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In view of the fact that the The Parbhani People's
Co-operative Bank Ltd., Parbhani, Maharashtra, had ceased to be solvent, all
efforts to revive it in close consultation with the Government of Maharashtra
had failed and the depositors were being inconvenienced by continued uncertainty,
the Reserve Bank of India delivered the order canceling its licence to the bank
on June 16, 2006. The Registrar of Co-operative Societies, Maharashtra 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 Parbhani People's Co-operative Bank Ltd., Parbhani, Maharashtra,
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 position as on June 30,2002 indicated that its financial
position was precarious. However based on the bank's request it was given some
time to show improvement. In March 2005, the bank was affected by heavy withdrawal
of deposits resulting in a severe liquidity crisis. The bank was, therefore,
issued directions under Section 35A of the Banking Regulation Act, 1949 (As
applicable to Co-operative Societies) vide our order dated April 20, 2005 imposing
restriction on its activities. The subsequent inspection of the bank conducted
with reference to its financial as on March 31, 2005 revealed further deterioration
in its financial condition. Its deposits were getting eroded as the realizable
value of paid-up capital and reserves was in the negative. The Reserve Bank
had issued a notice to the bank on August 17, 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 canceling 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 The Parbhani People's Co-operative
Bank Ltd., Parbhani, Maharashtra, will be set in motion subject to the terms
and conditions of the Deposit Insurance Scheme.
Consequent to the cancellation of its licence,
the Parbhani People's Co-operative Bank Ltd., Parbhani, Maharashtra 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 Anand Prakash, General Manager, Reserve Bank of India, Urban Banks Department,
Nagpur. His contact details are as below;
Postal Address: Urban Banks Department,
Reserve Bank of India, Nagpur Regional Office, Additional Office Building, East
High Court Road, Nagpur-440001. Telephone Number: (0712) 2538696; Fax Number:
(0712) 2552896.
P.V.Sadanandan
Manager
Press Release : 2005-2006/ 1660
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