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In view of the fact that the Baroda Mercantile
Co-operative Bank Ltd., Vadodara 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 delivered the order
cancelling its licence to the bank on May 16, 2006 at 2:40 p. m. 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) under usual terms and conditions.
The Reserve Bank of India decided to cancel
the licence of the Baroda Mercantile Co-operative Bank Ltd., Vadodara, 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. The inspection of the bank
with reference to its financial position as on June 30, 2002 revealed that the
bank's financial position was unsatisfactory. The bank was, therefore, issued
directions under Section 35A of the Banking Regulation Act, 1949 (As applicable
to Co-operative Societies) with effect from the close of business of October
10, 2002 including a cap of Rs 1000/- on withdrawal of deposits by an individual
depositor. The scrutiny of the bank conducted with reference to its position
as on June 30, 2004 revealed further deterioration in its financial condition.
Its deposits were getting eroded as realizable value of paid-up capital and
reserve was in the negative. The Reserve Bank had issued a notice to the bank
on January 13, 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 its 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 commencement of liquidation proceedings, the process of paying
the depositors of the Baroda Mercantile Co-operative Bank Ltd., Vadodara , will
be set in motion subject to the terms and conditions of the Deposit Insurance
Scheme.
Consequent to the cancellation of its licence,
the Baroda Mercantile Co-operative Bank Ltd., Vadodara 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 : 2005-2006/1481
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