Reserve Bank Cancels the Licence of Hina Shahin Co-operative Urban Bank Ltd, Beed (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the licence of Hina Shahin Co-operative Urban Bank Ltd., Beed, Maharashtra, effective March 23, 2010 at 5:00 p.m. RBI said the bank had ceased to be solvent, efforts to revive it in consultation with the Government of Maharashtra had failed, and depositors were facing continued uncertainty. Inspections showed the bank’s financial position had become adverse and then deteriorated further; its Board had earlier been superseded, and a show-cause notice issued under section 22 of the Banking Regulation Act, 1949 (as applicable to cooperative societies) did not yield a satisfactory response or a viable action plan. RBI also noted negative realizable value of paid-up capital and reserves and concluded that revival prospects were remote. The Registrar of Co-operative Societies, Maharashtra was asked to initiate winding up and appoint a liquidator. Upon liquidation, depositors are entitled to DICGC insurance coverage up to Rs. 1,00,000, subject to applicable terms and conditions.