Reserve Bank Cancels the Licence of Krishna Valley Co-operative Bank Ltd., Kupwad, Sangli (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the licence of Krishna Valley Co-operative Bank Ltd., Kupwad, Sangli (Maharashtra) with effect from the close of business on March 5, 2012. RBI said the bank had ceased to be solvent, all revival efforts with the Government of Maharashtra had failed, and the uncertainty was causing inconvenience to depositors. The bank had earlier been placed under all-inclusive directions under Section 35A due to its precarious financial position, and its Board was found ineffective and responsible for deterioration in the bank’s condition; the Board was superseded and an Administrator appointed. Subsequent inspections revealed further deterioration, negative net worth, negative CRAR, 100% gross NPAs relative to gross advances, erosion in deposits, and non-compliance with statutory provisions including Sections 11(1), 18, 22(3)(a) and 22(3)(b). RBI also noted that the bank had not submitted any concrete revival plan or merger proposal and that its paid-up capital and reserves had negative realisable value. RBI therefore cancelled the licence, requested the Registrar of Co-operative Societies, Maharashtra to initiate winding-up and appoint a liquidator, and stated that deposit insurance payouts would begin subject to DICGC terms.