Case Brief
The Reserve Bank of India cancelled the licence of Chopda Urban Co-operative Bank Ltd., Jalgaon, Maharashtra, after finding that the bank had ceased to be solvent and that revival efforts had failed. The release says the bank's financial position had severely deteriorated, with negative CRAR, negative net worth, erosion of deposits, high NPAs, losses, and defaults in SLR maintenance. It also refers to irregular lending practices, routing of funds to societies related to the Chairman/Directors, and non-compliance with provisions of the Banking Regulation Act. RBI had earlier issued directions under Section 35A, the Registrar of Co-operative Societies superseded the Board, and a show-cause notice on licence cancellation was not met with a satisfactory response. With no merger or viable restructuring proposal available, RBI ordered cancellation and the bank was prohibited from carrying on banking business; liquidation and DICGC-related deposit repayment processes were to follow.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank
- Location