RBI cancels Licence of Mahatma Fule Urban Co-operative Bank Ltd., Patoda, Dist. Beed (Maharashtra)

Case Brief

The Reserve Bank of India cancelled the licence of Mahatma Fule Urban Co-operative Bank Ltd., Patoda, Dist. Beed (Maharashtra) with effect from August 24, 2013. RBI said the bank had ceased to be solvent and that depositors were being inconvenienced by the continued uncertainty. The release also recounts serious supervisory findings from inspections, including failure to maintain statutory liquidity reserves, breach of single-group exposure limits, unsecured advances beyond prescribed limits, a very high credit-deposit ratio, persistent irregularities, erosion of net worth and deposits, and other financial weaknesses. The bank had earlier been placed under all-inclusive directions, and a show-cause notice for cancellation of licence under Section 22 of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies) was issued before the final cancellation.