guidelines and instructions. RBI had earlier placed the bank under Section 35A directions on September 20, 2004, precluding it from incurring any liability, and later issued a show-cause notice on March 5, 2009; the reply was found unacceptable. The licence granted under Section 22 to conduct banking business was cancelled after the close of business on September 8, 2009, and the Registrar of Co-operative Societies, Maharashtra was requested to initiate winding up and appoint a liquidator.