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The Reserve Bank of India,
has on September 1, 2005, cancelled the licence granted to Shri Vitrag Co-operative
Bank Ltd., Surat, Gujarat, in view of the fact that it had ceased to be solvent.
The order canceling its licence was delivered to the bank on September 6, 2005.
A requisition has been made to the Registrar of Co-operative Societies (RCS),
Gujarat for winding up of Shri Vitrag Co-operative Bank Ltd., Surat, Gujarat
and to appoint a liquidator therefore. It may be highlighted that on liquidation
of the bank every depositor is covered by the Deposit Insurance and Credit Guarantee
Corporation (DICGC) and is entitled to repayment of his deposits up to a monetary
ceiling of Rs.1,00,000.
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. The bank
had also violated a number of guidelines/directives of the Reserve Bank of India.
The bank was placed under directions under section 35 A of the Banking Regulation
Act, 1949 (As applicable to Co-operative banks) with effect from the close of
business as on October 21, 2004 imposing, inter alia, restrictions on acceptance
and repayment of deposits and sanctioning / renewal of loans. At the requisition
of the Reserve Bank, RCS superseded the Board of Directors of the bank on November
17, 2004. A notice was issued to the bank on February 4, 2005, asking it to
show cause as to why the licence granted to it for carrying on banking business
should not be cancelled. The reply dated May 20, 2005 to the show-cause notice
was not found satisfactory. The Reserve Bank of India, therefore, took the extreme
measure of cancelling the licence of the bank in the interest of the bank’s
depositors.
Following the cancellation of its
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 of Shri Vitrag Co-operative Bank Ltd.,
Surat, Gujarat, the amount insured as per the DICGC Act will be set in motion.
For any clarifications, depositors
may approach the General Manager, Urban Banks Department, Reserve Bank of India,
Ahmedabad. His contact details are as below :
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Postal 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: 2005-2006/323
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