Case Brief
The Reserve Bank of India cancelled the licence of The Municipal Co-operative Bank Ltd., Ahmedabad (Gujarat) under Section 22(4) of the BR Act, 1949 (AACS). RBI said the bank had ceased to be solvent, revival attempts in consultation with the Government of Gujarat had failed, and the prolonged uncertainty was inconveniencing depositors. The order follows a show-cause notice and an unsatisfactory reply, along with a failed search for a merger proposal. The release also records severe supervisory concerns: negative net worth, negative CRAR, deposit erosion, high NPAs, accumulated losses, violation of operational instructions by sanctioning unsecured advances and issuing unsecured guarantees, KYC non-compliance, and the earlier imposition and extension of all-inclusive directions under Section 35A. RBI requested the Registrar of Co-operative Societies, Gujarat, to initiate winding up and appoint a liquidator. The cancellation makes the bank unable to carry on banking business and shifts the process toward insured depositor repayment under the DICGC framework, subject to applicable terms and conditions.
Action Snapshot
- Primary Impact
- License cancellation
- Entity Type
- Co-operative bank