The Reserve Bank of India,
has on June 2, 2005, cancelled the licence granted to the Royale Co-operative
Bank Ltd., Surat, Gujarat, in view of the fact that it had ceased to be solvent.
The order canceling the licence was delivered to the bank on June 7, 2005. The
Registrar of Co-operative Societies, Gujarat has been requested for winding
up of The Royale Co-operative Bank Ltd., Surat, Gujarat and to appoint a liquidator
thereof. The Reserve Bank further said that every depositor of the bank is covered
by the Deposit Insurance and Credit Guarantee Corporation (DICGC) and on liquidation
is entitled to repayment of deposits up to a monetary ceiling of Rs.1,00,000.
The liquidator is required to expeditiously send the claims of all depositors
to DICGC.
Earlier, the inspections of
the bank conducted by the Reserve Bank of India had revealed serious deficiencies
in the working of the bank. The bank had become insolvent with negative net
worth, negative CRAR, high NPAs and significant erosion of deposits. Thereafter,
due to bank's inability to meet its clearing liability, it was suspended from
the membership of Surat Bankers' Clearing House w.e.f. October 6, 2004. In view
of the serious deficiencies in the working of the bank, directions were issued
to it under section 35A of the Banking Regulation Act, vide order dated October
12, 2004 and the bank was precluded from incurring fresh liabilities and was
restricted from making repayment of deposits from any deposit account above
Rs.500. The Registrar of Co-operative Societies, Gujarat was required to supercede
the Board of Directors of the bank vide Requisition dated November 4, 2004 as
per the provisions of Section 115A of the Gujarat Co-operative Societies Act,
1961. Despite issue of directions, the bank did not show any improvements in
its financial position. Subsequent inspection of the bank conducted with reference
to its financial position as on September 30, 2004 revealed that the financial
position of the bank continued to be precarious. A notice was, therefore, issued
to the bank on December 8, 2004, asking it to show cause as to why the licence
granted to it for carrying on banking business should not be cancelled. The
bank has not submitted a reply to the same. Therefore, the Reserve Bank of India
took the extreme measure of canceling the licence of the bank in the interest
of the bank's depositors.
Following the cancellation
of licence, the bank is prohibited from carrying on banking business as defined
in Section 5(b) of the Act ibid, including acceptance and repayment of deposits.
After the liquidation proceedings are initiated by the Government of Gujarat,
the process of paying the depositors, the amount insured as per the DICGC Act
will be set in motion.
The Reserve Bank has advised
the depositors to approach the General Manager, Urban Banks Department, Reserve
Bank of India, Ahmedabad in case of any further clarification, on contact details
as below :
|
Post Address
|
Urban Banks Department, Reserve
Bank of India, La Gajjar Chambers, Ashram Road, P.B. No.1, Ahmedabad-380
009
|
|
Telephone Number
|
(079) 2658 – 2360, 3650,
4039, 6019, 7324-25, 7614 and 26589338
|
|
Fax Number
|
(079) 26584853
|
P. V. Sadanandan
Manager
Press Release: 2004-2005/1290
|