Reserve Bank Cancels the Licence of The Bhusawal People’s Co-operative Bank Ltd., Bhusawal, Jalgaon (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the banking licence of The Bhusawal People’s Co-operative Bank Ltd., Bhusawal, Jalgaon (Maharashtra), effective from the close of business on March 22, 2012. RBI said the bank had ceased to be solvent, revival efforts with the Government of Maharashtra had failed, and continued uncertainty was inconveniencing depositors. The release also records the bank’s severe financial deterioration, including negative net worth and CRAR, very high NPAs, accumulated losses, and violations of provisions of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI had previously placed the bank under all-inclusive directions under Section 35A, issued a show-cause notice, and found the reply unsatisfactory. Because no concrete viable revival plan or merger proposal was submitted, 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.