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In view of the fact that The Janata Co-operative
Bank Ltd., Nadiad, Gujarat, had ceased to be solvent, all efforts to revive
it in close consultation with the Government of Gujarat had failed and the depositors
were being inconvenienced by continued uncertainty, the Reserve Bank of India,
on December 09, 2005 at 11.00 a. m. delivered the order
cancelling its licence to the bank. The Registrar of Co-operative Societies,
Gujarat has also been requested to issue an order for winding up the bank and
appoint a liquidator for the bank. It may be highlighted that on liquidation
every depositor is entitled to repayment of his deposits up to a monetary ceiling
of Rs. 1,00,000/- from the Deposit Insurance and Credit Guarantee Corporation
(DICGC).
The Reserve Bank of India decided to cancel
the licence of The Janata Co-operative Bank Ltd., Nadiad, Gujarat as a final
step after examining all the options for revival of the bank and in order to
protect the interest of the depositors. In view of the liquidity problem faced
by the bank, it withdrew itself from the local Clearing House from February
18, 2002.Consequently, the bank was placed under Directions under section 35A
of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)(AACS)
with effect from the close of business on September 24, 2002. The inspection
of the bank with reference to its position as on September 30, 2004 revealed
deterioration in its financial condition. Its deposits were getting eroded as
realisable value of paid-up capital and reserve was in the negative. In view
of its precarious financial position, the Reserve Bank issued a show cause notice
to the bank on February 04, 2005 asking it to show cause as to why the licence
granted to it to conduct banking business should not be cancelled. As the bank
did not have a viable plan of action for revival and the chances of its revival
were remote, the Reserve Bank of India took the extreme measure of cancelling
licence of the bank in the interest of the bank's depositors. With the cancellation
of its licence and after commencement of liquidation proceedings, the process
of paying the depositors of The Janata Co-operative Bank Ltd, Nadiad, the amount
insured as per the DICGC Act, will be set in motion.
Consequent to the cancellation of its licence,
The Janata Co-operative Bank Ltd., Nadiad is prohibited from carrying on ‘banking
business’ as defined in Section 5(b) of the Banking Regulation Act, 1949 (AACS)
including acceptance and repayment of deposits.
For any clarifications, depositors may approach
Shri S. Rajgopal, General Manager, Urban Banks Department, Reserve Bank of India,
Ahmedabad. His contact details are as below :
Postal Address: Urban Banks Department, Reserve
Bank of India, La Gajjar Chambers, Ashram Road, P. B. No. 1, Ahmedabad 380 009.
Telephone Number: (079) 2658-5184,
Fax Number: (079) 26584853.
Alpana Killawala
Chief General Manager
Press Release: 2005-2006/722
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