Case Brief
The Reserve Bank of India cancelled the banking licence of Vidarbha Urban Co-Operative Bank Ltd., Akola, Maharashtra on April 22, 2010 at 10:15 a.m. RBI said the bank had become insolvent, repeated revival efforts had failed, and the bank’s financial position had deteriorated further over successive inspections. Earlier, RBI had placed the bank under Section 35A directions restricting its activities, superseded its board, and issued a show-cause notice seeking to know why the licence should not be cancelled and the bank wound up. After the bank’s reply was found unsatisfactory and no viable revival plan was submitted, RBI took the extreme step of cancelling the licence and asked the Registrar of Co-operative Societies, Maharashtra to start winding-up proceedings and appoint a liquidator. The bank is consequently prohibited from carrying on banking business, including accepting and repaying deposits, and depositors will be entitled to DICGC insurance coverage up to the prescribed ceiling.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location