The Reserve Bank of India,
has on June 2, 2005, cancelled the licence granted to Shri Swaminarayan Co-operative
Bank Ltd.Vadodara., 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 Shri Swaminarayan Co-operative Bank Ltd.Vadodara, 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. 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 December
16, 2003 and the bank was precluded from incurring fresh liabilities and was
restricted from making repayment of deposits from any deposit account above
Rs.1000. The Board of Directors of the bank resigned on December 23, 2003 and
the bank was placed under custodian by the Registrar of Co-operative Societies,
Gujarat. Despite issue of directions, the bank did not show any improvement
in its financial position. Subsequent inspection of the bank conducted with
reference to its financial position as on June 30, 2004 revealed that the financial
position of the bank continued to be precarious. A notice was, therefore, issued
to the bank on October 7, 2004, asking it to show cause as to why the licence
granted to it for carrying on banking business should not be cancelled. The
reply submitted by the bank was not satisfactory. 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 :
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Post Address
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Urban Banks Department, Reserve
Bank of India, La Gajjar Chambers, Ashram Road, P.B. No.1, Ahmedabad-380
009
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Telephone Number
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(079) 2658 – 2360, 3650,
4039, 6019,
7324-25, 7614 and 26589338
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Fax Number
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(079) 26584853
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P. V. Sadanandan
Manager
Press Release: 2004-2005/1293
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