Case Brief
The Reserve Bank of India cancelled the licence of Solapur Nagari Audyogik Sahakari Bank Niyamit, Solapur (Maharashtra) with effect from the close of business on November 5, 2011. RBI said the bank had ceased to be solvent, repeated revival efforts in consultation with the Government of Maharashtra had failed, and depositors were facing continued uncertainty. The release further states that statutory inspections revealed persistent deterioration in the bank’s financial position, negative net worth, very weak capital adequacy, significant erosion in deposits, high NPAs, and non-compliance with several provisions of the Banking Regulation Act, 1949 (as applicable to co-operative societies), including sections 11(1), 18, 22(3)(a), 22(3)(b) and 24. RBI also noted that the bank violated operational instructions and investment guidelines, for which a penalty of Rs 5 lakh had earlier been levied. Following an unsatisfactory reply to the show-cause notice and the absence of a viable merger/restructuring plan, RBI took the extreme step of cancelling the licence and requested the Registrar of Co-operative Societies, Maharashtra to initiate winding up and appoint a liquidator.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank