The Reserve Bank of India has cancelled the licence of The Bhusawal People's Co-operative Bank Ltd — the Jalgaon-based cooperative bank in Maharashtra, following depositors' concerns.
"...All efforts to revive it in close consultation with the Maharashtra government had failed and the depositors were being inconvenienced by continued uncertainty, the RBI delivered the order cancelling its licence effective from the close of business as on March 22, 2012," RBI said in a notification.
RBI took the extreme measure of cancelling the licence of (The Bhusawal People's Co-operative Bank Ltd) in the interest of bank's depositors, it added.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of the bank, the amount insured as per the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act will be set in motion, subject to the terms and conditions of the deposit insurance scheme, it added.
Upon liquidation, the RBI said, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 1 lakh only from the DICGC under usual terms and conditions. It further said that the Registrar of Co-operative Societies (Maharashtra) has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. The Bhusawal People's Co-operative Bank was granted a licence by RBI on March 31, 1980 to commence banking business. The statutory inspection under Section 35 of the Banking Regulation Act, 1949 revealed that the gross and net NPAs were assessed at 19.0 per cent and 15.2 per cent of gross and net advances, respectively, the RBI notification said. "In view of the deteriorating financial position, the bank was placed under all inclusive directions under Section 35 A of the Act from the close of business as on October 25, 2011," it said. The financial parameters of the bank, it added, continued to deteriorate further as revealed during subsequent inspections conducted with reference to its financial position as on March 31, 2007; March 31, 2008; March 31, 2009; and March 31, 2010.
