RBI notice to Royale Bank

The Reserve Bank of India (RBI) has issued a show cause notice to the Surat-based Royale Co-operative Bank, asking it why its licence should not be revoked.

"RBI has issued the show cause notice to Royale Bank under Section 22 of the Banking Regulations Act. The Bank has been asked to file a reply within 30 days as to why its licence should not be revoked," a bank official said.

District registrar and the bank administrator R R Waghasia, said, "We have received the show cause notice from RBI, but I am yet to study it. I will study the notice and discuss with the bank officials, then a reply should be filed." The bank officials are publicly claiming that they are trying hard to recover the dues from the defaulters.

The same officials are, however, confessing in private that there is no chance of recovering any money, as the bank chairman Jitu Modi and managing director Parul Shah, have committed gross financial irregularities in the bank.

The officials also agree that since there is no hope of Royale Bank being able to resume banking operations, it would be better if Reserve Bank takes it into liquidation at the earliest, so that at least the depositors can get their monies back.

It is worth mentioning here that membership of Royale Bank was cancelled by Surat Bankers Clearing House in September, on account of its failure to meet the clearing requirement.

Restrictions were clamped on it by Reserve Bank of India under section 35 (A) of the Banking Regulation Act, while Waghasia was appointed the bank's administrator on November 29.

The total deposits of the Royale Bank are Rs 13.91 crore, while its loan advances are Rs 17.48 crore. However, over 90 per cent of the deposits are under Rs 1 lakh and are insured by Deposit Insurance & Credit Guarantee Corporation.