RBI cancels licences of two urban co-op banks

The Reserve Bank of India (RBI) today announced the cancellation of banking licences issued to Annasaheb Patil Urban Co-operative Bank Ltd, in Aurangabad, Maharashtra and Rabkavi Urban Co-operative Bank Ltd, in Rabkavi, Karnataka. 

An RBI release issued today said the licence issued to Annasaheb Patil Urban Co-operative Bank Ltd has been cancelled as it had ceased to be solvent and all efforts to revive it in consultation with the government of Maharashtra failed.

RBI said it had delivered the order canceling its licence to the bank before commencement of the business as of 9 March 2010. The registrar of co-operative societies, Maharashtra has also been requested to issue an order for winding up of the bank and appoint a liquidator for the bank.

It may be highlighted that on liquidation, every depositor is entitled to repayment of his/her deposits up to a limit of Rs1,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The RBI had, following up on the findings of a statutory inspection to the bank's financial position as of 31 March 2006,  had made a requisition for supersession of the bank's board of directors to the commissioner for cooperation and registrar of cooperative societies, Pune, on 8 December 2006.

The bank's financial position continued to be a matter of serious concern since then and, keeping in view the deteriorating financial position of the bank, the RBI issued a notice to the bank on 19 November 2009 asking it to show cause as to why the licence granted to it for conducting banking business should not be cancelled.